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Lord Ponsonby of Shulbrede: My Lords, I thank the noble Viscount for giving way. He seems to be accusing the Government of being somewhat tardy in their response. It might be appropriate to refer to CAFOD, one of the NGOs to which I spoke recently. It stated that after the first telephone call it received a donation of £95,000 to its work in the region. That was an immediate response. Not only did the Government have their own facilities in the region, but they were quick to fund other NGOs which also had facilities there.
Viscount Waverley: My Lords, this afternoon I attended a round table discussion where the message was somewhat different. At a later time I shall be delighted to discuss the issues with the noble Lord, but we must press on. I believe that there is a concern. We want the best for the future and therefore I shall continue. NGOs have a problem, but I can discuss the issue with the noble Lord at a later time. I thank him for his intervention.
I believe that without the presence of the training mission in the region nobody would have been sent from the military. But they were and they must be congratulated on being able to implement defence diplomacy at its best. The difficulties start arising when one realises that, although our ambassadors were requesting assistance via the Foreign and Commonwealth Office, the DFID, which is the leading Ministry for disaster relief, declined, for example, to request MoD assistance on the grounds that it might have to pay. The MoD, to its eternal credit, decided to take hold of the situation. But because its ships and men
I note that the deployment of the guard ship is to be reduced as a result of the reduction of warships under the recent Strategic Defence Review and so future support for disaster relief in the Caribbean will be less. Will the Minister confirm that?
Finally on this theme, although credit must be given to our regional ambassadors and defence attaches, is the Foreign and Commonwealth Office, through necessity, considering closing posts in both Honduras and Nicaragua? If so, will the Government reconsider that position?
On a different tack, I understand that today Central American Presidents will meet with international donors to discuss a massive injection of aid, with the Presidents also looking for trade benefits and immigration support from the United States. Will the governments contribute to that? If so, will the Minister comment on it? UN agencies estimate that it will cost 5.3 billion dollars just to repair the damage to infrastructure and housing in the region. I also understand that Nicaragua will be seeking fast-track approval to open US markets for its products. Ministers here might wish to keep a watch on that situation, as the United States may be about to contradict its Lome concerns. On the question of debt, are European governments offering to suspend bilateral debt service payments to help Honduras and Nicaragua?
Briefly, what of the future? I believe that dramatic action is called for. I call on the Government to set up an inquiry to consider the implementation of an effective rapid response mechanism, and to consider such matters as whether disaster relief should be taken out of the hands of the DFID and given to the Foreign and Commonwealth Office, for which I believe there could be a strong case. Central America and, by extension, the Caribbean are susceptible to an annual catalogue of disasters and it is essential that we prepare ourselves for such calamities.
Lord Redesdale: My Lords, I thank the noble Viscount for initiating this timely debate. It is timely as this week the international community will hold two meetings of vital importance to the future of Central America. The Paris Club of creditor nations held their regular monthly meeting in Paris a couple of days ago. On the agenda was an item to discuss debt relief for Central America. Also, the leaders of Nicaragua, Honduras, Guatemala and El Salvador will meet in Washington DC with international donors today and tomorrow at an emergency consultative group, hosted by the Inter-American Development Bank.
I have two questions for the Minister. What progress does the noble Baroness expect to come out of those meetings and what will be Britain's contribution? I want to focus on those points because I believe that many
Prior to Hurricane Mitch, the countries of Central America were already among the poorest nations in the western hemisphere. In 1997, 2.6 million Hondurans and 2.1 million Nicaraguans lived below the poverty line. That represents 50 per cent. and 47 per cent. of the countries' respective populations. In Guatemala, 53 per cent. of the population live on less than 1 dollar per day.
Surveys by Oxfam International staff in the districts of Choluteca and Valle in Honduras reveal a dire situation. Displaced families are living in rudimentary shelters; food shortages prevail; and town and village water systems have been destroyed. Not only have people lost loved ones and homes, but many have lost their only sources of livelihood as well. An estimated 80 per cent. of the region's agricultural production has been lost, including food crops as well as valuable export commodities.
Outbreaks of cholera, and other water-borne diseases resulting from contamination of food and water, have been reported in all four countries, and the death toll, as may be expected, may exceed the death toll caused by the hurricane itself.
