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Lord Kennet: My Lords, we are 17 minutes ahead of time.
Lord Chesham: My Lords, the noble Lord still has only four minutes in which to speak.
Lord Kennet: My Lords, I understand that. I utter one hope. Under the guidance of the noble Baroness I hope that we shall be able to play a more active part to get European Union movement in this field, and especially to line up with the European ECGDs.
9.27 p.m.
Lord Thomson of Monifieth: My Lords, like other noble Lords who have spoken I, too, thank the noble Baroness, Lady Young, for asking this Unstarred Question, and especially for being such a notable ambassador for Britain in expanding trade with Cuba. I was therefore all the more disappointed to hear some of the criticisms she felt she had to make about the response of the Government in terms of ECGD. That was echoed by the noble Viscount, Lord Montgomery. I hope that in due course we shall receive an answer from the Minister on those points.
My own view is that by far the best way to increase our influence in a country such as Cuba is through trade and dialogue. During my many years in politics I have had some experience of sanctions. I started as a sanctions enthusiast, but as the years have gone by I have become more sceptical about them. Sometimes they are no doubt necessary and inevitable, as in the case of Iraq, but they involve the difficulty that they tend to make the poor poorer and powerful politicians more powerful. Ever since the Second World War and ever since the revolution in Cuba we have maintained an embassy and an ambassador there and have maintained a dialogue. I believe that is the better way to proceed in this case. Britain has, of course, historic relations of importance in the Caribbean generally. We have much to gain from encouraging the right sort of developments in Cuba. Cuba is, I suppose, almost the last of the old fashioned Soviet type communist states in the world. If we can do something to encourage a gradual movement towards a more civil society--as the noble Baroness called it--that would be important. It is important to encourage it to join the mainstream of Caribbean democracy.
As has been said, as a byproduct of our efforts in Cuba, there is the useful co-operation in the battle against drugs. I was glad to read that the Cuban Minister, the chairman of the commission, visited this country last year, and Scotland Yard has a team in Cuba at present. As almost every noble Lord has said, for their own domestic and regional reasons the Americans have adopted a different policy towards Cuba over a period of years from that adopted by the United Kingdom and our European and Commonwealth partners. The latest example of that is the notorious Helms-Burton Act. In terms of its results, the American policy seems to leave them in a very solitary situation. I note that the last time there was a resolution at the United Nations on the issue, 137 members of the United Nations voted to persuade America to repeal the Helms-Burton Act, with only two supporters, Israel and Uzbekistan. That is hardly a recipe for successful international diplomacy.
On our side of the Atlantic, not only the Government but the Government in association with its European partners have been wiser and more active in the diplomacy that they have promoted. I listened to what the noble Viscount, Lord Montgomery, said about this. I was interested to see that the European Union recently passed a new regulation to deal with the matter. It seemed to be of a usefully balanced character. It was robust and vigorous in terms of defending the interests of the European Union in international trade if the United States were foolish enough to pursue seriously the Helms-Burton proposals. At the same time, it was equally forthright in its espousal of the need to promote human progress and human rights in Cuba. I believe that it may have helped President Clinton at least to give the further six months suspension of the Helms-Burton Act. I believe that it was a good example of how European Union diplomacy can be effective and can play a useful part.
I believe that the European Union regulation requires a United Kingdom order to implement our responsibilities in respect of that regulation. I should
be grateful for information on how that is proceeding. I should also be grateful to hear from the Minister the Government's position about any British companies which feel that they are suffering damage from the effects of the American Act, and what help they can expect if the Americans were to proceed further on that matter.As other noble Lords have said, the Act is still on the statute book. As the noble Viscount said, it is unsatisfactory that we have to proceed on the basis of hoping for a fresh suspension every six months. I do not know what the constitutional answer is. However, I hope that if the Act cannot be repealed, like many Acts of parliament in many countries it might be allowed to wither on the vine or allowed to rust away and not be put into effect. I believe that the maximum international effort is required through the World Trade Organisation, and in other ways, to ensure if possible that the Act is never put into operation. I hope that Her Majesty's Government will play a leading part in that.
