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Costa Rica/Nicaragua

4.1 pm

Norman Baker (Lewes) (LD): I shall make a swift change from the dairy sector to the different subject of Costa Rica and Nicaragua. I am delighted to have secured this Adjournment debate, having been on an Inter-Parliamentary Union visit there in September. It was a well organised visit and there was a good deal of unanimity of views across all three parties represented. Had it not been for the important debate in the House, the hon. Members for Liverpool, Walton (Mr. Kilfoyle) and for Aldridge-Brownhills (Mr. Shepherd) and others would have been here to add their views and I hope that my comments will represent their views as well as mine.

It was interesting to be there with both countries having elections next year. I want to put on the record that, having not been to central America previously, I   found them attractive and welcoming countries. Costa Rica seems to be particularly well organised and developed environmentally—that is close to my heart—with huge reliance on hydropower, which was pleasing to see. Its National Biodiversity Institute—INBio—promotes and safeguards the country's unique environment. I am pleased that it has had some British funding to help it to do so. Nicaragua is an extremely attractive country and wears its heart on its sleeve. Both countries are preparing for elections next year; Costa Rica in February 2006 and Nicaragua in November 2006.

In Costa Rica the front runner is the former president and Nobel peace prize winner, Oscar Arias. It was an interesting time to be there because two former presidents are under house arrest awaiting charges for alleged corruption during their time in office. What is interesting is that there is obviously an issue of possible corruption, but the country seems to be able to deal with that and is not frightened of taking forward issues relating to high-profile individuals. That is welcome.

Costa Rica has a diversified economy and a good stable regime for investment, although it would be welcome if it ratified the Central America Free Trade Agreement sooner rather than later.

In this debate I want to discuss what we are doing to maximise UK influence in those countries, to help Costa Rica and Nicaragua as countries, and to ensure that we engage with them productively for our own country. Having spent some time there and having done some reading, I have discovered that relations between our countries have always been good and that is useful. However, it is clear that our resources over there are stretched, to say the least.

I want to put on record that we have an exceedingly effective ambassador in Georgina Butler who now covers both countries. I found it extremely refreshing to see the way in which she was able to undertake her duties in both countries. She was refreshingly unstuffy compared with some in the Foreign Office—I am not referring to the Minister—and the more ambassadors we have like her, the better. She does a great deal to enhance Britain's reputation in those countries.

However, Georgina Butler is now covering both countries and we recently closed the embassy in Nicaragua. She has only two diplomatic staff to help her
 
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and 13 people who are native to Costa Rica or Nicaragua. We have now got to the stage at which the engine is running so slowly that it is in danger of stalling. A little more investment from the UK would repay itself many times over in terms of the benefits to the UK that would flow from it. The people I met in Costa Rica felt a good deal of good will towards the UK. Many have been here, some have studied here and they are very well disposed towards us. Frankly, we are not maximising our opportunity to put across our values, nor are we maximising trade opportunities.

UK Trade and Investment operating in Costa Rica has now been downgraded to a response service only. We met the UK Trade and Investment people. They were quite clearly capable of actively going out there, identifying markets for UK businesses and securing them with little difficulty, given the stable nature of Costa Rica and the fact that the country is growing successfully and is well disposed towards the UK. However, only a response service is in operation and I   understand that that was almost withdrawn and was saved at the last minute only after a huge fuss was kicked up.

Why are we neglecting trade opportunities in the country? The Minister will probably say that there is a finite budget for these matters, priorities have to be allocated as the new countries enter the European Union, and we have had had to reconsider our role across the globe. I understand all that. However, has a cost-benefit analysis been carried out to find out whether, if we had more personnel there—whether from the Foreign Office or UK Trade and Investment—they might pay for themselves in terms of the money that we would recoup from their presence?

We met business people from UK companies in Costa Rica. The Minister will know that many UK companies operate there. Frankly, some of us were embarrassed by the lack of support that we appear to be giving to those companies, which want to expand, to the benefit of both Costa Rica and Britain. There is no British Council presence in the country any more. There have been two annual Chevening scholarships, but there was some suggestion that they might be withdrawn. Perhaps the Minister can confirm whether that is the case. In general, we are underperforming. Investment would more than repay itself. Thanks to the ambassador and her staff, who are excellent, we are punching above our weight, but there is only so much that can be done with the resources available.

When we went on to visit Nicaragua, the story was similar. The visit was interesting. There are elections coming up and there is a real possibility that Daniel Ortega, whom we met, will return. It was an interesting experience meeting him. We learned that one has to interrupt him in order to get a word in. He sort of expected that. If we did not interrupt him, he carried on indefinitely, like some throwback to the 1970s. He is very much influencing what is going on. There is a difficult constitutional situation, as the Minister will doubtless be aware. There is some sort of unusual pact—I would not quite say devil's pact—between the Sandinistas and the supporters of former President Alemán, who, of course, has been charged with money laundering and embezzlement. The situation is far from stable at present.
 
