Examination of witnesses (Questions 260 - 279)
7 APRIL 1998
RT HON
GORDON BROWN,
MP, RT
HON CLARE
SHORT, MP,
MR RICHARD
MANNING and MR
GUS O'DONNELL
Mr Canavan
260. The White Paper on International Development endorses
OECD targets relating to economic wellbeing, human development,
environmental sustainability and regeneration. What contribution
can debt relief make to the achievement of those targets?
(Clare Short) As I said in my original statement,
debt relief is in order to contribute to the capacity of governments
to make their own local plans to meet those targets and we have
always got to remember that it is that way round; otherwise one
could relieve debt and more arms could be purchased or more palaces
could be purchased and that is not the objective. That is why
the conditionality is important, that governments are on track
with economic policies that will bring benefits to poor people
in those countries. If there is any room for argument, and I think
there is and as Gordon said in his opening statement about some
of the details of IMF ESAF programmes and making sure they complement
Bank programmes and programmes of developing countries to relieve
poverty, that is where we need the improvement. We have got to
have the conditionality in order that debt relief is about poverty
eradication, not just about debt relief for its own sake.
Mr Robathan
261. May I just ask you briefly on conditionality because
you particularly mentioned palaces and I think it is fairly common
knowledge, Secretary of State, and you would know very well, that
there are still countries, regrettably (and I fear there will
be for some time) where palaces seem to be the priority of the
Presidents. Are we going to be very firm in future when we look
at international debtor countries with our conditionality on,
for instance,———well, I will not name countries
because that would be a little bit rough, but there are countries
which you know of and I know of that do need firm conditionalities.
(Clare Short) The HIPC conditions are very firm.
It is six years of a programme that is sustainable and responsible
and so on. That is part of the whole point of the initiative and
therefore relief will not come if government spending is irresponsible
and not about poverty eradication.
(Mr Brown) In Mauritius both Clare and I made
it clear that any export credits that this country would provide
for the next two years would only be for productive expenditure
and not for unproductive expenditure—this the Committee
knows—but we also said at the same time that we would press
our colleagues in the international community to do likewise.
You may have seen the communiqué that was issued after
the G7 meeting where we did raise this issue with our colleagues
and there was support for that position, that in future export
credits and help should be given only for productive expenditure.
Of course there can be discussions about what constitute productive
and unproductive expenditure but there is a concern about defence
and arms expenditure. There is also concern about the issues that
Clare has been talking about, the waste of money on what are sometimes
called prestige projects but are actually monies that have been
wasted when monies ought to be used for health education and other
purposes, so we have said that we will review this situation after
two years. You have already had information about how much of
export credits has gone to arms expenditure in the past, but the
fact is for the next two years nothing will happen and I believe
we will secure greater agreement in the international community
on that issue.
Ann Clwyd
262. Then why are we and the IMF baling out Indonesia
which has spent a large amount of money, not on palaces but on
arms certainly, and arms for which we have given export credit
guarantees which, if they default of course, will mean quite a
considerable loss to the British taxpayer?
(Mr Brown) The issue in Asia is not actually relieving
debts or eliminating debts. There is no proposal that has come
forward that actually eliminates the debt burdens of these countries.
Indeed, the whole purpose of the proposals in relation to Asia
was to make sure that these economies were on a stable basis and
able to make their way in the international economic community.
The difference in approach is quite striking. There is no debt
reduction, there are no grants of that sort such as we are talking
about, particularly in relation to Africa, and you are dealing
with a completely different situation of instability in the world
economy that had to be dealt with in the ways that we did deal
with it. Essentially the way in which we dealt with that was through
the insistence of many governments, including ours, that there
would be no bale-out that would be guaranteed purely by governments,
that the private banks themselves had to be involved in that process,
and that is exactly what has been happening. You are neither talking
about the elimination of debt as we are talking about in relation
to the poorest countries, nor are you talking about government
financing guarantees without there being private sector involvement,
in other words other debtors being involved in the process.
