Developing Countries (Famine and Debt)

Part of Opposition Day – in the House of Commons at 3:58 pm on 11th June 1985.

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Photo of Mr Stuart Holland Mr Stuart Holland , Vauxhall 3:58 pm, 11th June 1985

The Labour party is committed on aid to achieving 0.7 of 1 per cent. of GNP within the lifetime of a Government. It is also committed to aiming towards 1 per cent. What we are urging on the Government—it is well publicised by Oxfam; I agree with the hon. Gentleman about that — is that precisely for those reasons the Government have no excuse either for continuing their cuts in the aid programme or for claiming that their hands are tied and that they are doing the best that they can.

The Minister—for example, in the case of food aid distribution in the Horn of Africa—has paid lip service to the difficulties caused by the civil war in Eritrea and Tigre, and he has made minor resources available through some of the agencies which may reach either Eritrea or Tigre from Port Sudan. But those resources are minuscule. Eritrea and Tigre need about 20,000 tonnes of food aid per month, whereas only 2,500 tonnes is reaching them. The Government's claim to recognise the problem is not matched by anything like a sufficient scale of food aid allocation for the voluntary agencies at Port Sudan.

Further, the exodus of refugees from Eritrea and Tigre underlines the current crisis in the Sudan. One of the relief centres, Wad Kowli, is now the third largest city in the Sudan. Senior Sudanese officials made it plain earlier this year that they were disappointed with the Minister's visit in January and with his failure to realise that transport and fuel would be needed by the end of April if there was to be any way effectively of distributing food aid to the areas where it is most needed, especially on the borders with Eritrea and Tigre and in west Sudan. It is clear that the Government have relied almost entirely in west Sudan on American agencies taking responsibility for food aid distribution. But now there is a major tragedy in that area.

On 22 March and 5 June the Minister referred to transportation. On 5 June, he claimed that "large numbers of trucks are already available in Sudan, which has a strong private enterprise trucking agency." — [Official Report, 5 June 1985; Vol. 80, c. 306.]

In reality, because of its debt problem of between $8 billion and $9 billion, Sudan has not been able to buy the fuel needed to ensure that the private trucking sector is available for food aid distribution.

In December 1984, the Sudanese Government asked for tenders to renew railway rolling stock and equipment in west Sudan. British firms responded magnificently to that request, and some went out there within three or four days. On their return, they immediately submitted tenders— that was by mid-January—but it was only last week that the Minister was able to tell the House that approval for the £6 million project had finally been given by the EEC.

It is quite wrong for there to be such a delay in ensuring that the railway is in working order. Only one fifth of the food that is needed in west Sudan is getting through via the railway. The rains have come. They may not be sufficient to sustain a future crop, but they certainly will wash roads away. Road transport cannot possibly cover the whole of the Sudan. It can be used only on a limited basis in food distribution — for example, around Darfur. Because of the delay in approving the railway project, 1.5 million people in west Sudan are now at risk.

The Minister has repeatedly said to the House, "What can I do? My hands are tied. It takes time for the multilateral aid agencies to operate. Very difficult decisions must be made." In reality, if the EEC would not approve that project, why did the Minister not do what the Germans did? It appears that the German project for refurbishing the railway was not an integrated part of the EEC programme. There is no reason why the British firms which were ready to meet the orders for repair of the railway should not have been able to do so.

Fuel is a similar issue. On 22 March, I put it to the Minister that there was a desperate shortage of fuel in Sudan. Again, he told us that his hands were tied by the EEC. He said that the EEC was examining the issue and that he was foremost in the EEC in arguing the case. I said to him, "Britain is a shipping and oil-producing nation. Why do you not commission a tanker, fill it with fuel, send it to the Sudan and then send the bill to the EEC Commission?" Had that tanker gone to Sudan and had the fuel arrived in April, the food aid distribution problem would have been very different.

In contrast to what the Minister told the House last week, nearly half a million tonnes of food intended for famine victims is said to have piled up in ports in Ethiopia and Sudan because of the lack of transport. Some of that food has been spoilt. A United States official, Mr. Peter McPherson, who is the administrator for the agency for international development, has blamed Ethiopia and Sudan for the hold-up. He has said that neither of those Governments has given transport the priority that it deserves. In Ethiopia's case, the lamentable tragedy of the civil war and the Ethiopian Government's failure to ensure the safe passage of food aid or to allocate sufficient vehicles for food aid distribution are much to be deplored. I know that hon. Members on both sides of the House deplore this. The Government in Sudan should not, however, be blamed. In January, that Government gave the message clearly to the international community and to the Minister. The Minister failed to react.

The cyclone in Bangladesh has directly affected almost 3 million people—more than 1 million seriously—and caused substantial damage to livestock, homes and crops. The Government of Bangladesh have appealed for $50 million to cover the immediate—not long-term—need for food, medicine, shelter, and so on. So far, the United Kingdom has pledged £750,000 from its aid budget. That is probably less than the VAT that the Government have managed to collect from the £8 million raised by the Band Aid project. It shows the lack of priority that the Government are giving to the problem.