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The power of the Executive has also been increasingly curtailed by the legislative branch in a way that is not entirely helpful in the sense that there now appears to be an unfortunate degree of political involvement in, for example, the nomination of Supreme Court judges and the members of the electoral tribunal. However, we might not be in a position to exert as much influence as we would like, given the paucity of our resources in the sense that, from our point of view, Nicaragua is now essentially administered from Costa Rica.

I should say that the Department for International Development is clearly doing some good work in Nicaragua. We went to see a couple of the projects that it has been supporting, including the association for people living with AIDS. DFID is doing some good, cutting-edge stuff there, but I am concerned that, to some degree, it is operating as a kind of surrogate embassy and almost undertaking Foreign Office functions because of the lack of an embassy in the country. Again, sadly the position that we saw was, to some degree, one of retrenchment and withdrawal from the country on the part of the UK, rather than of taking the opportunities that exist to boost the UK's position.

It is also important from the EU perspective that the EU's voice is heard. The American voice is certainly heard in Nicaragua, and the louder the US voice, the less its influence. America may wish to reflect on how it undertakes its foreign policy. I am sure that the Minister will not comment on that observation.

DFID's programmes undoubtedly seek to improve the economic opportunities for poor people and strengthen the effect of planning and policy making. The programmes go some way towards doing that. I welcome the fact that the UK cancelled its multilateral debt with Nicaragua in 2004. It is a welcome and sensible move, which has gone down well in that country.

We have good trade opportunities. Companies such as GlaxoSmithKline, Shell, Securicor and Land Rover are well established in the country, but they do not get the support that they ought to from the Government as an entity. The issue is more for the Department of Trade and Industry than the Foreign and Commonwealth Office, but it is relevant to the debate.

We have historical ties to the Atlantic coast of Nicaragua as a consequence of British landings in the 17th and 18th centuries. There is a large English-speaking population who still feel close ties to this country. We met some of them, and they had attractive and warm personalities. We all wanted to return from that country in order to help. I know that the hon. Member for Liverpool, Walton has organised a meeting with the Minister at DFID, and we are grateful for that and we shall attend on a cross-party basis.

What is happening on the Atlantic coast is sad. There is little investment stretching from Managua to the Atlantic coast. There is no road to the town of Bluefields, which has a population of 60,000. The road stops some way west of the town. When we raised that with the people from the Atlantic coast, their view was that the horse always set off from Managua and always died half way across the field, never quite reaching Bluefields nor the eastern seaboard. It is a pity for Nicaragua that it cannot or has not developed the Atlantic coast. Its geographical position is useful in
 
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terms of trade, with openings to the Pacific and the Atlantic. It seems that the Atlantic coast is entirely ignored.

I raised the question of funding via a written question to DFID. It is clear that DFID takes an interest in how the funds are allocated, although it seems to be adopting a funding policy in common with other countries' general programmes. Although that may make some sense, it has lessened the ability to determine how the money is spent. There is an issue about how well our money is being spent.

It is true that there are budget headings in the Nicaraguan Government account to show that money is being spent on the Atlantic coast. However, the Atlantic coast people to whom we spoke said that it is simply not spent. The money stays in the budget or is redirected. We cannot unfortunately rely on the budget heads and the published accounts from the Government to see what is happening. We must do something else to ensure that money is spent in those areas.

DFID's spending ought to be dependent on a proven assurance that money is spent on those areas of the country that need it most. The Atlantic coast is one of those. It is to the benefit of Nicaragua to have the money spent in that area.

My other point is about the San Juan river dispute, which was of concern to both countries when we were in Nicaragua. It is an unfortunate dispute about who can do what on the river. Everyone accepts that the river belongs to Nicaragua, which possesses sovereignty over it, and everyone accepts also that Costa Rica has rights of passage on the river. That curious debate has reached epic proportions about whether Costa Rican police carrying arms can operate on the river. Costa Rica does not even have an army; it spends its money on the health service, education and other matters. I do not say that we should adopt that policy ourselves, but money spent on health and education is probably more warmly welcomed by the population than that spent on some of our overseas jaunts. However, I digress.

I am concerned that the stability of both countries should not end up compromised by what appears to be a very small dispute, and that valuable resources that ought to be spent on improving the lot of the population at large should not be spent on military matters. If the Government could help in any way—perhaps they can, having been involved historically in the region—that would be very welcome.

4.15 pm

The Minister for Europe (Mr. Douglas Alexander) : I am most grateful to the hon. Member for Lewes (Norman Baker) for securing this debate. His contribution is eloquent testimony to the importance of Inter-Parliamentary Union groups visiting and seeing for themselves the kind of initiatives that he was able to describe in such detail following his recent trip to Nicaragua and Costa Rica. I also place on record my personal gratitude for his generous words about Ambassador Georgina Butler, whom he described as "unstuffy". I shall ensure that his kind and generous remarks are relayed directly.