Before I sit down, I should like to say how greatly I admire, not for the first time, both the stamina and the versatility of the noble and learned Lord, Lord Fraser. He has just turned from the intricacies of domestic trade union law to the intricacies of the Helms-Burton Act. When he replies, I hope that he can give a positive response to the complaints made by the noble Baroness, Lady Young, about the trade matter, and reassure us that Her Majesty's Government will do everything possible in association with their partners to deal with the situation created by the Helms-Burton Act.
9.34 p.m.
Lord Peston: My Lords, we are indebted to the noble Baroness, Lady Young, for raising the matter before us tonight. I speak as an outsider. Noble Lords are aware that only in the most extreme circumstances do I ever allow myself to cross an international frontier. My speeches never contain sentences such as, "When I was in such-and-such a country". That does not mean that I am not sympathetic on this or on other occasions.
My task is particularly easy. The noble Baroness, Lady Young, and other noble Lords have raised the important points. All I can do is echo and reinforce their remarks.
I start by emphasising that the Cuban people are our friends, and I wish them well. I have no desire to tell them what to do, or to interfere with their freedom to make political and economic choices according to their preferences. That does not mean that I agree with them; nor--following my good friend, the noble Viscount, Lord Montgomery of Alamein--that I regard the command economy in its communist or other forms as desirable or as remotely economically efficient. I had my starry-eyed days, as did the noble Viscount. I was very sad to realise that one has to learn other things. But one does.
For me, as for all other noble Lords, the one-party state is unattractive. However, I take the view that the Cubans themselves must decide the path that they wish to follow and when they wish to follow it. All I say to
them is that it is possible to have parliamentary democracy and a free, mixed economy which is both prosperous and able to achieve fair outcomes for all citizens. I do not say that it is easy or guaranteed, or that, for instance, the democracies of the West do not sometimes go backwards as well as forward. However, I am optimistic that, over time, we do move forward and that we know how to rectify evils when they occur. I wish to persuade the Cubans, and for that matter others, of that belief. But I have no desire to threaten them, nor any wish to associate myself with those who do. In that connection--this is the nature of our debate--we do not mean in the military sense. I include economic threats. In the case of the Cubans, such threats are undesirable per se. But they are also undesirable in practice when confronting a proud nation. Here I somewhat echo the remarks of the noble Lord, Lord Thomson of Monifieth.I am not naive. I do not say that the position in Cuba with regard to human rights, for example, is acceptable. However, I repeat, the Cubans themselves must rectify that situation. I very strongly agree with the noble Lord, Lord Thomson that we must not reinforce the belief of those in Cuba who see the outside world as enemies and seek to justify limitations of expression and other freedoms on the basis of preserving the nation against outside threats.
The relevant comparison is with the totalitarian dictatorships of Eastern Europe. In the end it was the people themselves, coupled with the inexorable power of modern economic forces, that led to the downfall of those regimes. They were not brought down by economic or military threats. Sadly, and it is worrying in the present context, the economic failure of the successors to the former Soviet Union--I hope only for the time being--provides a very poor model to follow. I truly believe that the West failed the Soviet Union in its responsibilities there.
However, there need be no similar failure in Cuba when the time comes and when, as it is already doing, it eventually opens itself up more fully to the rest of the world. The Cubans are right in not wanting to see the return of United States based Mafia corruption, and worse, and all that went before. I hope that they are aware that we agree on that point. There is no inevitability that that will happen if Cuba opens itself up and we trade with that country as friends, not enemies.
The point about threats holds good equally in regard to the relationship between the United States and the European Union, and, from our particular point of view, between the United States and the United Kingdom. The United States and the European Union are of equal importance, and neither should threaten the other. That is my point regarding the Helms-Burton legislation. The United States and United Kingdom are allies of very long standing and, a fortiori, neither should threaten the other. That is what Helms-Burton seems to seek.