Conditional aid and the political refusal to grant aid are also of concern. It is transparently obvious that the so-called technical reasons which the Minister claimed for not granting aid to Nicaragua through the Inter-American Development Bank or the World Bank are entirely without foundation. The Nicaraguans showed me the projects that they have submitted for aid. It is clear that the proposals have been admirably vetted and are technically excellent. There are no essentially technical reasons for blocking aid to Nicaragua; the reasons are political. They reflect the fact that the British Government are prepared to coat-tail the United States rather than concern themselves with a basic needs programme of the type that Nicaragua has already shown it can pioneer—in health, education and food production—and, with resources, deliver.

Mr. Geoff Dennis, a junior civil servant in the ODA, has been suspended without pay and may face charges following allegations that he was involved in the release to hon. Members of information which showed that the technical reasons for denying aid to Nicaragua were implausible. I am sure that I speak for both sides of the House in saying that few of us believe that civil servants should release material to hon. Members in any circumstances, but this case is directly comparable with the Ponting case, where a Minister misled the House. The jury expressed its views on that matter by dismissing the charges brought against Mr. Ponting by the Government under the Official Secrets Act.

We understand that, while Mr. Dennis has been suspended without pay, he is still technically employed by ODA and therefore cannot sign on for unemployment benefit. The Government have already penalised him by his loss of earnings. We suggest to the Government that no charges should be pressed and that Mr. Dennis's salary should be post-dated and paid from now until he is reinstated, or dismissed, by the ODA. We shall carefully watch the Government to ascertain how they choose to handle the matter.

The third part of the motion concerns debt. The scale of the financial crisis is recognised internationally as overwhelming. Mr. Tom Clausen, the head of the World Bank, warned that the future would bring "more Ethiopias" unless action is taken now. It appears, however, that that view is not shared by the Chancellor, who told an IMF meeting that world economic conditions are the best they have been in six years.

Yet between 1980-82 and 1985-87, annual average national capital flows to sub-Saharan Africa fell from $11 million to $5 million. That represents a drying up of private capital aid flows. Official international development funds from the West and the East are stagnant at S9 billion. Many of those loans will have to be repaid shortly. An extra $2 billion is needed to keep the official aid flows to sub-Saharan Africa at the 1980-82 level. That is why the World Bank, in its project for Africa, recommended a $2 billion target. It appears to be clear, unless the Minister says otherwise, that this target will in no way be met. In fact, it is probable that between only a quarter and a half of that sum will be allocated. Further, the sub-Saharan countries are suffering from crippling debt servicing. Their debt service bill alone in 1981 was $4.1 billion. That is projected to increase on average from 1985 to 1987 to $11.7 billion, in other words, there has been an almost threefold increase in debt servicing in sub-Saharan Africa.

The interest rates are extremely high. While 4.5 per cent. may well not be considered high for official interest rates, they are 12.5 per cent. for private loans. When the United States Administration are recommending more market forces within the African sub-continent, and when they are recommending that the forces of supply and demand should make a contribution to development, what is the development difference between interest rates of 4.5 per cent. and 12.5 per cent? It is not merely 8 per cent; it is the difference between viability and financial bankruptcy. That is what is now facing the sub-Saharan countries.

In the sub-Saharan countries, overall debt service is now rising to about 27 per cent. of total export earnings. That is twice the ratio of 1977. Therefore, even if there had been no drought, there would be a development crisis in Africa today. The measures that the international community is taking in relation to the crisis vary substantially. There is the obduracy of the United States and the unwillingness of our Government to pioneer and press for increases rather than cuts in EEC programmes, so the position is getting worse.

It is relevant to make a comparison with the cost of intervention storage and export subsidies of the food programme in the CAP. It now amounts to about $10 billion in a total EEC budget of $16 billion. Against that, the Government were pressing that the spending on the food aid programme for next year should be reduced by £22 million.

In reality, who are the real debtors? The biggest debtor in the world at the moment is the United States. The biggest creditor in the world at the moment—although it may shortly be Japan—is the United Kingdom. We are lending all right—the Government do not have a bias against lending—but we are lending to the rich and to the most developed countries. We are not lending on a sufficient scale to the lesser or least developed countries.

There are other issues that the House has addressed on other occasions concerning the deteriorating terms of trade of Third world countries, the practice of IMF conditionality, and other matters, but in reality the three main parts of the motion are crucial.

Have the Government any target whatever for increasing official development assistance over the lifetime of this Parliament? Will they undertake substantial new measures to remedy drought in sub-Saharan Africa, rather than the minuscule measures which are a fraction of the debt needs and development needs of those countries? What action will the Government take internationally either to reschedule or to write off the debts of the poorest countries? I am not talking here about the conversion of loan into grant, because we appreciate that the Overseas Development Administration has a record for doing that with the least developed countries. It is the overall financial debt that is crippling those countries.

The Government have acted too late. They have failed to respond to warnings. They are, with other EEC Governments, directly culpable for the fact that a railway in the Sudan is not now functioning, and that another 1.5 million people are now suffering in addition to the 10 million migrants and the 100 million other people affected by the drought. The Government must learn the lessons of the famine and act urgently along the lines recommended in the motion. It is for that reason that I commend it to the House.