The hon. Gentleman made comments about Daniel   Ortega's style of conducting meetings; propriety and diplomatic convention oblige me to resist
 
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commenting on that. Suffice it to say that my own limited experience of diplomacy—first as Minister for Trade and then as Minister for Europe—convinces me that Mr. Ortega is not alone in approaching meetings in that style. I have faced similar challenges on how to ensure that the British Government's point of view is communicated in various meetings during the past couple of years.

The hon. Gentleman asked a number of questions about Foreign and Commonwealth Office policy towards Costa Rica and Nicaragua, and I shall direct myself to some of those concerns. The background was set out in the December 2003 White Paper "UK International Priorities: a Strategy for the FCO". That set out the Government's international priorities for the next 10 years and the Foreign and Commonwealth Office's strategy for delivering them.

It was clear that we needed to evaluate our network of overseas representation to respond to inevitably changing priorities. We have, in the past seven years or so, opened 28 new posts, including major new missions in Baghdad, Basra, Kabul and Pyongyang. Twenty-six posts have been closed over the same period, and Managua in Nicaragua is one of those. None of those decisions has been taken lightly, but it is essential that we align our resources to our overall priorities and have the ability to respond to change.

I assure the House and the hon. Gentleman that we are not—categorically not—abandoning countries. As he knows, and recognised before our deliberations today, our ambassador to Costa Rica is now also accredited to Nicaragua and is responsible for taking forward the Foreign and Commonwealth Office's strategic priorities for both those countries. The Department for International Development's central America office is in Managua, as was acknowledged in the hon. Gentleman's contribution. The head of the Department for International Development office, whom I know the hon. Gentleman met on his visit, is also accredited to the British embassy in Costa Rica. We also have an excellent honorary consul in Managua.

A key priority for the Foreign and Commonwealth Office in both Costa Rica and Nicaragua is to promote the rule of law and sustainable development, underpinned by democracy, good governance and human rights. We continue to seek opportunities to develop our cultural relations with the region, including through the Chevening programme. The hon. Gentleman said that he had heard rumours that the Chevening programme would be withdrawn from Nicaragua and Costa Rica; I assure him that that is not the case. Two of the presidential and one of the vice-presidential candidates in the forthcoming election in Costa Rica are former Chevening scholars. By any measure, that shows the importance of the Chevening scholars programme and its effectiveness in identifying those who will be figures of influence in Costa Rica and the region in the future.

The Department for International Development's work in Latin America is based on a regional approach to help the multilateral agencies. The hon. Gentleman raised that point in talking about the effectiveness and efficacy of using our money as part of a multilateral effort, rather than the Department for International
 
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Development determining priorities in isolation. That is notably the case in relation to the World Bank and the Inter-American Development Bank. The general policy context in which such individual decisions are made has received detailed Government consideration and is based on a judgment that, in many circumstances, pooling money across multilateral agencies is a more effective means of securing value for money and effectiveness of output than when each international development agency from a range of different countries chooses to set up its own mechanisms and deploy its resources unilaterally. In addition, the Department for International Development provides bilateral assistance to Latin America through United Kingdom non-governmental organisations. DFID maintains a bilateral programme of support for Nicaragua, the only remaining low-income country in the region other than Haiti, and has increased its annual budget for Nicaragua from £3.7 million to £4 million for 2006–07.

This is the first year that DFID will provide budget support to Nicaragua. Given our concerns about the party polarisation of central state powers and the fact that donor support to the Government's fight against corruption is hampered by political control of state powers, including the judiciary, the audit authority and the electoral circumstances, DFID Ministers decided, this year, to provide budget support direct to local municipal governments. DFID is also providing £1.5 million of additional technical assistance over three years to help strengthen the transparent auditing of municipal institutions. I hope that that commitment to transparency in audit goes some way to addressing the concerns about the public accounts.

DFID, the FCO and the Ministry of Defence have worked closely on emergency preparedness action in the region. As a result, HMS Cumberland stood ready to provide humanitarian relief in the wake of hurricane Beta, which hit the Atlantic coast of Nicaragua on 30 October. President Bolanos of Nicaragua and the United Nations were grateful to the Government for this offer. I understand that HMS Cumberland went on to seize two tonnes of cocaine in international waters about 100 miles off Nicaragua, for which we should all feel rightly proud.

