Development Banks Bill 2005: Second Stage.

Thursday, 15 December 2005

Dáil Eireann Debate
Vol. 612 No. 70

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Minister of State at the Department of Finance (Mr. Parlon): Information on Tom Parlon  Zoom on Tom Parlon  I move: “That the Bill be now read a Second Time.”

The Development Banks Bill 2005 provides for Ireland’s future membership of the Asian Development Bank, the extension of the activities of the European Bank for Reconstruction and Development, EBRD, to include Mongolia, and amendments to existing legislation governing Ireland’s membership of several multilateral financial institutions to facilitate Ireland in meeting its obligations to those bodies.

Membership of the Asian Development Bank, ADB, is an important element of Ireland’s strategy to join several regional development banks, which was recommended to the Government in the 2002 report of the Ireland Aid review committee. Membership of the bank will contribute significantly to Ireland’s bilateral development programme in the region, providing further impetus to the role played by Ireland in supporting economic development and social progress in Asia, and in particular reducing poverty.

The Asia strategy responds to the need identified for a concerted and strategic approach to the development of trade with Asia. Membership of the ADB was identified as a key objective of the Asia strategy. Henceforth, China and other Asian countries will, to a progressively greater degree, influence political and economic developments throughout the world. Ireland’s mem[1137]bership of the ADB will provide an opportunity to strengthen Ireland’s voice and contribution to Asian development. It will confer economic benefits in providing greater opportunities for Irish companies and consultants to tender for projects funded by the ADB and in helping to develop greater awareness of business and commercial opportunities in Asia. The Government’s primary motivation, however, is our belief that Ireland should, building on the progressive improvements in our national prosperity, deepen and widen its contribution towards helping the less fortunate people of the world improve their position.

The Asian Development Bank is a multilateral development finance institution dedicated to reducing poverty in Asia and the Pacific. It aims to improve the quality of people’s lives by providing loans and technical assistance for a broad range of economic and social development activities. It was founded in 1966 to promote social and economic progress in the region and to make loans to more developed member countries at market rates of interest. The ADB is owned by the existing 64 members, of which 46 are from the region and 18 are non-regional members, including EU states. It is a well established and highly respected development agency fostering progress in the Asia region.

Japan and the United States are the equal largest shareholders, each with almost 16% of the bank’s total subscribed capital. I will outline briefly the governance and management structures of the bank. Each member country nominates a governor to the board of governors, often the Minister for Finance, to vote on its behalf. The board of governors meets formally once a year at the ADB’s annual meeting. They elect the president for a term of five years. Four vice-presidents are appointed by the board of directors on the recommendation of the president. The board of governors also elects the 12 members of the board of directors. Eight are elected by member countries from within the Asia-Pacific region, and four others are elected by member countries from outside the region.

The board of directors performs its duties full-time at the ADB headquarters in Manila and holds formal and executive sessions regularly. Members are arranged in constituencies headed by one of the 12 directors. Ireland will, after membership, join an existing constituency as part of a group of members from outside Asia. Ireland will not have any permanent staff assigned to the ADB.

The scale of the bank’s operations is very significant. In 2004, the bank’s loans amounted to $5.3 billion. An excellent and timely example of the work of the Asian Development Bank, as we approach the first anniversary of the disaster, is its response to the Asian tsunami. The bank moved rapidly to assist those countries most directly affected by the disaster, providing assistance of more than $750 million. It established a [1138]$600 million Asian tsunami fund and identified $175 million in funding to be redirected from ongoing projects and programmes, bringing the bank’s total financial commitment to $775 million.

Indonesia, the Maldives, Sri Lanka, and India requested the ADB’s assistance in their rehabilitation and reconstruction efforts. In those countries the bank’s assistance packages support disaster management, help to restore critical infrastructure such as water supply, sanitation, solid waste management, power, agriculture and fisheries, and rehabilitate and reconstruct roads and railways. Disbursement priority areas include housing reconstruction, micro-finance for livelihoods, and coastal protection.

The support of the bank, alongside national efforts and the work of the international community, has made an enormous contribution to the recovery of those countries severely affected by the tsunami. More recently, the Asian Development Bank has been playing a significant role in the earthquake disaster in Pakistan. The bank has already completed a preliminary damage and needs assessment report in association with the World Bank. That estimates that Pakistan needs approximately $5.2 billion to implement a relief, recovery and reconstruction strategy effectively. Of that, $3.5 billion is for physical reconstruction of housing, schools, health facilities, roads and other public infrastructure.

The Asian Development Bank has already established a special Pakistan earthquake fund, with an initial contribution of $80 million. The fund is similar to that set up by the bank in response to the tsunami. It will pool and promptly deliver emergency grant financing for projects that support immediate reconstruction, urgent rehabilitation, and other associated development activities. In addition, the bank has announced that it will provide approximately US$1 billion in concessional support for the rehabilitation and reconstruction of earthquake-hit Pakistan with a focus on transport, power, health and education, and governance and institution building.

