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Mr. Gregory Barker (Bexhill and Battle): I totally agree with the right hon. Lady's analysis of the need to help Africa develop so that it is capable of producing more than just the most basic staple commodities. We need to reduce institutional and trade barriers for that to happen. We have our own part to play with the Commonwealth Development Corporation. Is the right hon. Lady happy though that, in the past two years for which figures are available, the number of investments that the CDC made in sub-Saharan Africa almost halved from 41 to 26?

Clare Short: I am happy with the way that the CDC is being reformed. Some of the criticism is grossly misinformed. Our proposals, which the House supported, were to reform the CDC so that rather than being a public sector investment institution, looking for low rates of return and with a limited investment fund, its expertise on investment in developing countries could be used so that it became more of a conduit for private sector investment in those poorer countries—places where the markets do

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not attract much investment at all. That meant selling on some of the businesses that it owned to local or other ownership so that they could continue to function, and trying to increase the rates of return to encourage the private sector to move into those countries.

Last year was especially difficult for the world economy. Most investment houses have reduced their estimate of the value of their investments because of the state of the world economy. That has affected the CDC, too.

We are engaging in a difficult reform. It is being watched by other public sector development investment institutions across the world. If we succeed, the institution will be enormously important. Inward investment will provide the means to achieve technology transfer, access to clean water, sanitation, electricity, modern communications and so on. The amount of such investment going to the poorest countries is still extremely small.

We should try to find another opportunity to discuss at greater length the progress of the CDC reform. The hon. Gentleman correctly expressed the concern of the House that we get that right, but I completely reject the criticisms, for example, those in the article in The Times, which were malicious and ill informed.

Rev. Martin Smyth (Belfast, South): I share the Secretary of State's concerns, and welcome the definite co-ordination that is under way.

The issue relates not only to inward investment but to what countries can do for themselves. Does the right hon. Lady welcome the fact that the President of South Africa has at last acknowledged that AIDS and HIV must be tackled for the good of the country? On a negative point, does she share my concern about the latest threat in Zimbabwe? White farmers have been dealt with and action is now being taken against Indian traders. Surely, that will further impoverish the country.

Clare Short: I agree that the changes in South Africa—offering treatment to prevent mother-to-child transmission of HIV/AIDS and offering tests and anti-retroviral treatment to women who may have been infected after sexual assault or rape—are both right in themselves and will heal a bitter row that probably distracted the country from getting on with the task of preventing the spread of the infection.

HIV/AIDS is yet another burden for Africa. It has also spread considerably in India, and Russia has the fastest growth rate in the world, so it is wrong for people to think that the disease is a problem only in Africa, although it is more advanced there.

The good news is the achievement in Uganda, where rates of infection are down to 6 per cent. from the high 20s. There is a massive reduction in the rate of infection among young people. That shows what can be done and what needs to be done throughout the whole continent.

I agree that Zimbabwe is a complete tragedy. The economy is collapsing; there is negative growth, and hunger and poverty are increasing. The elections were flawed. The country should be an engine of growth in Africa. It has a highly educated population, good land and other resources, but the economy is being wrecked and the people are suffering terribly. We must hope for, and work towards, an end to its misgovernment so that the people of Zimbabwe have the chance for a better future.

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I was describing the achievements of the past year and focusing on the world's efforts. At Monterrey, more official development assistance—aid—was committed by both the United States and the European Union after years of declining aid spend. That was a turnaround in the world's commitment to development and is a step towards the achievement of the millennium development goals.

The EU made a commitment that, by 2006, we would reach an average of 0.39 per cent. of gross domestic product. That means an extra $7 billion every year thereafter. The US made a commitment to an increase of $5 billion from the same date.

So that is good news. It is still not as much as the amounts that the reports commissioned by the World Bank and from former President Zedillo of Mexico said will be needed from the world in aid resources to reach the millennium development goals—that is, roughly double the assistance that is already given through the international system. However, the meeting reversed the decline that has taken place for many years in the international system, and that helped to make it an important success.

Dr. Tonge: I am becoming a little confused by the number of declarations, conferences and pledges on development that are going on around the world, so will the Secretary of State clarify a couple of points?

First, what is the relationship between the fund recently set up at Monterrey and the global health fund? I presume that they are completely separate, but is there any cross-over? Secondly, has the money merely been pledged or is it in a bank somewhere gaining interest that can be dished out to the countries that need it? I sometimes worry that such pledges remain just pledges, and may seem grandiose but do not really amount to much.

Clare Short: A fund was not set up at Monterrey—rather, the United States and the European Union committed themselves to grow their spending on aid. It was a commitment on future spending, so the money is not in the bank. The US has suggested that its $5 billion might go into a new fund that is run in a different way to USAID. The EU's pledge is to increase our spending through existing channels, not through establishing a new fund. So no, there is no money in the bank. There is a pledge and a commitment, and it will be our duty and that of others to ensure that the EU keeps to it. It would be a betrayal of the developing world to sign up to a radical reform agenda, and then to fail to keep our part of the promise.

The global health fund arose from the G7 meeting and from commitments made by Kofi Annan. There has been some confusion about whether it is only for HIV/AIDS—it is not—and whether it is the only instrument for getting more spending into the care of those with HIV/AIDS, malaria and TB, three illness that cause enormous ill health and suffering, and thereby economic loss, in developing countries. We in the UK have always seen the global health fund as a fund to provide drugs and commodities through which, by pooling resources internationally, we can achieve greater reliability of supply and lower prices, and then encourage developing countries to improve their delivery systems. As a country,

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we have pledged $200 million to the fund. We are already spending £1 billion on strengthening countries' health systems.

That is what the fund is for. Because Kofi Annan made a speech saying that we need an extra $10 billion a year to combat HIV/AIDS—he meant all forms of spending, including Government spending—everyone sees the global health fund as a failure, which it is not. It is in the final stages of appointing its chief executive, or whatever title the person is to have, and it has received a series of applications from developing countries on which it is about to make decisions.

The final UN international conference that is required to complete the architecture is the forthcoming world summit on sustainable development in Johannesburg, Rio plus 10. We have discussed that in the Select Committee. I hope that the prize that we will get from that conference is an overcoming of the division between the environmental lobby of the north, which tends to be cautious about promoting development because it believes that the world is under strain and cannot afford any more economic growth, and the view from the south that such an environmental agenda locks them out of development. I very much hope that we will get a real commitment to sustainable development at Johannesburg. We need to guarantee development for the poor, but in the context of a sustainable planet, and to bring the development and environmental lobbies together properly to promote sustainability, rather than a "do not disturb, do not develop" approach. If we can achieve that, we will have global agreement on how to drive the world forward.

Mr. Simon Thomas (Ceredigion): The Secretary of State took part in an interesting sitting of the Select Committee on Environmental Audit on just this point. At the risk of sounding like a voice for the north, does she agree that it is important in the context of Johannesburg to transfer our technology to developing countries? That offers huge opportunities both for our domestic markets and for developing countries, which could be enabled to bypass some of the environmental degradation that we have undergone through the process of industrialisation. For example, we could take them straight to the future of electricity generation—embedded generation instead of huge grid connections.

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