Wednesday, 31 May 2000
Dáil Eireann Debate
Mr. M. Higgins: In the course of my remarks on this Bill I pointed to a number of significant assumptions which seem to run through the thinking on the International Development Association and the context in which it operates. One of the figures I cited concerns the pernicious effects of the globalisation of trade on income in some of the neediest areas. Without repeating myself, and summarising what I said the last day, when the benefits, or otherwise, of the Uruguay Round are calculated as regards trade, there is a net loss of $3 billion for Africa. The most significant gains were for the European Union followed by Japan followed by the United States. In relation to the ideologically driven liberalisation of trade, the Uruguay round brought increasing poverty and misery to a Continent like Africa.
It is interesting to reflect on the other figure I quoted, which is based on a United Nations development report as late as 1996. In the period between 1970 and 1985 when gross national product on the planet increased by 40%, the number of poor increased by 17%. The number of people included in poverty statistics has massively increased. Taking account of all UNDP reports, between 1965 and 1980, 200 million people saw their income fall. At a time when that statistic has been highlighted and a near revolution is taking place that is benefiting almost everyone, between 1980 and 1993 one billion people saw their income fall.
The effect of the new globalised order and its trade manifestation, through the Uruguay round, has been to create significant disability for Africa in particular, Latin America to a lesser extent and that proportion of the producing world that relies heavily on primary commodities. There is no evidence of an improvement in trade conditions for those countries. There is no evidence of a real increase in incomes there, although in some parts of the world where the IDA projects are in place  one can point to certain achievements. I am not taking from that.
There is a certain amount of perfunctoriness in the way in which IDA type motions come before different Parliaments. It is as if they can almost be waved through. This is not a negative comment about the contribution of the Minister or the Minister of State. The position is very much worse than it was. I will use the example of the Tobin tax to highlight that. The tax was proposed by Professor James Tobin, a Nobel laureate in economics. He proposed the introduction of a simple tax of 1% on speculative capital flows internationally, money that would be recycled in time to the countries that were in greatest need and it would be like, as someone put it, throwing a little sand into the machinery that is international global speculative capital flows. Global speculative capital is massively the beneficiary of the new technological revolution that enables such money to be moved at enormous speeds with terribly destructive consequences. I have not the time nor the inclination to go into that, but the example of the south east Asian economies in which more than $1 trillion of speculative capital can hover over an economy and be magnetised down, as it were, by speculative opportunity highlights my point.
Professor Tobin constructed what came to be known as the Tobin tax to attach to such capital flows. It will be debated at the end of June in the European Parliament. It has been dropped by the United Nations because the Helms-Dole legislation in the United States effectively prevents people from giving donations with tax benefit if a proposal interferes with international trade. The Tobin tax which started off with a flourish through the United Nations institutions effectively has been killed by that legislation, which prevents corporate and individual contributions, including the many beneficiaries to all the UN agencies, if such proposals entertained a discussion on the Tobin tax.
I mention that to puncture the air of perfunctoriness that sometimes attends the passing of IDA type motions in different administrations. Conditions have worsened in relation to international capacity and the UN's right to lead and to take an initiative. The trade benefits are not coming through to those for whom such conditions should be improved.
The debt relief promised, which is much less than that sought, has not been delivered. A significant component of aid is still tied aid and much of it has been deflected into hidden exports. Aid, relief and disaster funds need to be separated from ODA programmes so that they are clearly identifiable. All Members are conscious of two factors, a moral consensus to press forward on these issues but also the manner in which strong powers, particularly the members of the Security Council, have to be put under constant pressure to ensure life opportunities for people in those parts of the planet who so desperately need them, particularly in the Continent of Africa,  especially sub-Saharan Africa with its many problems where people are literally dying as a result of economic and health reasons.
Mr. Noonan: Fine Gael welcomes the Bill. We have no difficulty with the Bill having moved onto Report and Final Stages. It gives us an opportunity to reflect on some of the wider issues, as Deputy Higgins did. I want to raise an issue with the Minister of State on the manner in which the IMF, in particular, moves in and the base of public expenditure from which it operates to reconstruct the economies of very poor countries, particularly those of sub-Saharan Africa. There is only one model for running an economy. Any country moving towards the free market model must take the medicine of deregulation, liberalisation of trade, reductions in public expenditure and privatisation. That is the type of recipe being imposed on the economies of very poor countries. In giving that medicine, the IMF is working from far too low a base of public expenditure. In any of these countries, especially the very poor countries, of which there is a high incidence in sub-Saharan Africa, a new formula should be agreed for deciding the appropriate base of public expenditure before a country's debt must be repaid. The essentials of public expenditure must be separated and put into another fund that can be used domestically. One element of such a fund is the allocation of sufficient resources to provide universal health services for children. Very small amounts of expenditure on public health would save the lives of literally hundreds of thousands of children in sub-Saharan Africa.
