Private Members' Business. - Multilateral Investment Guarantee Agency Bill, 1988: Second Stage (Resumed).
Wednesday, 2 November 1988
Dáil Eireann Debate
Mr. J. O'Keeffe: Basically, out of this debate I want to see a commitment by Government to seek an all-party approach to agreement on a phased increase in our overseas aid, with a timetable agreed for the attainment of the UN target of 0.7 per cent. In the light of recent experience, that is probably the best way in which progress can now be made. The overseas aid programme funding had increased to around £45 million by the time I moved out of office as Minister of State for Development and over the period of time that I was in office there had been steady if unspectacular progress made towards the UN target. Now all that progress has been lost. The funding has been slashed by the present administration. Perhaps that would not be worthy of such utter condemnation were it not for the inordinate amount taken out of the ODA budget by comparison with other areas.
My general approach is that we must take the necessary steps leading to national solvency, but clearly an inordinate proportion was taken out of the ODA budget. What is left now is largely mandatory, funding that we have to pay anyway because of our membership of the United Nations and various subsidiary bodies of the United Nations and because of our membership of the European Community. It was the discretionary element of the ODA budget which came under the axe to the tune of about £11 million. That would indicate that it was a soft target, demonstrating a completely uncaring attitude to the needs of the hungry, the defenceless and the dying in the developing countries. It also indicates that the commitments made over a period of time and the undertakings given have not been observed.
While we all have different interpretations of how to progress towards the UN target, never was it envisaged, or indicated by any member of the present Government, that we would actually go into reverse and begin to reduce our aid. That raises the question as to whether it is considered that the needs of those countries are any less now or that there are fewer people dying of hunger and disease there. Or is it that there is an insufficient interest here in those problems? I believe very strongly that the answer to all those questions is no.
I referred earlier to the cynicism that has crept into the whole question of how we handle our official aid programme. It needs to be recorded that the attitude of the Government is perhaps typified by that of the present Taoiseach, in that in 1982 the Taoiseach failed to reappoint a Minister of State with responsibility for overseas aid, contemptuously dismissing such an appointment at the time as being both superfluous and supernumerary. Yet, in 1984, during our Presidency of  the European Community, at the height of the famine in Ethiopia, at a time when I was visiting some of the death camps there on behalf not just of Ireland but of the EC as a whole, the present Taoiseach, then Leader of the Opposition, had the gall to claim that the problem of famine in Africa was of such proportions that we should have a full Cabinet Minister here to deal with it. That is the kind of hypocrisy and cynical comment that does nothing for those who are seriously interested in the cause of the people of the Third World. It is very clear to me that the leopard has not changed his spots because the Taoiseach has been the Leader of a Government who have decimated the aid programme, who have put it back to the state it was in in 1981.
Those are not my words. They are taken from the script of a former Fianna Fáil Minister for Foreign Affairs some years ago. However those words are as apt today as when they were spoken. The only difference is that our response is so different. It is necessary that the present Government set out exactly what is our response. Does the 26th richest nation in the world have an obligation to the poorest of the poor, some of whom have an income per capita less than 5 per cent of ours? Is there an obligation to the people in those countries? Do we ignore the plight of those afflicted by natural and man made disasters in Bangladesh, Ethiopia, the Sudan and other countries of the world ravaged by floods, earthquakes, endemic poverty, civil and uncivil wars?
A further question needs to be addressed, that is on what moral basis can we claim what we regard as our entitlements to European Community support for the poorest regions of the Community, of which we are one, when we ourselves ignore the plight of those in a much worse  position than ours? That raises the question as to whether it is in our interest to accept that there is an obligation on the part of wealthy nations to assist the poor and the weak. One side of the coin is the fact that we use that argument at European Community level with the result that we secure a substantial flow of money, particularly through the Structural Funds which we hope will increase considerably in ensuing years. But, how can we legitimately claim that when, on the other hand, we are not discharging our obligations to those countries so much weaker than ours.
