Latin America

Part of the debate – in the House of Lords at 4:04 pm on 4 May 2006.

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Photo of Lord Rea Lord Rea Labour 4:04, 4 May 2006

My Lords, the noble Viscount, Lord Montgomery, has chosen an exciting time to discuss Latin America. He has also managed to bring what may be only a short burst of Latin American weather with him, which is rather nice. My credentials for joining the discussion are modest. I am only an emergency Spanish speaker, but I have over the years made five journeys to Latin America and visited 10 countries, including an IPU visit to Cuba.

My chief lasting impression of Latin America is of the stoical, poverty stricken but dignified and colourfully dressed indigenous people of the Andean region. Since the Spanish conquest in the 16th century, they have been treated as second-class citizens even where they form the majority of the population. There is still a persistent socio-economic hierarchy, with a small minority of direct descendants of the Conquistadores at the top—although their influence is diminishing—followed by "mestizos" of varying degrees of ethnic mix, with the fully indigenous people at the bottom. That is of course an oversimplification, but the parallel with South Africa and other settler-dominated countries is clear.

However, as almost all noble Lords have said, the political power structure is changing. In the past decade or so, government by military coup, which was the norm, has been replaced by government through the ballot box, although attempted coups have continued—the habit dies hard. However, so far, the change to more stable democratically-elected governments has not brought about much improvement in the lives of the less well off, and disillusion about democracy was until recently widespread.

Great inequality of wealth has persisted, although the region as a whole—as many noble Lords have said—is doing well economically, with oil and commodity prices at a high level. Small wonder then that Left-leaning governments with indigenous leaders and radical pro-poor policies—including re-nationalisation of energy sources—are increasingly being elected. When President Morales of Bolivia surprised the world three days ago by sending the army to take control of the gas industry, he was actually carrying out the programme on which he was elected by 55 per cent of voters, and, as my noble friend Lord Brennan pointed out, quite a lot of the other 45 per cent of voters were also in favour of this action. In fact, this was not an outright expropriation; the Bolivian Government are acquiring only a 51 per cent share in the industry and will pay for this—though the price has yet to be determined by negotiation over the next 180 days.

The surprise in Latin America is that the Left-wing governments of Venezuela and Bolivia have, so far at least, not been overthrown by coups or other methods organised by the CIA as has occurred repeatedly in the past, when any government a shade Left-of-centre were elected. In fact, an attempted coup did take place in Caracas in 2002, but was a signal failure because the army and a large number of the people remained loyal to President Chavez—even though he is accused of being a populist demagogue. There have been many events in the past half century, perhaps as many as 40, in which a Left-of-centre government have been overthrown in Latin America; the best known being Chile and Nicaragua.

There are of course more subtle ways of destabilising and eventually toppling Left-leaning governments who may be unpopular with certain powers in North America, such as economic squeezing. President Lula of Brazil lost some of his popularity because the financial strictures required by the international financial institutions caused economic hardship and prevented him carrying out some of the poverty reduction programmes that he and his party had intended. However, in a delicate balancing act, he succeeded in allowing many of these programmes to go ahead—a few, I am glad to say, have indirect assistance from DfID. President Lula retains popular support.

I hope that my noble friend will have time to outline the nature of development assistance that we are still providing to alleviate poverty in Latin America. He knows that, although direct bilateral aid has been withdrawn because of the middle-income status of Latin American countries, there is still extreme poverty in most of them, as Bob Blizzard pointed on Monday in Westminster Hall. Some excellent work, funded by DfID, had to be curtailed after the decision to concentrate aid on countries classified as poor. I do not need to go further on this matter; other noble Lords have discussed it.

The enormous advantage for the new wave of Left-wing regimes is that the leading nation among them, Venezuela, has vast oil wealth. It is heavy oil, which is more expensive to refine, but with world oil prices set high, that problem is less important. This enables Chavez to assist and encourage like-minded governments and presidential candidates such as Ollana Humala of Peru. This was the cause of a bad-tempered spat between thee two countries, resulting in the withdrawal of the Peruvian ambassador from Caracas. Chavez says a lot, as we have heard, and he does not mince his words, particularly about President Bush or even our Prime Minister, whom he has called a "pawn of imperialism" after the Prime Minister rather patronisingly said in another place that Venezuela should "abide by the rules of the international community", although he had not broken any. As has been mentioned, Chavez has developed a close relationship with Cuba and supplies it with subsidised oil. In return, Cuba is sending thousands of doctors to help set up and run health clinics in villages and barrios in Venezuela which previously had none. Cuba trains a surplus of doctors. In this respect, Cuba is rather like Scotland, which for many years exported doctors, plus engineers and whisky, while Cuba exports doctors, plus cigars and rum.

In the past few days, a new trade agreement has been signed between Cuba, Bolivia and Venezuela. It is known as ALBA—which is Spanish for "dawn"—Alternativo por las Bolivianos. This is being promoted as a socialist alternative to the Washington-backed Free Trade Area of the Americas. It contains clauses covering such matters as working towards the elimination of illiteracy and the expansion of employment.

I see no reason why British firms should not maintain or increase their investment in the new Left-leaning governments of Latin America. It is badly needed by the countries concerned. The terms offered may result in a reduced share of profits for investing countries when compared with prevailing or former high rates, but I am sure that fair profit margins will still be negotiable Almost every country in Latin America has a positive trade balance with the UK, so British exports should be welcome, whichever department of state promotes them. There are many British products of high quality for which we have historically built up a good reputation in Latin America. In particular, there is a huge need for expertise and training in a range of scientific, medical and other academic skills. I suggest that we are in a better position to provide them than China. I am sure that my noble friend will comment on this area.

I had intended to say a few words about the illegal drugs trade, but I see that my time is up. The matter has in any case been covered fairly fully by other noble Lords.