The hon. Gentleman also raised specific concerns about the Atlantic coast region of Nicaragua. Since taking over responsibility for Nicaragua, the ambassador in San Jose has paid four visits to the Atlantic coast region and has made a point of raising a number of the concerns with the Nicaraguan authorities in Managua, reinforcing the message of the Under-Secretary of State for International Development, my hon. Friend the Member for Harrow, West (Mr. Thomas), who visited that region in March 2004. DFID's work to improve the auditing mechanisms of Nicaragua's central and local government expenditure should enable it to identify better in future the extent to which the national budget has benefited the Atlantic coast. DFID is also funding a countrywide programme to help local government and NGOs to provide basic care for people living with HIV/AIDS, again including those on the Atlantic coast. I am grateful for the hon. Gentleman's generous acknowledgment of the work that DFID is doing in that regard.
 
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DFID has also been supporting the United Nations Development Programme's 2005 national census in the coastal region. The census now covers a wider area and takes better account of local ethnic sensitivities. It has also helped the Government to identify more clearly the areas of poverty on that coast, it has increased their awareness of communities not previously registered and it has highlighted weaknesses in the electoral register in the coastal region.

Two weeks ago, with the assistance of La Prensa, the biggest Nicaraguan daily newspaper, the embassy launched a book of short stories about life on the Atlantic coast, written by children from Bluefields and Pearl Lagoon. It is hoped that this initiative will help raise awareness of the region and boost pride and self-esteem in the community.

The hon. Gentleman also touched on and expressed concern about the level of our commercial resources in Nicaragua and Costa Rica. UK Trade and Investment offers support both to companies in the UK trading internationally and to overseas companies seeking to locate in the UK. As some hon. Members will be aware, UKTI's 2004 spending review settlement included a £20 million cost reduction in its global overseas network. Following that decision, a fundamental review of the network was carried out to identify and prioritise business needs. Although it can no longer offer the full range of market services in Costa Rica and Nicaragua, UKTI is focusing its commercial resources on responding to the needs of UK businesses. The level of commercial staffing at the British embassy in Costa Rica reflects this demand, and I assure the hon. Gentleman that we will continue to monitor it carefully.

The hon. Gentleman also referred to the internal political situation in Costa Rica and Nicaragua.

Norman Baker : I, for one, very much regret the cuts that have been made, because I believe they are self-defeating. Does the Minister agree that it would be sensible to have a cost-benefit analysis carried out to discover whether any increase in posts in these countries, and perhaps more widely, might pay for itself in terms of benefit to the British economy?

Mr. Alexander : I assure the hon. Gentleman that, as part of the spending review process, careful consideration was given to the relative return, on the basis of the commitment of resource to UKTI, and to a need for UKTI to be a customer-led organisation.

An important dialogue is not simply a dialogue with the country post where historically, on the basis of legacy, there has been representation, but a candid and clear conversation with organisations such as the CBI as to where they wish resources to be deployed. Frankly, given the changing nature of the international business environment, a measure of the effectiveness of the
 
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UKTI, albeit inevitably involving difficult decisions, is that periodically there are reviews of the relative resource allocations. I assure the hon. Gentleman that, within UKTI and in UKTI's discussions with the Treasury, careful consideration is given to the impact that UKTI staff in post can have both in securing inward investment into the United Kingdom and in promoting British exports within those markets. We will keep that matter under review, not just in terms of our own judgments in these situations, but also by careful and sustained dialogue with organisations such as the CBI.

In the time available, let me return to the internal political situation in Costa Rica and Nicaragua. President Pacheco is committed to the fight against corruption and is working to reduce poverty in Costa Rica. We support Costa Rica's commitment to arms control and non-proliferation. We will work with the Costa Rican Government and other supportive countries in the region to establish an arms trade treaty.

We encourage the Costa Rican Government to continue its proactive environmental policies, protection of biodiversity and the innovative ways of combating and even reversing deforestation within its   borders. The provision of over 90 per cent. of Costa Rica's energy needs from renewable, often hydroelectric, sources, as the hon. Gentleman identified, is also admirable. I hope that there will be opportunities for other countries to learn from the experience garnered from the initiatives being taken within Costa Rica.

We hope to continue to enjoy the good relationship that the hon. Gentleman was kind enough to acknowledge with whatever Government the people of Costa Rica choose next year.

In Nicaragua, political stability is a prerequisite for the economic development and greater social cohesion needed to combat the poverty and inequality that have afflicted that country for too long. We welcome the recent developments that have helped reduce tension between the executive and legislative branches of government in Nicaragua, and also the progress on financial and other reforms, which are essential to unlock the IMF programme and release funds from international donors.

As the hon. Gentleman knows, the Foreign and Commonwealth Office's resources are inevitably stretched in many areas. He generously recognised that reality at the outset of his remarks. We cannot, therefore, answer every demand placed upon us. The Government need to be ready to shift resources where they best meet our international priorities. I hope that, on the basis of my remarks, the hon. Gentleman is convinced that the important process of prioritisation categorically does not mean the abandonment of central America or any individual country therein. Careful prioritisation and hard decisions are required. On that basis we continue to make policy.
 
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