The initial cost to Ireland of entry to the Asian Development Bank will be in the order of US$40 million or €33 million, depending on the rate of exchange prevailing at the time. This is made up of the following commitments which will be assumed by Ireland: a 12,040 shareholding in the ADB, of which 847 will be paid-in capital shares, at a cost of US$10 million or some €8.4 million, and 11,193 will be callable shares. This is the shareholding structure required of new members from outside the region; an initial contribution of some US$28.046 million or €23.102 million to the Asian Development Fund, which is a key resource and a major instrument of concessional financing available for development from the ADB; and an initial contribution of some US$2 million or €1.6 million to two trust funds operated by the ADB which support specific objectives.

[1139]It is proposed that Ireland’s contribution to the bank’s share capital and to the Asian Development Fund will be paid in equal instalments over four years. A once-off payment will be made into the two trust funds, namely, the Governance Co-operation Fund and the Gender and Development Co-operation Fund.

The Governance Co-operation Fund supports government-led governance reform activities to improve transparency, accountability, predictability and-or participation.

The objective of the Gender and Development Co-operation Fund is to promote gender equality and women’s empowerment in the Asia Pacific region, and to implement programs and projects to narrow gender gaps in order to meet the millennium development goals. Ireland will also have to give the conventional legal immunities to the ADB which other international agencies have in respect of staff and other matters.

The House will wish to note that at the UN summit in September of this year, Ireland recommitted to achieving the UN target of 0.7% of GNP for overseas development assistance by 2012. Given current economic projections, this implies a tripling of Ireland’s ODA above current levels. Fulfilling the financial obligations which membership of the ADB entails will help achieve the objectives set for the coming years.

I will now refer to the European Bank for Reconstruction and Development, of which Ireland was a founder member. The EBRD is a multilateral financial institution established in 1991 following the collapse of communism. It was a response to the recognition that the emerging democratic states in central and Eastern Europe and ex-Soviet republics required significant investment in businesses and financial institutions that underpin the development of market economies in 27 countries of operation from central Europe to central Asia. In 2004 alone, the bank invested €4.1 billion in 129 projects. Investments are designed to foster and accelerate the transition to open market-oriented economies and to promote private sector development. The span of operations of the EBRD encompasses some of the less developed countries in Europe and central Asia.

Mongolia lies in the heart of the Asian continent and has existed for decades as a buffer state between the Soviet Union and China. Amid the collapse of communism and the Soviet Union’s disintegration, Mongolia underwent rapid change. In January 1992, a new constitution was adopted that renounced socialism and made Mongolia a republic with parliamentary government and a directly elected president. Mongolia has remained neutral in international affairs.

Until 1990, Mongolian economic development had been directed by a series of Soviet-led central plans. Since then, Mongolia’s economy has suffered substantially due to the withdrawal of Soviet aid for development. At the time of establish[1140]ment of the EBRD, Mongolia was neither part of the Soviet Union nor a founding member of the bank.

Since Mongolia’s needs for assistance are consistent with the needs generally faced by the EBRD’s countries of operations, it was deemed appropriate that Mongolia should become a member of the bank. This took place in October 2000. Since early 2001, the EBRD has been providing technical assistance to Mongolia, using donor funds made available through the Mongolia Co-operation Fund. However, the Mongolian authorities considered that the involvement of the bank should not be limited to technical assistance, but should also include financing of specific projects.

In July 2003, the Prime Minister of Mongolia formally expressed an interest that Mongolia be granted “country of operation” status. However, being non-European and located outside the territory that the bank’s founders had originally intended for its activities, Mongolia could only become eligible for EBRD financing after an amendment of the agreement establishing the bank.

In January 2004, the board of governors unanimously adopted a resolution establishing an amendment to the agreement establishing the bank in order to admit Mongolia as a country of operations. The resolution must, however, be ratified by all members of the bank. Passage of this Bill will enable Ireland to ratify that resolution.

Ireland is currently a member of several multilateral financial institutions. These are the International Monetary Fund, the World Bank, the European Bank for Reconstruction and Development, the European Investment Bank, and, most recently, the Council of Europe Development Bank. A significant element of this Bill is the proposed amendment to the current legislation governing Ireland’s participation in these international financial institutions. This will allow for future changes in the articles of agreement of those institutions to be approved by resolution of the Dáil, rather than through primary legislation, but only where this is consistent with constitutional requirements. I will outline briefly the constitutional and legal position.

Article 29.5.1° of the Constitution requires that every international agreement to which the State becomes a party shall be laid before Dáil Éireann. However, under Article 29.5.2° the State is not bound by an international agreement involving a charge upon public funds unless the terms of the agreement have been approved by Dáil Éireann.