(Clare Short) If I could add something, all of
us respect and I certainly respect the work that Ann has done
on Indonesia, but there are a lot of poor people in Indonesia
and in Asia and if we do not handle this crisis sensibly a lot
of poor people will be very badly hurt as well as the whole world
economy. We have put up jointly a fund to assist the countries
concerned to better regulate their banking systems but also to
look at the effects of the crisis on the poor. We cannot just
walk away from Indonesia without enormous damage to the poor in
Indonesia, in the region and to the world economy. We have tried
to make sure that the intervention has beneficial effects on particularly
the poor and better regulation of the financial sector in those
countries.
263. Does that not highlight the inconsistency in our
policies across the board? We have an ethical foreign policy,
or so we are told, with respect for human rights being a major
plank in that ethical foreign policy, and yet we are propping
up what is a corrupt regime in Indonesia, which shows no respect
for human lives, and there is an alternative argument that if
we were not propping up Indonesia this time through the IMF then
in the long run that might be better for the people of Indonesia.
(Clare Short) No. I have to say I understand the
emotion behind that but I think that is a deeply wrong suggestion.
The consequence for the poor of Indonesia, the poor of Asia and
for the world economy would be catastrophic. What we have to try
and do is use the influence that the international financial system
gets because of Indonesia's need for help to get less corrupt,
more decently regulated structures into the economy of Indonesia.
We have not got complete power in the situation but we have to
act to be responsible and we have to try and use the influence
to get improvements in the governments of Indonesia.
Dr Tonge
264. I wanted to ask in relation to an article that was
in the FT last week, that if the IMF are spending such a huge
amount of money baling out Indonesia and South East Asia, does
this not mean that there is less available to deal with poorer
countries who are urgently in need of debt relief?
(Mr Brown) Can I just say, so that people do understand
what has actually been happening in relation to the Asian countries
as a whole, that it has been at our insistence that the private
creditors are involved and that governments do not take the burden
of guaranteeing monies in relation to that that has been at the
heart of our response to this particular crisis in Asia. I would
say a second thing, that the instability that can result from
what is happening in Asia can affect, as we have seen in quite
spectacular instances in Europe, jobs and growth in European countries
as well as in other parts of the world. Clare is absolutely right
that we have to be mindful of the condition of poverty and unemployment
that is actually spreading right across the Asian continent and
the World Bank must, as the President of the World Bank said in
an article only a few weeks ago, play its part in dealing with
the issues of poverty relief. In Indonesia there has just been
an announcement of the closure of seven more commercial banks
so you are dealing with a high degree of instability, but the
response of the international community is not to provide grants
as you are suggesting. The response has actually been to demand
change in policies, financial restructuring, and to offer help
to do so, particularly in relation to the banking system, to demand
a degree of openness and disclosure in relation to financial information
and monetary and fiscal policy that means that circumstances such
as have occurred in the Asian continent cannot arise again in
relation to these countries, and in the particular case of Indonesia
I should perhaps point out that the whole effort of us and other
countries over these last few weeks has been to prevent Indonesia
taking action, particularly in relation to the setting up of a
currency board which we believe would have been damaging to the
prospects particularly of the poorest people in the region. When
I met the Vice President of Indonesia a few days ago we made it
clear that we expected there to be major reforms and many of the
things that have been mentioned that have been symbols either
of waste or mistakes that have been made are actually mentioned
widely by my colleagues in governments in the international community,
so I do not think you can draw the same parallel that people are
trying to draw particularly with Africa, and I think you can see
that our response is to deal with the situation of instability
and to do so without the use of public funds in the way that they
have been used in relation to debts particularly in Africa but,
as Clare has pointed out, in demanding reforms to be careful that
we actually have in mind the needs of the poorest, particularly
those people who have been made unemployed in very big numbers
in recent weeks.
(Clare Short) On the specifics of the money, the
money that has been made available to Indonesia and other countries
is at a return for an interest rate. It does not come out of the
IDA much more subsidised rates.
Chairman
265. It is a commercial rate, is it not?
(Clare Short) Yes. I do not know the exact rate.