It is necessary to raise one other issue, that is that apart from the intangible moral benefits emanating from co-operation with our fellow men, we must question whether our future is not inextricably bound up with the developing world though not in circumstances such as occurred here, that these countries, we hope, over a reasonable period, will themselves have reached a stage of development at which trade with them and so on will be more and more in our mutual interests. Those are some of the questions that need to be addressed.
I do not intend to dwell on that point very much more other than to say that this is a country that committed itself to a new international economic order. We enthusiastically endorsed many of the recommendations of the Brandt Report and its theme of mutuality of interest. I suggest that the basis of that approach is as relevant today as it was at the time such commitments were given. Indeed, perhaps at a more mundane level, it is relevant also to point out that overseas aid does not constitute one-way traffic. There is a return to the country at many levels. There is also a return at a financial level. A recent report of DEVCO indicates the substantial overseas earnings, in the developing world mainly, of our semi-State bodies under the umbrella of DEVCO, now totalling almost £100 million. I am not one who would say that some of that would not have been earned had we not been involved in overseas development aid but I have no doubt from my experience that the fact that we  made a reasonable effort in relation to overseas aid considerably helped the efforts of people in our semi-State bodies to develop their consultancy and other business links in the developing world.
My overall approach as to why we should be involved is, at one level, related to the humanitarian aspect. There is also a political and an economic dimension. On all three scores I have no doubt that it is very much in the interest of this country, that it is the right and proper thing to do, that we set about restoring what has been lost in that area, that once again we get going on the path towards the UN target.
There is one last point I want to make, that is in relation to the attitude of the general public. I am not speaking in general terms because, when I was in office, through the advisory council, we had a survey conducted on the attitudes of our people. We wanted to discover our people's views on the causes of poverty and their choice of likely solutions to those problems. In addition, an attempt was made to discover the general attitude to development aid and ascertain whether this was mirrored by people's personal efforts and by their attitude to the Government's aid programme. It was significant that that detailed survey indicated that there was a very favourable attitude towards aid in the Third World, expressed by 91 per cent of the people surveyed. This positive orientation was further reinforced by the very high degree of personal commitment exhibited because, of the people surveyed, it was clear that 93 per cent had themselves helped.
That is the background against which I put the proposal to Government arising out of our discussion on this Bill. The answer is that in this House we attempt to establish all party agreement, with the initiative emanating from the present Government. The aim should be to seek an agreement on a phased increase in our overseas aid. Furthermore the aim should be to seek all-party agreement on a timetable, agreed by all, for the attainment of the UN target. In that way the whole  question would be taken out of the political arena. It gives me no great joy to come into the House and castigate the Government on their approach. I would much prefer to join the Government in an approach, the benefits of which would be clearly seen in our official development assistance programme and the results of which would be there for many years to come.
I approve of the Bill and it was right and proper that when Deputy Bruton was in office, he ensured that there was a rapid response from our colleagues in the European Community. When it is passed, the Bill will be a useful addition to the range of instruments available to those who are anxious to help people in the Third World. However, it will not work miracles.
Mr. J. Bruton: I strongly support the Bill for reasons which have already been outlined in the debate. There are two ways of helping Third World countries to deal with their problems. One is to give them the opportunity to help themselves by producing more goods and selling them overseas and the other is to give them money in the form of aid to try to keep them satisfied in their present situation.
It is far more preferable to opt for an approach to Third World development which gives them an opportunity to produce and export their goods. It is also very important to encourage Third World countries to learn from the mistakes of the richer countries in so far as achieving economic growth is concerned. The lesson learned in the developed world since the last war has been that centrally planned economies do not work, that politicians deciding what you should invest in is a recipe for failure because virtually all the countries in Europe that have had politically led investment policies where governments decided to invest in steel mills, ship building facilities and other big government schemes, where all the political, constituency and local pressures were brought to bear to get politicians to make what were essentially market decisions, led to disaster.