Traditionally, our participation in these organisations, and related entities such as the International Development Association, has been provided for exclusively by primary legislation, thus necessitating the passage of new primary legislation to ratify every and any change in the establishing agreements. These changes could [1141]encompass, for example, the requirement for additional financial contributions or the extension of operations to new member states. Legislation cannot be drafted until the change has been agreed by the members of the bank. There is then significant pressure for the agreed change to take effect immediately, or for Ireland to meet agreed financial commitments. The required legislation has been delayed, in many cases, due to other legislative priorities and as a result Ireland has, in some instances, had to seek time extensions or has been unable to make timely payments.

Accordingly, the Bill will provide that in future, where appropriate, approval of an international agreement to which Article 29.5.2° applies would be done by way of Dáil resolution in accordance with that provision of the Constitution, rather than by way of primary legislation and that the definitions, in those existing cases already dealt with by way of primary legislation, be amended to allow any future changes to be approved by resolution of Dáil Éireann.

The advice of the Attorney General will be sought in relation to each future amendment to an existing agreement to ensure it does not require substantive changes in primary legislation or substantive Irish law for effective domestic implementation.

I will now turn to the specific provisions of the nine sections of the Bill. Section 1 sets out the definitions used in the Bill. Section 2 provides for the approval of the terms of agreement for membership of the Asian Development Bank. The articles of agreement establishing the Asian Development Bank are set out in a Schedule to the Act. Section 3 sets out the financial and other provisions associated with joining the bank.

Section 4 provides for an extension of the definition of “agreement” in section 1 of the European Bank for Reconstruction and Development Act 1991 to take account of the EBRD’s resolution dated 30 January 2004 providing for the extension of the bank’s activities to Mongolia. In the case of section 2 and section 4, the Bill provides for future changes to the terms of agreement to be approved by resolution of Dáil Éireann, and for publication in Iris Oifigiúil of notice of any such approval.

Sections 5 to 8 amend the Bretton Woods Agreements Act 1957, the International Development Association Act 1960, the Multilateral Investment Guarantee Agency Act 1988 and the Council of Europe Development Bank Act 2004 in a similar fashion.

This Bill will allow Ireland play a much more significant role in supporting Asian development through membership of the ADB and the extension of the EBRD activities to Mongolia. It will facilitate meeting Ireland’s international obligations in a timely fashion, more consistent with constitutional Oireachtas requirements. This will be critical in enabling us to provide our contribution to debt relief in Africa in line with the World Bank’s multilateral debt relief initiative, [1142]which builds on the proposals that emerged from the G8 Summit in Gleneagles. It also contributes in an important way to the delivery of the Government’s objective of increasing Ireland’s overseas development assistance towards the UN target. I recommend the Bill to the House.

  12 o’clock

Mr. Bruton: Information on Richard Bruton  Zoom on Richard Bruton  I welcome the Bill. While the Government’s commitment to overseas development aid falls short of its initial promise, it is welcome that targets are at least now set and it is hoped that there is a greater determination to honour those targets than was the case in the past. Like any Bill that addresses development issues, this Bill throws into stark relief the attempt to balance economic liberalisation and globalisation, which can confer many benefits, with the need to achieve progress on alleviating global poverty. The failure to achieve this balance to date is a serious affront to basic decency.

There is considerable popular support for more cogent global approaches to development support. There have been many popular manifestations of this desire. All too often, this groundswell of public opinion is not reflected in negotiations over international agreements where attempts are made to develop the policy of large institutions such as the International Monetary Fund. Ireland has unique insights which it needs to bring to bear on these debates. The misapplication of the development thinking of the time has occurred throughout our history. All of us remember the reference to Sir Charles Edward Trevelyan, assistant secretary to the Treasury at the time of the Famine, in the song, “The Fields of Athenry”. He believed that Irish poverty and starvation should be tackled with liberalisation, free markets and external trade and, as a result, grain was exported from Ireland at a time when people starved. We must reflect on the results of the misapplication of popular thinking in this country and apply the same scepticism to the occasional eager application of crude ideological market solutions in countries which do not possess the institutional underpinning to make them work.

There have been undoubted improvements in the way in which institutions like the IMF and the World Bank approach poor countries. The millennium development goals have been produced and tackling poverty has been factored into these institutions’ thinking to a greater extent. However, policies drawn up thousands of miles away from the coalface are often imposed on poor countries and often have perverse effects.