I am sure Gus can speak to that. It is money that is made available
at a rate that is necessary to support HIPC and loans to the very
poorest countries but there is a big issue for the Bank in balancing
its funds and it is going to come up at the Spring Meeting that
we are going to very shortly, just after Easter, to increase the
net income of the Bank by charging for services that are given
to middle income countries, so that there are sufficient resources
to give proper concessional help to the poorest countries. That
is an issue but the resources that have been made available in
Indonesia and so on are not resources that otherwise would be
available to the poorest countries.
(Mr Brown) Perhaps I should just add that the
money that has been given has been given on close to commercial
terms. In Korea's case it has been above their normal rates so
I suppose you could argue that part of the extra interest that
will come will actually help us to finance the next stage of HIPC.
Ann Clwyd
266. But what is the conditionality attached to money
being loaned to Indonesia?
(Mr Brown) The conditionality is exactly what
I have been talking about: the reforms that are necessary in the
financial system. I am talking about Asia as a whole here—the
requirement that there will be open disclosure of information.
All these are now on the agenda and I think you will see when
the Interim Committee of the IMF meets in the next two weeks that
the issues of openness, disclosure and a code of fiscal and monetary
conduct that prevents these sorts of events occurring because
of lack of disclosure, or for example deals with questions of
information not disclosed and therefore corruption made possible
in other parts of the world, are very much now on the top of the
agenda.
267. Are the rules purely financial? There are no human
rights conditionalities attached at all?
(Clare Short) Dealing with corruption is part
of decent democratic government. Corruption hurts the poor. Corruption
is a major issue for the poor and there should be no doubt about
that. The programmes do bear down on corruption and that is very
important. Also, the Bank has followed the Fund in each of these
countries, looking at the possible consequences on the poor and
setting up programmes and discussing with all partners, including
the trade unions in every country except Indonesia, the programmes
that will make sure that the adjustment takes account of the needs
of the poor.
Mr Grant
268. I am not convinced on this question. We have just
come back from Kenya where the IMF were visiting as we were there,
and the IMF, for a paltry $100 million, wanted the Kenyans to
set up a special independent trust to get the money and so on
because they felt that the Kenyan Government was corrupt. We have
an extremely corrupt Government in Indonesia, where the son of
the President amongst others has all kinds of fancy deals with
car companies in America and so on. The IMF is rushing to give
them something like three billion dollars. Ordinary people looking
at that see that the IMF is acting extremely unfairly towards
an African country and there are African poor as well as poor
people in Indonesia, and acting in a very favourable manner towards
the Indonesian Government which has a very poor record of human
rights in terms of East Timor and so on. Why are you adopting
these two standards? Gordon Brown made the point that British
jobs are at stake. If British jobs are at stake let us have that
out in the open. Let us not have any of this pretence that somehow
we are trying to look after the poor.
(Mr Brown) Let us be absolutely clear so that
we do not get into a situation of regarding the action that has
been taken in relation to Asia as similar to the action that we
are taking in relation to HIPC and other related debt issues.
First of all, there has been no money passed on a bilateral basis
from Britain to countries in Asia. That is not happening. Secondly,
as far as IMF and other loans are concerned, these are loans at
market rates, in some cases above market rates, subject to high
conditionality. What we are talking about in relation to HIPC
is wiping out debts or at the least in relation to these countries
relieving debts by lower than market interest rates in a way that
allows these countries to progress. That is a different situation
and I hope the Committee does not allow itself to go down a road
of suggesting that the treatment of Indonesia is exactly the same
as the treatment of, for example, Uganda or indeed Kenya. We are
talking about quite different ways of acting in relation to these
circumstances. As I say, there is no bilateral money passed to
Korea or Indonesia on the lines that you are suggesting and, secondly,
the terms of the loans are at market or in some cases above market
rates subject to high conditionality. That is certainly not what
you are asking us to do in relation to the HIPC countries.