 We have huge problems in Europe as a result of that type of decision making by governments in Europe and it is very important that Third World countries should be discouraged from making similar mistakes. Indeed, since the last war, some of those countries followed our approach. India, for example, decided that it should get into heavy industry in a big way, with disastrous results. Increasingly, Third World countries now realise that they will not expand on that basis but on the basis of going for private sector investments which are related to the prevailing market rather than relating to the vision in the eye of a politician. MIGA is particularly important because it encourages private sector investment in Third World countries. The present approach of giving aid in the form of giving it to governments can, unfortunately, be a source of corruption in some countries. The aid, because of under-developed political structures, does not go where it is supposed to but is used to line the pockets of those who are in political power in those countries. That is not the intention of the donor but it is frequently the result. If, on the other hand, you go for the approach contained in MIGA, whereby you encourage private sector interests in the developed world to put their money on a commercial basis into Third World countries directly, then you avoid all the difficulties of being tangled up with political problems in the countries concerned.
It is extremely important that we are taking this step of encouraging autonomous commercial development in Third World countries. There are, however, a number of difficulties in this regard. One major difficulty is the fact that many Third World countries are so heavily in debt that the interest rates applying in them are such that local commercial enterprises cannot start. Governments in such countries may be committed to repaying debts, repaying money which they put into prestigious and wasteful projects. The position now is that private sector investors in Third World countries cannot establish themselves and take the opportunities that are there. I will give  an example of this which is contained in the recent World Bank report which said that the growth rate of the real GDP in 17 heavily indebted countries needs to be, on average, at 4 per cent a year for the next ten years if they are to deal with their debt problem. This will permit a per capita growth in consumption in the countries concerned of only 1 per cent. In other words, for every extra £4 they produce they will be allowed to keep £1 and the other £3 will be spent in debt servicing to assist the solvency of the banks of the world.
We should ask fundamental questions instead of discussing giving a little more aid. The World Bank report also made it clear that, for the most heavily indebted developing countries, the debt overhang is so constrained that corrective domestic policies alone will not produce a viable solution to their problems. In other words, they are bankrupt in commercial terms, they cannot get out of their present situation. Whereas a company or individual in that position can go into liquidation, be declared bankrupt and pay whatever it can to its creditors — perhaps 50p in the £ — close the books and start again with whatever controls are necessary to ensure that it is not done in an abusive fashion, it is not open to these dreadfully poor countries who are heavily burdened with debt to be declared bankrupt.
The Minister has been and will continue to be in a position to influence the policies of world institutions which need to address the question of whether there should be fundamental legal changes in the position in regard to sovereign debt. The present adjustment programmes which are being engaged in by these Third World countries are, in some cases, incapable of ever achieving their objectives. Simply giving them more money, on even softer loans, does not solve the fundamental problem of some of these Third World countries. They will never get out of their difficulties. Would it not be better to put an end to their agony? I know this has implications for the balance sheets of Continental Illinois and some of the other big banks in America and  Europe who are very widely and heavily exposed to Third World debt. Any suggestion that this debt might not be collectable could lead to problems for those banks. On the other hand, it must be said that those banks have already made substantial write downs of their debt as far as Third World countries are concerned. Some of them have written off half the debt and nothing happened. However, they are still trying to collect the entire amount even though, on their books, they have written off half of it.
In respect of these very poor countries, is there not a need for, in the context either of the international DAC negotiations, at the annual meeting of the International Monetary Fund or some other place, an orderly solution to find a way of importing into international sovereign borrowing some of the escape mechanisms that exist in ordinary commerce for companies who get into severe difficulties? That suggestion may sound extremely radical in the context of this House but it is not by any means, as it is being widely canvassed at present in international development circles. I would be interested to hear the Minister's attitude to that.
The Third World problem is in some countries but not in all, and the Third World is far from being uniform in its configuration. Some parts of the Third World have in recent times been doing quite well, others quite deplorably. The World Bank has estimated that between 340 million and 730 million people in the world are malnourished, that in the 36 poorest countries in the world during the seventies the food consumption per head fell by 3 per cent. In other words, in 1980 they were eating 3 per cent less than they had available to eat in 1970. That is appalling.