I do not pretend to be an expert on Ghana, which is regarded as a model for developing countries, but I know that an attempt has been made to force it to privatise its water supply system. It is difficult to see how the privatisation of the water supply system in a country like Ghana serves the interests of its people. I have the read the work of individuals like Joseph
[1143]Stiglitz, who has examined the policies applied by international institutions. The application of privatisation has often resulted in the establishment of semi-criminal monopolies in key areas. We have also witnessed the misapplication of the deregulation of capital markets and the banking sector, which has made matters more difficult for small emerging enterprises in developing countries to cope because international banking tends to become very alarmed at any sign of turbulence in a country and looks to have very high levels of reserves, which are often wasteful from the perspective of development.

Ireland must support development aid and examine whether the policies being framed are sufficiently tailored to local needs. It appears that we still have a long way to go with regard to getting the broad-based representation within global institutions such as the IMF, the World Bank or development banks. There needs to be some level of global governance of this process, which will continue to develop because globalisation will not go away. We need to develop better policies and take on board the criticisms of the past.

The work of Joseph Stiglitz has highlighted the fact that the World Trade Organisation is dominated by trade ministers and the domestic lobbies that build up around these ministers, while the IMF is dominated by finance ministers and the lobbies that accompany them. These two organisations tend not to reflect the broad-based development interests of the wider public in those countries. The issues and concerns reflected in these international organisations tend to be attenuated. We must move to a more broad-based understanding of what we are pursuing when we go to meetings of the IMF or WTO. The Government has possibly not been as successful in this area as it has been in examining development aid. From a long-term perspective, the correct balance must be attained so that international institutions do not impose policy solutions that do not work because of conditions within the countries in question.

I welcome this Bill. The recent catastrophes that have befallen Asia cannot fail to move us. We must put our shoulder to the wheel in a structured fashion that will deliver progress. I understand the Asian Development Bank has a good record and has been successful in a number of areas. However, the Government must maintain a healthy scepticism, continue to scrutinise the spending of money and ensure that policies do not serve some narrow interest which can occasionally colour the stances assumed.

I have not tabled any amendments to this Bill and support its speedy passage through the House. The inclusion of Mongolia is to be welcomed as its former status appeared to leave it in limbo. I know that former Members of this House with strong commitments in this area have been very keen to see this Bill move forward so that [1144]Mongolia would no longer be left in this limbo. I am glad to be able to facilitate this change.

Ms Burton: Information on Joan Burton  Zoom on Joan Burton  Now that the Government has reinstated the promise that Ireland would reach the 0.7% target, it is time that the policy drift in our overseas development aid programme, the spending of money by Development Cooperation Ireland and the positions assumed by the Department of Finance on the spending of taxpayers’ money on development were examined. My views on the objectives of the Ireland aid programme when I was Minister of State at the Department of Foreign Affairs, which were shared by my successors, focused on poverty alleviation and capacity building.

I fundamentally disagree with the review of the Irish aid programme, which was accepted by this Government. The review’s message is that the Government should effectively issue large blank cheques to multilateral organisations and UN organisations without any precise sense of how the money spent will advance poverty alleviation and capacity building for developing countries. Various UN organisations, such as UNICEF and the United Nations Development Programme, have attempted reform processes with some degree of success. We have also heard that the World Bank has attempted some process of reform, owing to the influence of people like Joe Stiglitz, to whom Deputy Bruton referred. However, in the White Paper and in the Estimates, the Government is committing a record €79 million to the International Development Association and €7.4 million to the Asian Development Fund. That total of almost €87 million, as well as the consequent annual rises, will effectively be without almost any scrutiny, either by this House, by development agencies in Ireland or by the experts in development issues in this country, that is, Development Cooperation Ireland. These significant amounts of money will be entirely under the supervision of the Department of Finance. When the finance committee visited Washington some time ago, we took the opportunity to meet the World Bank and to meet the Irish representative in the IMF. The IMF gave us the oldest of neoliberal, free market, globalisation rhetoric that I have ever heard. This is what the agenda for Ireland is in practice, in its participation in the fund and the agencies dominated by the fund, such as those agencies mentioned today.

We will make significant increases in public money and the Department of Finance has an agenda of putting money into the various development banks around the world. Our aid programme will rise by more than €100 million per annum to €670 million. In Irish domestic terms, this is significant but we are not a big player internationally. As we spread this money around like jam across the development banks, there is no coherent strategy on what this is meant to achieve for poverty alleviation and [1145]capacity building. We know about the scandals that have emerged over the years surrounding the fund and the agencies that are creatures of the fund. We know what has happened with so many World Bank projects. Can the Minister of State give an undertaking that the Government honours its obligation under section 10 of the Bretton Woods Agreement (Amendment) Act 1999 to produce an annual report on Ireland’s participation in the World Bank and the IMF? Can he give an undertaking that that annual report should include particulars of policy positions taken by Ireland at the bank and the fund? The Government has never fully honoured this obligation. The latest annual report gives no details of policy positions taken by this country on our key objectives in development aid, which are poverty alleviation and capacity building. Requests that have been submitted under the Freedom of Information Act by those who are experts in development issues have not even been answered.