(Clare Short) I want to add on Kenya, and I would
say this, Bernie, very seriously: it is not to be friendly or
helpful to the poor people of Kenya to say that the international
community should not bear down on corruption in Kenya. There is
a very serious problem of corruption in Kenya. There is no doubt
that it is the poor that pay the price of corruption with all
the inefficiencies, all the rip-offs. It is the people at the
bottom of any society that really pay the price. There is a serious
problem in Kenya. There was agreement at the last annual meeting
of the Bank and the Fund that we would all act more firmly to
deal with corruption. As you know, the OECD countries need to
clean up their own act too and cease to make the offering of a
bribe tax-deductible and to move to make it a criminal offence
to offer a bribe to a public official. Also the Bank and the Fund
agreed, and we strongly supported that agreement, that one of
the conditions of their support would be agreement by Governments
to bear down on corruption and that is an important thing to achieve
in the case of Kenya.
Mr Canavan
269. Chancellor, in your Mauritius Mandate statement
you estimated that as many as 300 million people in the poorest
countries could benefit from the HIPC initiative if the mandate
targets were achieved. Could you tell us though what additional
specific measures are necessary in order to ensure that debt relief
does in fact lead to poverty alleviation?
(Mr Brown) First of all it is getting those countries
into the process that are not yet in and when Clare and I made
the initiative in Mauritius there were fewer countries in the
process than are now in the process nearing completion: the Ivory
Coast, Guyana, Mali, Mozambique, all countries that are now moving
to decision points, and I am pleased that we have got that degree
of progress. The second problem of course is getting other countries
who are not part of the process into it and we hope will be by
the year 2000, and we will certainly continue with the initiatives
I mentioned in my opening remarks to make that happen. As far
as further measures are concerned, I am, like Clare, anxious that
the IMF programmes take into account the social factors that you
are talking about: poverty reduction, education and so on, and
we are in touch with the World Bank as to what role they can play
in helping make that possible. There are really two parts to this.
The first is to get the countries into the process, and there
is a bit of movement now and I am grateful for the help that was
given on Mozambique to make that possible, and, secondly, to make
sure that in the assessment of those issues of poverty reduction
and, of course, education (where Clare rightly has targets for
the whole of the world community by 2015) those countries are
getting these issues right at the centre of the process and that
we are trying to do so as well.
270. The Government memorandum to our Committee cites
"what can often, with the benefit of hindsight, be seen as
lending policies which did not take full account of the true risks
of default and poor investment on the part of the recipient"
as a cause of problems for many countries in servicing debts.
Are you satisfied that appropriate levels of external finance
will be available in the future and that past mistakes will not
be repeated?
(Mr Brown) I think President Clinton's visit to
Africa for example has been very important in showing that Africa
is ready to move forward. The help of countries, not as a matter
of charity but as a matter of international economic development
to the mutual benefit of everyone, is going to be so important
in the future, and greater international investment in Africa
and in other countries that are part of the HIPC process is going
to be very important and I think is going to be back on the agenda.
What we have got to understand, as you know better than I do,
is that we were dealing with a process where these debts had been
built up in circumstances where these economies were not growing
and were failing to grow at all, where commodity prices fell in
many cases and therefore put the debts on to an unsustainable
basis, where we were dealing in some cases with natural disasters
that have also got to be taken into account in this process. We
have, by the combination of aid, trade and debt relief, to do
what we can to assist the process of growth in these economies
in the future. I do think that what is being done for international
investment by high profile visits like that of President Clinton
to Africa but also other initiatives in which we are involved
in helping economic development are so important. That is the
reason of course why conditionality in the debt relief programmes
is so important, and to those people who say there should not
be conditionality, we have got to remember that our aim is to
speed up sustainable economic development and in that process
conditionality, both openness and the best use of resources, is
going to be very important indeed.
(Clare Short) To add one thing, the unproductive
expenditure, the commitment that is part of the Mauritius Mandate
not to give export credits for unproductive expenditure, the challenge
to other countries to join in, that has not yet happened so we
cannot guarantee that there will not be borrowing in these countries
for unproductive expenditure, but Richard and I are going to the
DAC high level meeting later today and we are going to try and
strengthen this challenge to other countries, so we have given
this commitment not to fund unproductive expenditure for two years
and then review our position. We need to get other countries to
come along with that commitment.