Also the share of developing countries in world agricultural trade is falling. They have reduced their share of agricultural trade. Fourty-four per cent of world trade in food was in the control of developing countries in the 1961-63 period. That had fallen to 34 per cent in the 1982-84 period.
Conversely, because of policies like the  CAP which subsidise agriculture in the developed countries, the share of the industrial market economies in world agricultural trade rose between the two same periods from 46 per cent of the total to 62 per cent of the total. In other words, our share of world agricultural trade increased by 15 points whereas theirs fell by 10 points. That is because a great deal of money is being devoted to encouraging food production in the parts of the world where people have too much to eat and are concerning themselves with going on diets — nobody in this House at the moment needs to do so more than myself — and at the same time in the countries of the world where food is needed most their governments are discouraging food production. They are putting all their emphasis on industrialisation and are taxing agriculture. The very countries in which starvation is taking place are taxing their own agriculture in order to subsidise industry. It is truly perverse. They are taxing agriculture to subsidise industry, because the agricultural markets of the world are closed to them, whereas the industrial markets of the world are open to them. The agricultural markets of the world are closed to them because countries like Europe and the USA are maintaining protectionist agricultural policies, and, let it be said, no country is more supportive of such policies than Ireland, for obvious reasons. Fifteen per cent of our population is working in agriculture. I figure there will be a major change in this because what is happening just does not make economic sense.
I think we are going to see in the world trade negotiations which will end by 1990, the Uruguay round, some of these policies that are keeping Third World countries out of the world food market under very severe pressure because the Americans have made a proposal that all these subsidies be abolished. The CAIRNS Group are supporting those and I believe that the developed world will do so, which will leave Japan and Europe, the other two industrial market economies who maintain agricultural protection, rather isolated in the world.
One might say that even to utter such  sentiments here in this House is treasonable to the interests of Irish farmers, and I represent Irish farmers or at least many of them, in the Dáil. However, I do not think the interests of Irish farmers are assisted by encouraging them into certain types of production, buying land for example, and investing at considerable cost to themselves, under the aegis of policies which depend solely on politicians to keep them in being. That is the case with agricultural prices at the moment. They are politically determined prices depending entirely on political will. They are not depending on the economic fundamentals. That means that farmers could find, if the political climate changed, as it could in the world GATT negotiations, that investments they had made that were worth £50,000 at the time they made them with hard earned borrowings and savings are worth only half what they put into them because the agricultural prices situation has changed as a result of a political decision. Therefore, is is not doing farmers a favour particularly to encourage them to assume that these policies are immutable.
Certainly, we have the difficulty here of speaking to two audiences. If we say here to our own farmers that these policies may be changed and then go out to Europe and try to say they should not be changed, clearly we are in a difficult situation in regard to negotiating because people will say, “but you are telling your own people back home that you might have to give in and you are saying here that you cannot give in.” We must find a way of getting ourselves out of this difficulty. We must find a way of gradually readjusting our agriculture to normal international trading conditions, because the type of heavily protected agriculture we have “enjoyed” since the last war is historically rather unusual. The general trend has been for relatively free trade in agriculture. For instance, the World Bank has estimated — this is an interesting statistic in the light of what we have heard about world aid that has been given here to Third World countries — that the OECD countries spent $27 billion during the 1982-84 period on official  development assistance. However, they estimate that a global liberalisation of agricultural policies would confer benefits amounting to $64 billion on both the industrial and the developing countries, in other words twice as much of a benefit as the total official development assistance being given by the OECD countries. They say further that the biggest gainers from expensive support systems for agriculture are not the countries that give the support, like Western Europe and America, but the Eastern European non market economies who are able to get butter for half nothing, for example, under these policies.
We need to look as a country very seriously at these agricultural trade issues in the medium and long terms because the problem will not go away. It has serious implications for food production in Third World countries because if their farmers cannot export their surplus food production in the years when they have a surplus they will not produce it at all. That is why we have got to create something nearer to free trade in agriculture if the world hunger problem is to be overcome.