We enter this process just as the branch of the Department of Foreign Affairs with the expertise in the field is to be moved to Limerick and is to lose 100% of its management. Mr. Finbarr Flood, the chairman of the decentralisation implementation group, acknowledged that the DIG has no idea what will happen to Development Cooperation Ireland when it loses 100% of its management. Nothing has been done about this.

I want a commitment from the Minister of State that the participation and role taken by finance officials on the IMF and the World Bank will be made fully accountable to the Dáil, as it ought to be. The Taoiseach has made many headline noises about being fully behind the campaign to make poverty history, but why have we no information about how these amazingly powerful organisations operate in an increasingly globalised world? The Department must put a mechanism in place to tackle this deficit. The joining of the Asian Development Bank is an opportunity to put in place such a mechanism, covering both moneys given and policy positions taken. When I visited the bank and the fund with the finance committee, I put very specific questions to the bank about the situation in Zambia and the privatisation of key elements of public services and banking, which were part of the IMF conditions on reforming the Zambian economy. The bank was not able or willing to answer my questions. I was told I would receive details, but I am still waiting for the details of the bank’s response to the enormous flow of information provided to it on how damaging its proposals were. The Irish Jesuits in Zambia have produced detailed reports and have even held conferences here about what the bank is doing in countries like Zambia. Deputy Bruton highlighted the situation in Gambia following the privatisation of water services there. I would like to highlight the privatisation of the water supply in Dar es Salaam. In large areas of Dar es Salaam in
[1146]Tanzania — one of the poorest countries in the world — the supply of water is a disaster because of the attempts by the bank and the fund to have it privatised. Can the Minister of State give an undertaking that our money will not be used to privatise the key public services in desperately poor developing countries in the disastrous way——

Mr. Parlon: Information on Tom Parlon  Zoom on Tom Parlon  Privatisation has proved to be a very positive, efficient way of delivering services around the world.

Ms Burton: Information on Joan Burton  Zoom on Joan Burton  Is the Minister of State saying that privatisation of water is successful?

Mr. Parlon: Information on Tom Parlon  Zoom on Tom Parlon  If the Deputy is talking about privatisation as a principle——

An Leas-Cheann Comhairle: Information on Séamus Pattison  Zoom on Séamus Pattison  Interruptions are out of order.

Ms Burton: Information on Joan Burton  Zoom on Joan Burton  I am talking about the privatisation of key public services in developing countries, such as sewerage and water services, which are absolutely essential to the maintenance of the life of the poorest people.

Mr. Parlon: Information on Tom Parlon  Zoom on Tom Parlon  The privatisation of water supply is a regular feature in the UK.

An Leas-Cheann Comhairle: Information on Séamus Pattison  Zoom on Séamus Pattison  These interruptions are out of order.

Ms Burton: Information on Joan Burton  Zoom on Joan Burton  It is valuable that the Minister of State should state that the UK privatisation model in a developed country should——

Mr. Parlon: Information on Tom Parlon  Zoom on Tom Parlon  The Deputy should not put words in my mouth.

Ms Burton: Information on Joan Burton  Zoom on Joan Burton  The Minister of State has just stated that he approved of the model of privatisation of water in the UK.

Mr. Parlon: Information on Tom Parlon  Zoom on Tom Parlon  I am saying that privatisation is not necessarily a bad thing. I know the Labour Party is completely against it.

An Leas-Cheann Comhairle: Information on Séamus Pattison  Zoom on Séamus Pattison  Deputy Burton, without interruption.

Ms Burton: Information on Joan Burton  Zoom on Joan Burton  The privatisation of water and sewerage in desperately poor Third World countries where so many children die before reaching their second birthday has been almost an unmitigated disaster. That is the conclusion not just of labour parties around the world but many of the Minister of State’s colleagues in right wing parties who have looked at conditions in such countries. I suggest the Minister of State looks at some examples on the ground at some stage. I do not believe he is without compassion and if he saw what was happening I do not doubt he would respond in a fair manner. One cannot compare [1147]what has happened in America or some European countries with what is going on in some of the poorest countries in the world — the rapacious greed and corruption as regards some of the privatisation programmes.

I do not know how familiar the Minister of State is with Mongolia. I am not particularly familiar with it, but he probably has heard of a remarkable Irish woman, Ms Christine Noble and the Christine Noble Foundation. I do not know whether he knows, but after the fall of communism in the Soviet Union, Mongolian society in many ways collapsed. Mongolia has the highest number of children in the world living in sewers. Many Irish people and businesses have given enormous support to the work of the Christine Noble Foundation. This support has come right across the business community for the work the foundation is doing. Corruption in Mongolia, as I have been told by people involved with the foundation, is probably on a scale that we can barely comprehend.