Chairman
271. Can the Committee be clear? Your answer, Chancellor
of the Exchequer, was basically that you hope that you have set
the framework of economic and financial conditions which will
attract inward investment and domestic savings from the private
sector. Is that correct?
(Mr Brown) That is one of the ways forward and
very important, indeed crucial, to the economic future of the
countries. I am not saying that we have set the framework. I am
saying that these countries themselves are setting the framework
and, to add to Clare's point about export credits, at the G7 meeting,
as I said earlier, we did get agreement amongst our colleagues
that they would also take the same approach to unproductive expenditure
in relation to export credits, so an action that we took originally
ourselves is now getting multilateral support.
Mr Grant
272. May I go back to the Guyana question, and I was
pleased to hear the Chancellor say that he is going to give technical
assistance to the poorest countries because Guyana has a major
problem in terms of tax evasion and tax collection because as
soon as their accountants become qualified they are sucked up
by the brain drain to North America. I am wondering whether specifically
any assistance is going to be given to Guyana in relation to the
provision of tax inspectors and people like that.
(Clare Short) I am going to Guyana just after
the meeting with the ACP countries in May to review what we are
doing in Guyana and I will report fully to you when I come back.
The offer we made as part of the Mauritius Mandate to give technical
assistance to countries to take charge of their debt affairs has
not actually been taken up as yet, and I want to work more actively
to make that support and technical assistance more widely available.
(Mr Brown) One of the complaints of those debtor
countries, and I think it is a legitimate one, is that they have
not themselves been as fully involved in the debt process as they
should be and while the countries who were owed money were playing
the biggest role, those people who were the debtors have not had
the chance to play their full part, so our offer of technical
assistance was not only in relation to the negotiations but also
in relation to the countries who are all part of the debtors group
coming together and we offered to help in that way as well. As
Clare says, we are anxious that that offer is taken up because
I believe that the debt process should be both more open and should
involve the voice of the debtors in a more consistent way.
Mr Rowe
273. Is the Government doing anything to talk to some
of the big providers, the big companies that provide perfectly
respectable things like very expensive pieces of medical equipment
and so on? There is an argument for saying that you will not keep
doctors in poor countries unless you give them centres of excellence
in which to perform. At the same time there are some very distressing
tales of very expensive pieces of equipment lying unused almost
as soon as they arrive because either there was no opportunity
of getting the spare parts or the electricity supply was too sporadic.
It does seem to me that this is an area where what you mean by
"unproductive investment" is actually very hard to define.
I just wondered if you were taking that into account.
(Clare Short) Indeed, and you are absolutely right.
Something completely respectable and attractive like a new hospital
might actually take up the whole of the health budget for a very
poor country and prevent the provision of basic health care to
the whole country. Since the election we have had a seat on the
Export Licences Committee where we are allowed to object to export
credits for projects that are not undesirable but would throw
off track a country's development programmes and expenditure on
more fundamental needs of the poor. That is a development and
we now have a say.
(Mr Manning) This is a very tricky issue, but
the key to it lies in the policies of the country that might be
importing this equipment and that is where the initiative of the
World Bank and other donors is helpful in supporting these sector
wide approaches where the Ghanaian Government (as it might be)
develops a health sector policy and the Government itself then
has a clear policy supported by the donors as a group which gives
clear priorities on the various kinds of health investment and
then the kind of problem that you allude to should not arise.
We are trying wherever we can in Africa to work with other donors,
the World Bank and the recipient country to build support for
these sector programmes which get the priorities right in these
key sectors that are so important.
(Mrs Kingham) When we were in Rwanda we had a
meeting with the representatives from the IMF and World Bank and
we were told that they would never consider making a special case
of a country like Rwanda that has gone through a unique experience
of genocide, because it may be seen as incentivising conflict.