There is no country in Europe for which that has more serious adverse implications than Ireland, but it seems to be a trend that is there and we are not going to be able, simply by protesting about it, hearing nothing, seeing nothing and objecting, to stop it. I hope the Minister will be able in his response to indicate the view of his Department to the world development report of the World Bank which addresses all of these issues, and I am conscious of the fact that he is a Governor of the World Bank which produced this report.
To revert to the provisions of this Bill, I would like to ask the Minister if the liabilities of Ireland are strictly limited to the amounts subscribed and on call or is there a possibility that any further liabilities could arise? Does the Minister expect that there will be any Irish companies that will be making investments under the guarantees being provided by MIGA and what steps will he or anybody in this country be taking to encourage the  Irish private sector to make investments of this kind? We have very substantial overseas investment now by Irish companies, for instance, in North America. Is there any possibility that some of that could be channelled to appropriate projects in the Third World countries, assuming that these are profitable projects?
Would the Minister explain in greater detail how the arrangement has been made in regard to voting in the MIGA, the purpose of which would be to ensure that there would be no groups of countries in a permanent minority situation? The Minister referred to this in his speech. He said that the voting power would be split evenly between groups, donors and recipients but he also went on to explain that a system of supplementary votes will ensure that the position of the minority groupings in the MIGA will be protected. It sounds extremely complicated and I wonder how it will work in a situation where one has majority rule but with supplementary arrangements to ensure that the minority do not lose. Will there be a total institutional paralysis? Will decisions be capable of being taken at all under such arrangements? I would also like to ask the Minister if he is satisfied that the International Finance Corporation, which itself is given the role of making sure equity investment in Third World Countries, is working effectively.
Mr. J. Bruton: Also, what criteria are being used for these equity investments and is the Minister satisfied that more could not be done in this area? Would he consider that perhaps Irish authorities might consider encouraging relevant investment agencies in this country, such as the National Development Corporation, to make equity investments in the Third World rather than have all our assistance given in the form of aid as it is now given? Is this something that he would consider to be a redirection of our own domestic policies which would be worthwhile?
 In conclusion, the main point I would like to make is that this system, which encourages investment in Third World countries, will only work if the markets are open to the Third World countries to export the results of that investment. Investment by the IDA makes no sense unless companies have the ability to sell what they are producing. That same consideration applies equally in Third World countries. It is the obligation of developed countries like Ireland to concern themselves just as much with opening up markets to Third World countries to sell what they produce as it is to invest in giving them the capacity to produce. It is a recipe for disaster simply to give them the money to invest in production unless we are able to open up the markets to them. This applies not just in agriculture but also in areas such as textiles where we have a multifibre agreement which keeps clothing from Third World countries effectively out of large parts of the developed world. Clothing and agriculture are two of the few areas in which an unskilled workforce can engage in traded activity. There is no point in saying to the Ministers for Industry and Commerce of some of these countries that if they want to get into the production of semi-conductors or computers there is no obstacle and that they will be let in tariff free. The fact is that their workforces are not capable of doing this; they are capable of producing food, clothing, shoes and a few other relatively simple products. Yet they are the very ones that we keep out of our markets. My policy so far as Third World development is concerned is a policy of trade rather than aid.
Mr. T. Fitzpatrick: My contribution will be very short but I want to put on record a couple of things I feel very strongly about. The object of this Bill is to enable this country to ratify a convention which is setting up an insurance agency which will encourage investment in the Third World by the better-off developed countries. It proposes to encourage these countries to set up industries in the Third World by providing this insurance fund  which will guarantee the investing companies against the losses incurred by activities outside the economic sphere, like civil strife, war or that sort of thing.
The object of this Bill of course is a good thing. In so far as it goes it is laudable and it is to be encouraged. The amount of money we are committing ourselves to invest is something like £2,750,000 towards a capital base of £1.082 billion but of that £2,750,000 only 10 per cent would be paid in cash and the rest would be paid by instalments or some other way. I honestly believe that this is an attempt to salve the national conscience because of our gross failure and miserable performance towards providing relief for the Third World.