Let me say a word on ECGD. I was very upset to hear what the noble Baroness said and I hope that the Minister can reassure us. I am particularly concerned about this matter. It is not entirely my field of expertise, as an economist, but I would have thought that using
ECGD in this area should be self-financing and that there should be no public expenditure implications. I should like to know whether that is the problem and whether we are prevented from doing something which is sensible because of the forthcoming election and because no one is allowed to say that they would like to spend money on anything. In this case I do not see that that is the issue. I shall be told to be at least as silent as the Minister is on these matters. It seems to me that this is an example of something sensible which would not place a burden on the public purse. I should like to hear the Minister's view on that.I believe there is no doubt about the illegality of Helms-Burton and its eventual total ineffectiveness. Essentially it is causing a lot of trouble to no good end. Can the Minister tell us whether United Kingdom companies have already been in touch with his department? There are two dimensions to this. Have they been in touch because, as Lord Thomson said, they have been threatened? More to the point, is there any truth in the rumour that the US has been constructing what I think is called a hit list of companies and is having a go? I am quite confident--and it shows how confident I am that I am able to speak in this context--that, if that is happening, Her Majesty's Government will stand up to this nonsense. It is quite intolerable in the modern world, at the end of this century, after having fought for 200 years for free trade, that, of all countries, the US, the great leaders in our time in matters of free trade, should adopt this kind of policy.
We are all in complete agreement. In this case I am absolutely certain that Her Majesty's Opposition is in complete agreement with Her Majesty's Government, whichever way it turns out we shall be in a few weeks' time.
9.42 p.m.
Lord Fraser of Carmyllie: My Lords, I am delighted that in this important and well-informed debate--unlike in the debate to which I responded about an hour ago--there is clear unanimity of view about how Cuba should be approached. I am grateful to my noble friend Lady Young for giving the House an opportunity to consider our relationship with Cuba. We take that relationship very seriously.
In recent years there has been an extensive exchange of business delegations, Ministers and officials responsible for trade, investment, health, justice and other fields. My ministerial colleague at the DTI, Ian Taylor, paid a very successful visit to Cuba in 1995. In line with our policy towards Cuba, there are currently no plans for an exchange of visits on a purely political level. However, my noble friend may know Mr. Mike Mowlam, the DTI Director for Trade Promotion in the Americas. He will be available to visit Cuba at a suitable time to explore commercial opportunities.
It will come as no surprise to your Lordships to know that our policy towards Cuba, along with our European Union partners, is to encourage that process of transition to pluralist democracy and respect for human rights and fundamental freedoms, as well as a sustainable recovery and improvement in the living standards of the Cuban
people. A Common Position to this effect was adopted by the European Union in December last year. The Common Position notes that transition would be most likely to be peaceful if the present regime were itself to initiate or to permit such a process. We believe that constructive engagement is the most effective way of encouraging the reform process in Cuba, as the noble Lord, Lord Thomson, and many other noble Lords indicated.We hope that our political relations will progress in tandem with our trade and investment links. While we have made some headway in that political relationship, human rights and fundamental freedoms--we must be open about this--remain areas of particular concern.
We have called for an ending of arbitrary detentions and for the release of political prisoners; fair trials with independent courts; freedom of expression; free media; the right of citizens to seek political or public office individually or as members of parties or organisations; publication of legislation; lifting of restrictions on non-governmental organisations; Cuba's accession to the international covenants on civil and political rights and economic, social and cultural rights; and co-operation with the United Nations special rapporteur on human rights. So there are a number of areas where we have our differences, but we have spelt them out openly.
Let me turn to the other main strand in our relationship with Cuba: the development of our trade and economic relations. These have been further strengthened over the last year with, I am glad to say, a substantial increase in two-way trade. The figures to the end of November last year show exports of goods from the United Kingdom to Cuba of £23.1 million. That is an increase of some 33 per cent. on the same period last year and already exceeds those for the whole of 1995 when exports were just some £19 million.
In the other direction, imports from Cuba to the end of November 1996 were £18.5 million compared with £8.2 million for the whole of 1995. I am sure that the visits to Cuba made by my noble friend and others will have played their part in this satisfying increase in trade.
Activities last year which attracted financial support from my department included DTI-sponsored representation at the Havana International Trade Fair. That 1996 fair was the largest ever, with some 36 companies at the fair.
In June there was a DTI-CARITAG trade mission which comprised some 14 companies. I am pleased to say that another trade mission is planned for the coming month of July.