I am a bit concerned about this issue of productive expenditure
in a country like Rwanda which has gone through a post-conflict
phase, a genocidal phase, where a whole section of their academics
has been wiped out, their trained people have been wiped out,
their technical people have been wiped out. When we talk about
productive expenditure, will provision be made in situations where
countries have gone through an experience like Rwanda's, for example
genocide, when we are looking at the poorest of the poor and we
are looking at primary education for example, and will there also
be exceptions made to recognise that some of these countries need
to bolt in expenditure at the top level to replace what has happened
in situations such as genocide?
Chairman: I think, Mrs Kingham, we should explain
before they answer the question that our question to the World
Bank and International Monetary Fund was: would they not write
off some of this debt.
Mrs Kingham
274. Yes, to make an exception for countries like Rwanda
that cannot fit into criteria laid down in the guidelines.
(Clare Short) We all share your view, as you know,
about the failure of the international community to prevent genocide
in Rwanda and the enormous challenges facing the Government which
is really honourably trying to tackle them and needs the support
of the international community. I share that view very strongly.
When we say "not unproductive expenditure", that is
not a rigid list of things never to be purchased. It is looking
at the sensible needs and sensible management of the resources
of an economy and although of course universal primary education
is an absolute objective, every country needs some highly trained
and highly skilled people and we recognise that and are not going
to be absolutely rigid in our approach. I understand on Rwanda
that an ESAF agreement with the IMF is expected soon so we are
expecting to make progress, get Rwanda on track and then Rwanda
can come up to getting debt relief.
(Mr Brown) I should just add by way of factual
information that the IMF staff have actually just completed the
negotiations for an ESAF programme. The Executive Board is going
to consider that in June and therefore the approval of that will
mean the start of the process. You asked is there sufficient flexibility
in the process essentially. I think some of the decisions that
have been made that have taken into account special factors, Guyana
to some extent, other countries as well, show that there is potentially
flexibility in the process but I think you will be pleased to
know that in June the decision will be made.
Dr Tonge
275. I wanted to pursue this question of unproductive
expenditure. I can see from this morning's performance that the
Treasury and DfID are the best of mates and there is great co-operation
between you.
(Clare Short) It is true.
(Mr Brown) I thought she was going to say the
Treasury's unproductive expenditure.
276. I am less convinced about both of your relationships
with the DTI because in the case of unproductive expenditure sometimes
particularly when you are looking at the arms trade it could be
argued that an awful lot of licences are being granted but that
I and you might very well think would be unproductive expenditure.
I think Mr Manning said you have a seat on that Export Licences
Committee. How can this be strengthened and is there any conflict?
Obviously you are not going to admit it publicly but it is a problem.
(Mr Brown) I do not think there is. Actually the
initiative on export credit was taken by Margaret Beckett, the
President of the Board of Trade, herself. I think you have had
a note of the military expenditure that has been involved in export
credits to the poorest countries in previous years. What I can
tell you is not only have we got this new position that other
countries are supporting, that export credits will not go to unproductive
expenditure, but the President of the Board of Trade has also
announced a few months ago an extra set of export credits to some
of the poorest countries in the world[31].
(Ms King) My question on Rwanda has been delightfully
answered.
Mrs Kingham
277. Back to post-conflict situations again. In terms
of the non-structural expenditure and export credit guarantees,
will they be flexible too in terms of realising countries like
Rwanda, again for example, are still having to deal with the effects
of western and quite often European arms policies in the past
for dealing with insurgency and terrorist and rebel attacks on
their borders where they do need to defend themselves, as was
the case with Mozambique in the past, which often had to pay for
defence as a result of the policies of past governments?
(Mr Brown) I think that is well understood. Rwanda
is one of the three poorest countries in the world with half of
its population in poverty and it is going to need external support
for many years to come. I think I am right in saying that between
35 and 40 per cent of its budget is military for many of the reasons
you give. The support of debt accounts for about 21 per cent of
government expenses and therefore to move this process forward
as we can is very important indeed and to give the detailed support
that Clare is talking about is also necessary.
(Clare Short) Can I add one cautionary note. A
lot of the HIPC countries do not have access to export credits.
Some of the poorest countries in the world do not have export
credits extended to them. I think it is only ...
(Mr Brown) ... Ghana and Vietnam.