As Deputy Bruton told us, help can be given to these undeveloped countries in two ways, first, by training and setting up industries such as this Bill will encourage and, secondly, the direct way, of providing food and money to purchase food to keep body and soul together in these unfortunate people. Down through the years we in this country who are comparatively well off have behaved in a miserable way in the context of playing our part towards looking after these people. It is all right saying that we are going to train them and that we will set up industries there to get them working. That reminded me of Question Time today when we were talking about dental treatment for young children at school. The Minister for Health conceded, so far as I could see, that there was a big problem here. He conceded to Deputy Andrew Boylan that there was something like seven years waiting time. His solution for this problem was to get in touch with the Dental Hospital in Dublin to get dentists trained, to recruit them and to get them into the field. In the meantime we will have thousands upon thousands of unfortunate children with malformed gums, with crooked teeth, going through the world with this handicap, handicapped so far as their appearance is concerned, handicapped so far as eating and talking are concerned and in so far as getting jobs is concerned.
However, the plight of the unfortunate  infants with the huge tummies who go without food is more serious because not only will they have physical handicaps but they will probably die of starvation. The Government, and their predecessors, have not been generous as far as aid is concerned. While the last administration did not behave as badly as this Government they were not great either and I was associated with them. However, I understand that the Government reduced the cash contribution to Third World countries last year and this year at a time when they spent money generously in other ways.
I have no doubt that I will be accused of introducing political argument into this debate if I say that we are spending the proceeds of the national lottery as if we had all the services we require and as if the £70 million or £80 million coming from the lottery was a bonanza, a windfall or a pools win we did not know how to spend. In my view we are neglecting our duties although we take a lot of pride in ourselves on the world scene. We project ourselves as a learned country, a nation to be admired on the sports field and one responsible for sending missionaries throughout the world. The amount of money required for Third World aid would not make us any worse off than we are but it would do a lot of good for Third World countries.
It is important that we contribute to these programmes for the example we would give. If we played our part and attained the target set for us by the UN — we are not near it and we do not look like reaching it — we would encourage other countries to act in a similar fashion. We could point out that our country, which does not have great resources, is discharging its duty as best it can. By our example we would be shaming other countries into following us.
I accept that good example will not do a lot for the starving children that we see on our television screens. We switch off such programmes because we are ashamed to look at those pictures. We are not comfortable when such pictures are shown on television and we either leave the room or turn off the set. The  amount of money we are asked to give might not make a lot of difference to the starving children but we should at least discharge our obligation and set a good example. We should remember that those unfortunate children will never develop to enjoy the benefits of anything that is contained in the Bill. Those children will die within a few years, if not months.
Minister for Finance (Mr. MacSharry): I should like to thank those who contributed to the debate. At the outset I did not think so many Members would be anxious to contribute and in their own way they all made important speeches. I should like to be associated with the remarks made about Deputy John Bruton who, in his capacity as Minister, promoted and supported this development. Members will agree that most of the debate has centred on Official Development Assistance and that very little, with the exception of a few points, referred to the Bill. I will deal with some of the points raised in the debate bearing in mind that we have a time constraint. I may not have time to deal with some of the important questions raised. I should like to tell the House that £275,000 of the £2.75 million will be counted as ODA allocation. Deputy John Bruton raised questions about the £2.75 million and I should like to tell him that that is the maximum payable under the Bill but it is unlikely that the figure will go as high as that.
Mr. MacSharry: No. Deputy John  Bruton also asked if Irish companies could become involved and I should like to tell him that they can, through the Government, as is the case in other countries.
Mr. MacSharry: I will deal with the questions of voting rights and what the investments mean for poorer countries later. Deputy De Rossa asked when the moneys would be paid and the answer is next year. He asked why we were involved in category 1 and the reply is that that is the way we opted. He pointed out that Spain, Portugal and Greece were in category 2 and that is what they opted for. In fact, Spain have since opted as a category 1 country.