If the reconstruction programme is to be equitable and sustainable, it must make rural development a priority. Reconstruction must not stop at the cities. In Nicaragua, for example, three-quarters of the poor live in rural areas. For those who have been displaced by the storm, the goal must not simply be a return to unsafe, crowded and marginal land, only for them to be swept away by the next storm. For the many farmers at risk of losing their land as a result of loan defaults, debt forgiveness by local banks will be necessary. Efforts are needed to protect those small landowning farmers from displacement and to open access to land and credit to those surviving on unsupportable lands. Environmental degradation, closely related to the poverty of the people--a major contributing factor in the devastation--must be reversed.
Clearly, achieving sustainable development, beyond merely restoring those countries to the pre-Mitch status quo, will take far more resources than any of the countries can provide themselves. The Government of Honduras have made preliminary estimates that recovery efforts may cost more than 2 billion dollars and take more than 20 years to complete, just to reach the development levels in existence prior to Hurricane Mitch.
The long-term problems of these countries are, I believe, closely associated with their debt levels. Rather than focusing on the immediate problems of aid, which was so necessary after the hurricane, I would like to focus on the issues of debt.
Even before Hurricane Mitch, Honduras and Nicaragua were struggling under the weight of immense debt burdens. Their positions will be far worse now. At the end of April 1998, Nicaragua had a debt of over 6.1 billion dollars, with the highest per capita debt in the world, at 1300 dollars per person. Debt service payments of 254 million dollars in 1997 took over half of government revenue.
Debt service payments in Nicaragua were two-and-a-half times current expenditure in health and education combined, yet over half the population was living below the poverty line and two-fifths of poor children were malnourished. Half of those people are unable even to meet their daily food needs.
A similar situation could be found in Honduras. Honduras had a debt of 4.1 billion dollars at the end of 1997. Debt servicing of 410 million dollars represents a third of government revenue. At the same time, 40 per cent. of children below five years of age are malnourished.
Guatemala and El Salvador, whose debts are not as high as Nicaragua or Honduras when compared to exports, also are under the strain of debt payments. According to the World Bank, El Salvador paid approximately 314 million dollars to service its debt in 1996. Thus, debt relief for those countries would also be an important component of the recovery package.
Both Nicaragua and Honduras are among the 41 countries classified as heavily indebted poor countries (HIPC). The HIPC initiative is a World Bank/IMF framework, covering all categories of debt owed by poor country borrowers. It is intended to reduce debt to sustainable levels.
The HIPC framework was inadequate for Nicaragua and Honduras even before the hurricane. Under the best assumptions, neither Nicaragua nor Honduras would have received multilateral relief through HIPC until some time past the millennium. Nicaragua is not due to receive debt relief until the end of 2002 and Honduras is not set to receive assistance until at least 2004, if it qualifies at all.
One reason for delay is that countries have to comply with up to six years of IMF adjustment programmes before becoming eligible for HIPC relief. Nicaragua will have completed half of those programmes by the end of 1999. Honduras has yet to sign a new agreement with the IMF, which would allow it to enter the framework at all. Such programmes are unlikely to survive the economic shock of this catastrophe, and would need to be adapted to include human development concerns. Prior to Mitch, the IMF argued that Honduras might not be eligible for debt relief because its export revenues were high enough to cover debt service. That point was disputed by the Honduran Government, although it is clearly irrelevant now.
Rather than read out too many more statistics--I believe they have been covered--I would ask the Minister to give a brief oversight of how the meetings have progressed and to press the Government to make sure, in their membership of the IMF/World Bank and in their representations to the Inter-American Development Bank, that they push as hard as possible in the area of debt relief.
The levels of devastation from hurricane Mitch could consign these countries to years of poverty and misery, with massive reversals in human development. An unprecedented disaster deserves unprecedented support, not just in the months ahead, but in the years ahead. The emergency consultative group and the Paris Club meetings present the international community with an opportunity to marshal the political will to deliver a package that matches the significant human needs.
I want to add just one point, which is quite frightening and should be borne in mind in relation to disaster relief. It came from the newspapers recently. Dr. Willoughby, an expert of the National Hurricane Centre in Miami, discussed what had made Hurricane Mitch so devastating. It was not the wind-speed factor, but the amount of rain that fell. That point was raised by the noble Lord, Lord Rea. The frightening factor is that he also predicts that those storms are not that unusual; indeed, the conditions that brought about Hurricane Mitch this year could prevail next year.
Before I sit down I should like to say that the work of the NGOs on the ground and the military personnel who were so quick to respond deserve the congratulations of this House.
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