Foreign Policy — Debate (Continued)

Part of the debate – in the House of Lords at 3:18 pm on 26th February 2009.

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Photo of Lord Joffe Lord Joffe Labour 3:18 pm, 26th February 2009

My Lords, I join in thanking the noble Lord, Lord Marlesford, for introducing this debate. I have listened with respect to the vast experience and views of the noble Lords, Lord Hurd and Lord Wright, on the conflicting foreign policies of the Foreign Office and DfID. I am not competent to express a view on that. However, addressing poverty in the developing world is a key part of our foreign policy. I declare a interest as an ex-chair of Oxfam and I am indebted to it for a briefing for this debate.

The poor of the world are fortunate that our Prime Minister, who has led the way in the attack on poverty in the developing world, is also taking the lead in the forthcoming London G20 summit to broker a new global deal which will, I hope, benefit the developed and the developing worlds. I shall focus on what I believe the developing world hopes will emerge from the summit, which faces the challenge of responding to what is probably the world's most serious economic crisis since the 1930s.

There is a real danger that the significant gains made towards meeting the millennium goals by many developing countries could be wiped out as financial flows dry up and, as usual, the most vulnerable will be most at risk. The severity of the crisis means that Governments around the world, led by the United Nations and the G20, need to act together to address it.

In relation to the developing world, there are four key areas upon which the G20 should focus. These are delivering a rescue package for developing countries, tackling climate change, regulating finance to ensure stability and reforming global governance. These areas overlap to a certain extent with what is required by the G20 countries for their own economies.

I shall briefly touch on each of these areas, beginning with a rescue package. It is hoped that a fiscal stimulus and resource for developing countries should be set up as soon as possible through the World Bank and the IMF, and it should be available on concessional terms, delivered as budget support and be free from conditionality. Rich countries must also increase their aid levels to reach the agreed target of 0.7 per cent of GDP, and debt cancellation must be actively pursued. Naturally, this will require significant additional funding, and it is important that it should not be taken out of existing ODA budgets, otherwise there will be no net benefit.

In relation to climate change, without urgent action to curb greenhouse gas emissions, developing countries such as Bangladesh will be at great risk. It is hoped that the G20 rich countries will commit to delivering a fair share of adaptation finance to developing countries to help them avoid the worst impacts of climate change.

In relation to finance and ensuring stability, the G20 must ensure that the world financial system is under greater public control and is more transparent and accountable. Tax havens, to which much of the wealth of the developing world is illicitly channelled, must be tackled. Measures should also be taken to curb volatility and speculation in financial markets, particularly exchange rate markets.

Finally, there is a need to reform global governance. The crisis offers an opportunity to make the international system fit for the 21st century. This means having not only better regulation of financial flows, but more equitable governance and oversight at the international level, including the G20. The G20 includes the major developing economies, but excludes the least developed of them. It should be more inclusive and bring in broader representation. It was encouraging to learn, in the eloquent speech from the noble Baroness, Lady Amos, that NePAD and the African Union have been offered invitations to attend the London G20 summit. I hope that will continue in future.

The London summit is an opportunity to mark an historic break with the failed system of unfettered capitalism, and the start of a new system that seeks to make the market work for the benefit of all people and for our planet. The challenge is for our Government, led by the Prime Minister, to help make that happen.