I was asked how much investment under MIGA will benefit developing countries. I should like to tell the House that MIGA investment will not be aid. It is expected that it will be commercial in nature and will show a profit to the investor. It is expected also that the investment will be of benefit to the host country. There is provision that MIGA can insure an investment only after the host country approves it. In other words, the interests of the host country are taken into account in the operation of MIGA. There was a great deal of talk about investment generally and why it was necessary. In my opening remarks I pointed out that investment flows to capital importing countries peaked in 1981 at $14 billion and fell sharply to $10 billion in 1983 where it has remained since. One can see the enormous impact that must have had on the capital importing countries and that is why investment is necessary. Notwithstanding the fact that  Deputy Michael Higgins might be concerned about the contents of my speech, I began to think during the course of his address that he had not very much to say other than to condemn the speech and the form of words used therein. It is important that every Deputy should realise, regardless of what philosophy they follow, that in order that money is invested there first must be a gilt-edged investment record, and the investment must make a profit. This applies whether the money is invested in this country or in the Third World. In a situation which does not allow that kind of atmosphere to exist investment will not take place.
Mr. MacSharry: MIGA is trying to overcome that problem in many instances throughout the world. Because these conditions do not exist, the investment opportunities are not taken. We have to try to encourage private investment in these areas because they need the investment just the same as everybody else, regardless of the philosophy they pursue. Deputy Michael Higgins took exception when I said:
Mr. MacSharry: That is the position. Many countries represented at the World Bank and the International Monetary Fund are really anxious to encourage people to invest in their economies. This legislation will encourage that. We are quite satisfied that it will enhance investment in these areas.
It is envisaged that industrial and developing countries will be fully equal partners within the organisation of  MIGA. That is reflected in a point that has been raised by many people about the voting powers, and I will come to this in a moment.
I have already said and I want to emphasise it again because it is important in the context of what Deputy M. Higgins has said, that the important feature of MIGA's guaranteed operation will be that the proposed investment must first be approved by the host countries before any contract of guarantee may be concluded. This will give the host country an opportunity to evaluate the investment and it will also ensure that it is fully in accord with its development needs. It is important to put those points on record again notwithstanding the fact that I already made them in my initial remarks.
Because of the technical nature of the voting arrangements, I think the best response I can give is to read from the commentary on the convention establishing the multilateral investment guarantee agency on the question of voting, adjustment of subscriptions and representation:
The voting structure of the Agency reflects the view that Category One and Category Two countries have an equal stake in foreign investment, that cooperation between them is essential, and that both groups of countries should, when all eligible countries become members, have equal voting powers (50/50). It is also recognised that a member's voting power should reflect its relative capital subscription. The Convention, therefore, provides that each member is to have 177 membership votes plus one subscription vote for each share of stock held by it (Article 39 (a)). The number of membership votes is computed so as to ensure that if all Bank members joined the Agency, developing countries as a group would have the same voting power as developed countries as a group. In order to protect the minority group before such equality is reached, this group would receive, during the three years after entry into force of the Convention, supplementary votes  which would allow it to have as a group 40 per cent of the total voting power. These supplementary votes would be distributed among the members of the group concerned in proportion to their relative subscription votes and would be automatically increased or decreased, as the case may be, so as to maintain the 40 per cent voting power of the group (Article 39 (b)). Even during the transition period, such supplementary votes would be cancelled whenever the group reached 40 per cent of the total voting power through subscription and membership votes. In any case, supplementary votes would be cancelled at the end of the three year period. During this three-year period, all decision of the Council and the Board would be taken by a special majority of at least two-thirds of the total voting power representing at least fifty-five per cent of total subscriptions, except if a specific decision was subject to a higher majority under the Convention, in which case, the higher majority would be controlling (Article 39 (d)). An example of the latter would be certain amendments to the Convention (Article 59 (a)).