We are asking for accountability. The Irish aid programme needs to take a quantum leap of imagination with extra money coming in. I appeal to the Minister of State on the grounds that aid only works well where it is planned and above all, where it is accountable. The Minister of State has rightly referred in his speech to governments being accountable and said that was part of the fund’s objectives. However, if the International Monetary Fund and its agencies have no accountability for what they do, then there is an enormous risk. I lived in Dar es Salaam when the men from the IMF arrived with briefcases to shut down free primary education to make the budget balance. It meant that girls were knocked out of primary school because families that had boys and girls opted to keep the males in school.

Such policies have a catastrophic impact on developing world countries. I ask the Minister of State to give a commitment in his response to accountability. An enormous amount of money, €80 million, will be spent this year through fund mechanisms, reflecting a major increase of thousands of per cent. I urge him to please not make this a blank cheque for the World Bank and IMF institutions. Make it accountable and make it useful.

Caoimhghín Ó Caoláin: Information on Caoimhghín Ó Caoláin  Zoom on Caoimhghín Ó Caoláin  I propose to share time with any representative of the Green Party or Independent Deputy.

I welcome this Bill, to put the Minister of State at his ease, from the outset, as it provides for further assistance from Ireland to developing countries to help redress the gross economic imbalance on our planet. The Asian Development Bank is a multilateral development finance institution dedicated to reducing poverty in Asia and the Pacific. Established in 1966, it now has 64 members, I note, mostly from the region. Of the non-regional members, most are from Europe. [1148]With this Bill this State will now be included in that number. I hope in future we can make a valuable and constructive contribution.

I welcome also the extension of activities of the European Bank for Reconstruction and Development to include Mongolia. I see no difficulty with the more technical parts of the Bill to allow for changes to administrative and financial arrangements regarding multilateral institutions to be made by Dáil resolution. I record my acceptance of that.

I want to deal with a number of issues concerning overseas development aid. The European Union Financial Perspectives 2007-13 currently being negotiated is a cause of major concern. If adopted in its current form, it will reduce the development aid allocation as a proportion of spending, while increasing the security orientated budgets. It will increase spending on the European Common and Security Policy and include development aid within this remit. It would allow the Commission more discretion to reallocate resources and diminish the European Parliament’s role, making it difficult to know how much the EU is spending on development, with the grouping of developing and non-developing countries together, making allocations more difficult to monitor. These are among the concerns I have.

Sinn Féin, as my colleagues and I have recorded here on many occasions, rejects the securitisation of EU official development aid and the financing of security and counter-terrorism measures from already stretched EU overseas development aid budget lines. We also reject the inclusion of military expenditure in ODA, which will create a distorted picture by inflating formal ODA levels without strengthening poverty reduction activities in developing countries. I urge the Government to oppose this trend. It should advocate instead the development of clear and objective criteria for the allocation of EU aid and do everything possible to ensure poverty eradication remains the overarching goal of EU development assistance in the period 2007-13.

People in developing countries throughout the world are attempting to oppose the undemocratic and unaccountable neo-liberal agenda of the World Bank, the International Monetary Fund, World Trade Organisation and the transnational corporations which, in the pursuit of profit, are undermining attempts by such countries to pursue economic and social agendas more suitable to their own development and interests.

Our overseas development aid and that of the EU can never be effective in the absence of real change in world economic institutions. We contend that this should include the replacement of the World Bank, the International Monetary Fund and the World Trade Organisation with international institutions which are democratically controlled and whose policies are accountable to and in the long-term interests of developing countries rather than the agendas of [1149]rich nations and transnational corporations. We recommend the ending of crippling debt repayments to the World Bank by the poorest countries. We recommend the breaking of the link between international aid packages and the economic agenda of neo-liberalism, which prevents poor nations developing forms of social and economic provision most suited to their interests.

I hope the Minister of State takes on board several of the points I have made. Perhaps in his response he might reflect on them. More importantly, I urge him and his colleagues in Government to take guidance from them and other points made by Opposition voices in the course of this debate on the Development Banks Bill. As I said at the outset, I welcome the Bill and will be supporting it on all Stages.

Mr. M. Higgins: Information on Michael D. Higgins  Zoom on Michael D. Higgins  This legislation provides one of those rare windows of opportunity for reflecting on the Bretton Woods institutions. When these were instituted in the 1940s, the structure of accountability went from them through the United Nations to an assistant secretary general. They were specifically described in the founding statutes as development institutions and just that. I need to repeat this point in the House far too often but as time evolved, the institutions spun away into a kind of self-articulated autonomy. For example, even when there was a fine moment in an ambience of bad moments at the United Nations, people spoke about the needs of development, the elimination of poverty and so forth. These institutions were no longer in the same relationship with the Secretary General as they were in their founding.