A second requirement of such a fund is that provision should be made for universal primary education. Allocations to provide for universal primary education and universal health care, particularly for mothers and children, together with the normal allocations for infrastructural development and to keep the nuts and bolts of what were originally state economies going are required. If a new formula was agreed internationally before a country's obligations to repay its debt kicked in, such a module of expenditure could be used domestically for those purposes. It would have a massive impact on the lives of ordinary poor people in many countries in sub-Saharan Africa. It is not an easy formula. It would remove the obligation on certain countries to repay their debt. Such countries are so indebted that virtually all their exchequer resources have to be used for that purpose, which leaves little, if any, resources available for essential services. We should move in that direction.
I said in an earlier debate that Ireland could be compared to the Skibbereen Eagle in the sense of it keeping an eye on the Tsar of Russia, given that proportionately what we contribute is quite small. However, we have a moral authority that allows us to punch beyond our weight. We have a better forum now, as equal participants in the European Union, from which to have a better base internationally to punch beyond our weight  than we had a generation ago. We should use that base and our international leverage to make a real contribution to the international debate, which I believe we are doing.
In terms of resources, Ireland's ability, even when we move to a figure of 0.7 per cent, will not change the face of the world. However, we can make a contribution to the debate which is beyond our economic strength and beyond the level of resources we can contribute. I ask the Minister, in any of the international forums in which he or the Minister for Finance are involved, to argue the case for a new formula for public expenditure in the poorest of countries so that fundamental health care and education services can continue to be provided and enhanced.
Minister of State at the Department of Finance (Mr. Cullen): I thank Deputies for the contributions. It is reasonable to suggest, even though this is a short Bill, that a wide range of issues were raised on all Stages. I availed of the opportunity to respond on Committee Stage, even though there was not much of a debate, because I accept what both Deputies have said in the context of their deep interest in the subject. I too have a deep interest in it. My heart bleeds for Africa. I am one of the few Members who emigrated to Africa for many years in the early 1970s when I was 19 years of age. I know parts of it intimately. Every day I read the newspapers to see what is happening there. There are a number of reasons for the difficulties being experienced there.
I take Deputy Higgins's point, which was further amplified by Deputy Noonan, about how to deal with the issues. However, from my experience in the past three years in dealing with the World Bank, the IMF, the EBRD and so on, there has been a dramatic shift in the discussions and debates. Ireland has been central to that shift, although it may not be of seismic proportions. The question of how funds are spent and distributed, how loans are granted and so on has come to centre stage. It is interesting to listen to the contributions of other speakers who, even three years ago, would not have countenanced such arguments in the context of the social consequences of policies which, in a pure fiscal sense, were forced on countries and worsened dramatically the lot of people. In the past two to three years these issues have come on to the agenda and this is where Ireland has punched above its weight. The moral authority we brought to that argument and our incredible experience in bilateral relations we have had with Africa, in particular, has given us that authority.
The success rate of small financial projects in which Ireland has been directly involved and the consequential benefit that has accumulated in areas from a small contribution can be measured against the grandiose projects of some countries which involved massive sums of money but did not achieve anything. In some cases they served to worsen the situation. As has been said, Ireland  has that sort of authority. Even in the past three years the debate in this area has changed dramatically.
Deputy Noonan made an interesting point. I have not heard it put in such direct terms previously. He is correct. Two weeks ago I attended a meeting of the EBRD, which is perhaps a slightly different forum. The issues that have been specifically pinpointed in terms of health, education and the entire social agenda in the context of eastern Europe – I have visited most places in eastern Europe – are substantially advanced on Africa. Africa is light years behind. We have a misconception about eastern Europe; it is certainly not in the dark ages. There may be one or two bad spots but the potential for advancement at a rapid pace in eastern Europe is extraordinary. The point being made at the key forum in the IMF in regard to public expenditure is a good one and that has not previously been said in such specific terms as it was said in the House today, namely, that before the IMF or whoever seeks repayments under specific headings, public expenditure targets should be set to achieve a better standard of education and health for the nation. That is important.
Another aspect about which I feel strongly, and I have changed many speeches given to me in the past three years, is that of good governance. Internally, in so many of these countries, it is deplorable what despots have done to their own people. We have seen this time and again. I see Deputy Higgins looking at me. The world has a role to play in this. It is interesting from an eastern European context to see the countries that are making progress. Before looking at any figures, the underlying reasons for their progress are the lack of corruption, a definite commitment to good governance and a system which is trusted externally on a political level and by investors. Africa has been ravaged by the leaderships that have emerged. It breaks my heart to see what is happening in Zimbabwe where I lived, given the potential of that country when it was taken over by the African people in the late 1970s and early 1980s. It was capable of feeding not only itself but was known as the food bowl of Africa. All the grain reserves have been sold off for profit. There were droughts in Africa long before the 1990s. It needs planning, control and good people in power to implement such policies.
This Bill has opened up an advancement in this House of which I am proud in the context of where we are pushing the agenda. I take seriously what was said on Second Stage, Committee Stage and today and I will use my offices and ask the Minister for Finance to note the central points made in this debate.
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