Chairman: Can I ask Ann Clwyd to lead on United Kingdom
policy.
Ann Clwyd
278. Chancellor, nobody questions your own commitment
or, in fact, the Secretary of State's commitment to the redemption
of debt and reduction of world poverty. Can I ask you whether
you feel that we are being robust enough because the UN has estimated
something like 21 million children will die before the year 2000
if the money spent on debt service continues instead of being
spent on health and education. I wonder if you have got a grander
panorama. You have talked about individual cases today and we
are all very pleased to hear that information, but does Africa
not need massive debt relief and also the equivalent of a Marshall
Plan? After all, we treated Germany very well in 1953 and required
Germany to pay back very little in comparison with the debt of
some of the countries in Africa. I wondered what your ground plan
was and whether you would be introducing that at the G8 summit
in May.
(Mr Brown) This was indeed the tragedy of the
delays in relation to Mozambique that so much of its income was
being spent on debt repayments at a time when the needs in education
and health were so obvious and so little could actually be done.
There are two issues here. One is to do what we can immediately,
as Clare has tried to do, to transfer resources in our budget
to poverty reduction, to education, to these vital social things,
but at the same time through debt reduction to get countries on
a process of sustainable development. That is why it is important,
first of all, that we bring all the other creditor countries along.
It is often argued that we could take some unilateral action that
would display our credentials better on the world stage and that
may indeed have an effect but the effect of that in relation to
debt relief would simply be to reduce the bills other creditor
countries had to pay and not actually reduce the amount of debt
that had to be paid back by the countries we are talking about.
We have to bring other countries along. I think we will see in
the process of the next few months that we are trying our best
to do that and are not finding in some cases the reluctance that
some people expected in particular quarters. It is a process of
moving people along, in some cases taking early action like we
did in Mozambique and Clare did on Uganda, in other cases trying
to win international consent behind closed doors before any public
announcement. I think the second thing I would say to you, and
Clare may want to add to this, is of course that sustainable development
means that the policies that the countries adopt must themselves
be credible to get to that position and when we are talking about
individual countries it is not in some cases us saying what should
be done, it is the decisions that are made themselves by a more
open process of decision-making that is going to guarantee that
these changes will actually work and have the best effect. I see
the combination of aid, debt relief and policies that encourage
international investment as the way forward and I think greater
openness in the process—and some of the reforms I have suggested
have got to be looked at in that process—will help us along
that road but at the moment the urgency is to get the countries
that are not in the process in as far as possible and as soon
as possible and to get decisions on the countries that needs decisions
like Mozambique as quickly as possible.
(Clare Short) Could I just add that President
Museveni just shortly a few weeks ago challenged all the donor
countries to stop continuing to give aid to countries that were
not spending it properly on poverty eradication in their countries.
The challenge is two-fold. It is not just a donor problem. In
the case of Mozambique, which is struggling against incredible
odds, and the government is really trying to do the right thing,
all this effort has gone into getting them on stream but we have
also been putting some resources into Mozambique to help them
service their debt in the meantime so the government can redirect
spending to education and health. We have just done something
similar in Tanzania. The challenge is two-fold. The governments
of the African countries—
and more and more reforming countries are there now, Uganda, Ghana,
Ethiopia, and so on—are seeking to realise poverty eradication
targets in their own countries, redirect their own spending so
the donors can get in behind. It is a two-way obligation; it is
not just a donor problem.
279. Do you see Britain playing a central role in reviving
the whole issue of the HIPC problem?
(Mr Brown) I see Britain as playing a central
role working with other partners in moving these things forward.
Clearly when we came to the G7 meeting a few weeks ago we had
for the first time in the G7 community not only a reference to
the year 2000 as being an important decision-making point but
also unproductive expenditure in relation to export credits. So
we are making progress and I hope we will make further progress
in the weeks to come. It will certainly be an important part of
the Birmingham G8 Summit and I hope this Committee's report will
have an effect on that process.
31 Note by witness: The President of the Board
of trade has announced $100 million of Overseas Investment Insurance
to some of the poorest countries in the world. Back
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