The Minister of State will need to give an assurance to the House on this matter. I refer to the eight millennium development goals. The eighth goal as it relates to trade is being debated in Hong Kong. There is no guarantee from the International Monetary Fund or from the different agencies that are related to the development banks that they are constructing their proposals in accordance with the poverty elimination principles of the eight millennium development goals. It may be said that this is a finance measure and has nothing to do with development. I argue it has everything to do with development and I refer to the previous, very minor debt relief schemes. Four things hang together and they are aid, trade, development and debt. To some extent, forms of technology transfer should be included. The conditions that have been imposed repeatedly are such as to frustrate the poverty reduction strategies that may be made possible by either debt relief or by increased aid or by changes in technology.

Practical measures can be achieved regarding accountability. It was announced at the meetings of the Heads of State at the United Nations that an attempt will be made to reconcile the poverty development issues and the structure of the international financial institutions. Why can the House [1150]not be provided with details of the policy positions taken on behalf of the Government at the meetings? Why does the House not have advance notice of the policy positions that are likely to arise at forthcoming meetings? Why is there such minimal reporting in the innovative report? Why are so many of the worthy non-governmental organisations having such difficulty in extracting information under freedom of information? Is it not the case that there is a suggestion that matters financial take precedence over matters of development, poverty reduction and everything else? Is it not the case that it is a special kind of non-accountability?

I refer to the nomination of the representatives to these governing bodies. I could have spent the small amount of time available to me dealing with the merit of including the Asian Development Bank. It was an aspect of how little transparency attaches to these issues that when the meetings were taking place in Edinburgh and there was significant debt relief, the exclusion of the Asian Development Bank from the meetings was hardly noted. The countries that were heavily indebted were effectively ignored.

I am concerned about some terms used in this Bill. The Minister of State’s contribution did not refer much to the founding principles of the Bretton Woods institutions. They are contained in page five of the Bill where reference is made to the bank agreement. If we have noted the previous shortfall in the legacy of non-accountability, we also have a difficulty about how the accountability from agreements can be constituted. I see the case that can be made for flexibility as one moves out from the founding statute and giving status to such agreements as may be brought before the Dáil. It should be noted that there is a serious shortfall on accountability.

I have a straightforward question about the lending policy. What evidence is there that the lending policy will take account of the wider goals expressed at the United Nations? This is not an abstract argument. I refer to countries such as Ghana and Zambia, for instance. The commercial banks are used by peasants to purchase seeds, some of which are retained for a further harvest. For a heavily indebted country, the price of obtaining debt relief in the previous round was the privatisation of the national commercial bank that provided seeds and implements and so forth. These are conditions that will frustrate any attempt to reconcile debt relief with increased aid to improve the lives of the people.

This Bill provides no guarantee on services. Such services are necessary for the instant development of a state that may be 40% reliant on aid to meet its annual budget. There must be a provision that such aid can be retained by these states.

An OECD report stated that education was to be the next big thing. This was included in an OECD report five years after the organisation stated that water was to be the next big thing by [1151]way of private, commercial investment. It is outrageous that institutions which take their sources from 1940s development institutions would be putting conditions in place which are not accountable back to this Parliament more than any other, that speak about the privatisation of water and education and the right of countries to put together their economies that may spring from an agriculture that is heavily labour intensive.

There is a need for accountability in lending policies. The Minister of State or his colleague, the Minister of State with responsibility for overseas development, should return to inform the House of the structure of the spending as it stands with regard to the forms of technology transfer. If loans are given for the high end of technology transfer, the deal is between multinationals and western governments and receiving elites. However, if it is crafted and takes its purpose from the development agenda, it may well be towards the lower cost of technology and may be of much more benefit to the 80% of the population in these countries that are reliant on simple agriculture. There are issues of sovereignty for these countries which they must negotiate all the time in terms of the conditions they will have to meet to bring in the flow of aid or debt relief or technology transfer.

It is wonderful that we are willing to give as much as we do. I question the reason that trade must be divided from development in this House. Why is it that the financial side of matters must be kept in such a hegemonic relationship to the development, trade and justice issues of international relations?

The answer is this. What proposals has the Minister of State for future representation at the meetings of these banks? How will the people who will represent Ireland be chosen and is he happy with the pool from which he draws? How many days will we be allowed in the Dáil and Seanad to debate the issues coming up on the agenda? Will we have an opportunity, and in which committee, to discuss the policy issues that will be decided? These are fundamental issues on which I would appreciate a reply. The questions are quite clear and I am sure the Minister of State will want to reply.

Mr. Boyle: Information on Dan Boyle  Zoom on Dan Boyle  I am grateful to Deputy Michael Higgins for ceding time to me. I feel almost guilty at interrupting his flow, because he was making all the points I wish to put on record for the Green Party.