Questions were raised about the monitoring of MIGA operations and projects. The operation of MIGA will be monitored on a continuing basis by its board of directors. We shall be kept informed of all developments and Ireland's adviser to the constituency's executive director will keep a particularly close watch on matters. Deputy Flaherty said that the convention would only help middle income countries. I refute that and say it will help all developed, under-developed and developing countries.
I will not give a detailed reply to Deputy Bruton's questions about the methods available to sovereign borrowers of a type similar to those operating  in the commercial markets. I would welcome the proposals made at the Toronto Summit for a menu of options aimed at reducing the debt burden of the poorer countries. There are different options required depending on whether it is a middle income or less developed country.
We have had a great deal of talk about official development assistance but I would like to put on record that we have honoured all our commitments in this area this year and last year. We will pay out £32.6 million in 1988 and £33.7 million in 1989. In 1989 we will have at least £1 million extra to spend on new projects in these areas.
When Deputies made their contribution about what we can do for the developing countries in the Third World generally, everybody who spoke said all were in favour of fiscal measures, financial control and order in the public finances and so on. We had that already on the International Development Association Bill earlier this year and we hear it repeated tonight but not one Deputy has said where we could get the extra few million pounds——
Mr. MacSharry: In the Deputy's contribution to this debate he did not suggest any way in which we would find an extra pound to give to development aid. At the same time the same Deputies came along on this very night and voted on the Health Estimates. Demands were made in this House last week for funds to meet the flood disaster in parts of this country, not to speak of the Third World. We are all concerned about the Third World. However, we have to be realistic and, unfortunately, too many people come into this House and deal in isolation with the matter before the House. They are for proper financial control and the savings that need to be made but not to hit them. We will all be wise in the future and perhaps some of the suggestions may be——
Mr. MacSharry: We have already done all we can in the context of budgetary adjustment policies that have been adopted since 1987 in all areas and this has necessitated a restrictive attitude to overseas development assistance as well as to other domestic expenditure. We are all familiar with the budgetary difficulties which successive governments have faced but few have done anything about them. It is very easy for people to say we should do more. In this regard nobody would like to do more than myself. When we talk about what we are doing in this area I think it is only right to put on record especially when we compare ourselves to other countries that everything we give is given in grant form which is non-refundable. Many of the countries that are held out to us as  examples that we should try to follow are giving a mixture of both repayable loans and grants. These repayable loans for which high interest is charged have put poorer countries into the difficulties which were described here this evening. Everything we do is on the basis of good investment in good projects for the benefit of the people concerned.
It is a good thing to recall that now and again. Even though it has been mentioned by Deputy Higgins it is important because what we are dealing with here is not just the taxpayers' money that is channelled by the Government to official development assistance but also the massive contributions that are made by the people at large to the various organisations and non-governmental agencies such as GOAL, Trócaire, Concern and so on which amounted to something of the order of £16 million in 1987. Added to what the Exchequer gave of taxpayers money this would have brought our contribution up from 0.22 per cent of GNP to 0.31 per cent which would put us way up in the category. Some of the countries which we are compared with do not have organisations such as GOAL, Concern or Trócaire doing this excellent work. It is important that we put everything in context.
I meet many people here in Ireland who are very concerned about the way certain spokespersons continue to decry the great efforts that are being made with a combination of both the non-governmental and the government agencies. It is about time we stood up on our feet and told the world at large that we are doing all we can as a people in the circumstances in which we find ourselves and we want to do more. What we should be doing is encouraging our neighbours, particularly those in Europe and in the Americas, to do much more, as they can do, and to come up to the level of commitment that is there from the Irish people both directly and indirectly. It is important to put that on the record.
I do not think it is for Deputies to come into this House and say that we are disgracing ourselves or that we should be ashamed of ourselves or embarrassed  about what we are doing. That is wrong considering all that we are doing not only through this House but through the assistance we give to the non-governmental agencies who are operating as well. There is much more I could say, a Cheann Comhairle, but it is only right, as the House agreed to take all stages of both this Bill and the motion, that I leave it at that at this stage. There were some other things I could have covered but if the House agrees we should move on to the other stages of the Bill.
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