I turn to the Commonwealth Development Corporation. I am sure those who have participated in this debate will probably be aware that the corporation received ministerial authority to commence operations in Cuba in June 1995 and that an agreement was signed for the CDC by my honourable friend Mr. Ian Taylor when he visited Cuba. The CDC has identified four areas in which initially to concentrate its investment activity: the financial sector, mining, agriculture and industry.
I am delighted to be able to tell your Lordships that the first investment by the CDC will be signed on the 5th of next month for a financial sector joint venture. CDC will own 60 per cent. of a company to provide short-term working capital facilities in Cuba and will second a general manager to run the company. The remaining 40 per cent. will be owned by the commercial banking arm of Banco Nacional de Cuba. In line with CDC's private sector focus, the company will provide working capital and lease finance to commercial enterprises in Cuba which are subject to market disciplines. CDC will provide a line of credit of up to 15 million US dollars to the new company.
The Investment Promotion and Protection Agreement between the United Kingdom and Cuba which came into force in May 1995 will, I hope, encourage further investor confidence and investment flows. I should add that the CDC is also a financial intermediary for the European Community Investment Partners Scheme, an EU initiative which the DTI promotes to British companies wishing to create joint ventures in Cuba or indeed in other parts of Latin America.
Financial funding remains a necessary part of our relationship, both for humanitarian purposes and to underpin our efforts to encourage economic reform in Cuba. We contribute significantly to EU aid to Cuba, which was approximately £24 million in 1995, of which our share was about £3.7 million. That covered humanitarian assistance, support via non-governmental organisations and economic reform.
We recently donated some £50,000 to the Red Cross for emergency relief, following the damage caused by Hurricane Lili in October last year; the EU provided £480,000 in addition to that, of which our share was about £81,000. Again to encourage economic reform, there is a British Partnership Scheme through which £150,000 is available per annum for suitable schemes.
Several noble Lords raised the issue of drugs. Certainly drugs and drug-related crime pose the biggest single threat to the security and stability of the Caribbean islands as a whole. Cuba, by virtue of her geographic position, is a particularly attractive target for drug traffickers. Fortunately, the Cuban Government now recognise that threat and recognise also the importance of close international co-operation in that fight.
Our counter-narcotics is increasing and over the past few years the Government have provided assistance bilaterally and also through the United Nations drug co-operation programme in the form of training and equipment for Cuban customs and police. That has been very successful. Indeed, one such course run by Her Majesty's Customs and Excise resulted in a significant seizure of cocaine during the practical part of the course at Havana airport.
I turn to the issue of the ECGD. I shall take a moment or two to spell out the various ways in which we believe we have been extremely helpful in seeking to improve the economic performance and offering various lines where trade and investment might be improved in Cuba. The position on ECGD may not be as encouraging or
satisfying to those who have contributed to the debate. ECGD's short-term operations were transferred to the private sector credit agency NCM in 1991 and NCM, as a private sector company, will underwrite business with Cuba--it is a decision for NCM--only if a confirmed letter of credit is in place. The medium cover provided by ECGD was withdrawn in 1983 when Cuba first rescheduled its debt with the Paris Club. I regret that Cuba has allowed substantial arrears to build up under these rescheduling arrangements. Once Cuba has normalised its position with its creditors, ECGD would be prepared to review its cover position with regard to Cuba's readiness for new medium-term credits, but resumption of cover would depend on Cuba being able and willing to service new external debt on commercial terms in a proper manner.
My noble friends Lady Young, Lady Hooper and Lord Montgomery made reference to the approach adopted by other countries. Our information is that ECGD's approach is not out of line with export credit agencies in other countries trading with Cuba. The key issue for most agencies is whether in a given project the payment risk can be externalised. If it can, ECGD would be prepared to consider medium-term cover. I understand that the French credit agency adopts a similar policy view. As my noble friend Lady Young mentioned, the French have provided short-term cover in an arrangement involving sugar bartering. Although that may be the case, it was for short-term cover, and in the United Kingdom that is now in the hands of NCM and not in the hands of ECGD.
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