In general, there is support for the principles behind this Bill, but there is a concern, noted by other speakers, that our responsibilities with regard to international institutions of this type have not been met by the Government reporting regularly to this House and seeking accountability for our membership of these institutions. It is unfortunate that this Bill will not be debated more widely on Committee Stage as that would [1152]allow us to include legislative mechanisms that would force the Government to do that.

The Bill has been sold on the basis of allowing the membership for the European Bank for Reconstruction and Development to include Mongolia, which might be taking globalisation to an absurd length. However, there is no doubt Mongolia is a developing country people here would fully agree meets the goals of our overseas development aid programme. If participation in that bank and membership of the Asian Development Bank assist that, the Green Party is in favour of our participation.

Having heard the Minister of State’s speech, I have a degree of concern as to the extent to which he emphasised the trade element. While it is important to encourage trade in a fair trading environment as a mechanism for getting countries out of poverty, the policies pursued by many international institutions, in particular the IMF and the World Bank have been towards a narrow focused definition of commercial activity. This drives developing countries to see natural resources such as water and the right to housing and education as something that the private sector alone can and should provide.

This is not a philosophy many of us in the House or the country share. We should articulate a different point of view. It could be that the Celtic tiger virus has embedded itself so deeply in our psyche that we can only see international development in terms of trade and commerce. I may be wronging the Minister, but what is particularly worrying about the subtext of what he seems to suggest outside the formalities of stressing our development agenda is that it is to our economic and trading advantage that we go down this road. If that is our motivation in supporting legislation of this type and our participation in bodies of this type, we need further debate and longer consideration of the issue because that is not a direction my party or many of the people here would like to see us take.

Minister of State at the Department of Finance (Mr. Parlon): Information on Tom Parlon  Zoom on Tom Parlon  I thank all the Deputies who contributed on this issue and welcome the positive statements and support for our involvement.

Deputy Bruton raised the issue of governance and this was a general theme. He did not suggest any amendments and was warm in his welcome of the admission of Mongolia. He suggested we should have a healthy scepticism with regard to our monitoring of how the money is spent. Deputies Michael Higgins and Burton added that this should extend further than a healthy scepticism.

The IMF does not dominate the World Bank, the Asian Development Bank or the EBD. The IMF does not have any agencies. In terms of our influence, we have a single representative on the IMF, and this is generally our Minister. If the Minister does not attend, the Governor of the Central Bank attends. Therefore, we have a voice [1153]there. Our report is presented on an annual basis and comes up for scrutiny. The suggestion that we should report more often or on a daily basis does not make sense, but clearly Deputy Michael Higgins has some misgivings in this regard.

Mr. M. Higgins: Information on Michael D. Higgins  Zoom on Michael D. Higgins  I assure the Minister of State there is room for improvement in the report.

Mr. Parlon: Information on Tom Parlon  Zoom on Tom Parlon  The Deputy is no doubt correct. I am sure he will bring about some improvement by asking the right questions and querying the report on an annual basis.

I regret that Deputy Burton has not been able to stay for my reply. She raised some issues with regard to FOI requests. That is not policy and my Department responds to FOI requests immediately. I regret that some of the responses and news items she has made out of them recently and the use of dated information can give a very skewed view of a particular situation. All FOI requests to the Department of Finance are responded to immediately.

Mr. M. Higgins: Information on Michael D. Higgins  Zoom on Michael D. Higgins  Several NGOs were unhappy with the quality of information they got, not us.

Mr. Parlon: Information on Tom Parlon  Zoom on Tom Parlon  She specifically referred to some FOI requests she submitted. Ireland is quite a small player in the international institutions. We will influence as best we can, but it would be unfair to hold us responsible for some decisions of the bodies which might not follow our suggestions. We have been very positive on the issue of debt cancellation. This has been accepted and we have contributed to this to the tune of €60 million this year.

Overall, this Bill will bring substantial improvements. Our involvement with the Asian Development Bank and its recent performance, in the context of the immediate response to the tsunami, is timely. It is important we are there in terms of developments and amendments in allowing decisions to be taken on a timely basis. I accept the support of the House for that. I know some former Deputies involved there have lobbied the House and the institutions, in particular for the inclusion of Mongolia. This is very positive. While Mongolia is a place about which I know little, I appreciate the investment of funds there will be important to its development.

With regard to the issues raised about governance, in terms of the Asian Development Bank it is the people who are involved and who pay the money that are on the committees and board of directors. Therefore, there is a strong bias in favour of the Asian contributors.

I am heartened by the commitment of all sides of the House to development issues. I acknowledge, despite the criticisms of our economy, that the affairs of the less well off countries of the world are something on which we are all agreed [1154]we should be more involved. I thank the Members for their comments.

Question put and agreed to.


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