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Baroness Rawlings: My Lords, I too thank my noble friend Lord Montgomery, for initiating this debate today. It is most timely, with the Paris Club meeting having taken place yesterday and the Red Cross transition announcement also being made this week. It has been an interesting and constructive short debate on a subject which is vitally important as thousands of people's lives are still at risk. This evening I shall concentrate on only one of the countries that was devastated by Hurricane Mitch. Other noble Lords have already vividly covered the others.

The horror that struck Honduras with Hurricane Mitch is now nearly two months old. But it was not until 9th November that we eventually had a Statement from the Secretary of State. Britain's aid package was but the paltry sum of £750,000 to a country that is burdened with debt repayments of over £1 million a day. In 1996 it still had a debt of £3 billion, more even than its annual GDP. That is clearly unsustainable even in normal circumstances, which we are not discussing today.

I should like to cover just three points in the short time we have available today: first, humanitarian relief; secondly, the horrific statistics, many of which have been mentioned by my noble friend Lady Hooper; and, thirdly, debt relief, which was also mentioned by most noble Lords today. In relation to humanitarian relief the British Red Cross, in whose gallant activities I have worked for over 30 years, sent three emergency flights in November with water containers, purification tablets,

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cooksets, disinfectant, and backpack sprayers. That is but a start. So far the emergency aid has been remarkable considering the relatively small funds available.

The Red Cross has also had assessment teams in place in the area. They reported back to Geneva only this week. They have already been debriefed and we are about to receive details of what is now most urgently needed for energy relief and reconstruction. The directors will lay out the plans and budgetary needs. It is important that there is worldwide co-ordination with only one appeal document. The federation has a website on the Internet which we all hope will help the appeal.

I wish to ask the noble Baroness, Lady Amos, three questions. First, did the DfID team of assessors co-ordinate its activities with those of the Red Cross? Secondly, what allocation of the £3 million pledged by the Secretary of State during this transitional period for further humanitarian assistance has gone to the Red Cross? Thirdly, will there be additional funds?

The people of Honduras are so weary with disasters that they would set their lives on any chance to mend it or be rid of it. The Minister for the Interior said:

    "The catastrophe set them back 40 years".
It was only 10 years ago in 1988 that Hurricane Gilbert swept throughout the area leaving devastation in its path. There were many promises in its wake but none materialised. It is a mountainous country, three-quarters covered by pine forest. Ambitious zoning and development plans were supposed to give the country order, conserving crucial green areas in its hilly country traversed by rivers and strictly limiting precarious hillside development. Sadly, the plan was never implemented. Today, both we and they have an Augean task--seemingly impossible--to get it right this time. Unfortunately, those rivers were destructive rather than constructive.

My second point concerns the horrific toll of over 6,000 deaths, over 8,000 missing and over 2 million homeless and destitute in a population of only 5.7 million people. The real problems we face today are the epidemics that have sprung up because many cities were under water and mud for so long. Most of the epidemics are being spread by contaminated water. The doctors say that health conditions will probably get worse before they get better. According to health officials 20,000 people have cholera, 31,000 have malaria and 208,000 have diarrhoea. Surely we can do more to help this modern hazard.

That leads me to my third point which concerns debt relief and which has been mentioned by nearly all of your Lordships today. This debate is timely because the Paris Club of western creditors met only yesterday, as the noble Lord, Lord Redesdale, said. It concluded by granting a three-year moratorium on bilateral debt repayments for Honduras and Nicaragua, but Honduras is to go through the Paris Club rescheduling of debt. That means it will have to comply with a structural adjustment programme and that will not be easy. The people of Honduras had no Balshazzar's feast before and were probably one of the poorest nations in the western hemisphere, as was mentioned by the noble

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Lord, Lord Rea. In 1997, 2.6 million Hondurans lived below the poverty line. The country had a trade deficit of 91 million dollars and a current deficit of 309 million dollars.

Despite the UK's support for the World Bank Trust Fund, whereby one creditor merely helps another, the UK still fails to agree to cancel our unilateral debt. It is a minimal amount but the cancellation would send a huge signal to G7 and G8 leaders and multilateral institutions. France cancelled its unilateral debt, which is far larger than ours at £42 million. It is taking the lead on this issue. Why do the UK Government still fail to lead in our response?

The leaders of Nicaragua, Honduras, Guatemala and El Salvador are attending an emergency meeting in Washington with international donors today and tomorrow to discuss debt. I am afraid that Hurricane Mitch was not foreseen and was far worse than anyone could have envisaged. As Shakespeare's Antony said:

    "We cannot call her winds and waters sighs and tears: they are greater storms and tempests than almanacs can report".

I fully support my noble friend Lord Montgomery, and look forward to the reply of the noble Baroness. I trust that she will press our views to the Secretary of State.

7 p.m.

Baroness Amos: My Lords, first, I thank the noble Viscount, Lord Montgomery of Alamein, for his kind words of welcome. I should like to assure your Lordships that it is correct to say that this is the first debate to which I have responded on the subject of international development, although your Lordships have been keeping me on my toes and very busy with Questions and a Statement. I should like to join with other noble Lords in thanking the noble Viscount, Lord Montgomery of Alamein, for initiating this very important debate. His commitment to Central America is well known in this House. I should like also to thank other noble Lords for participating in what has been a high level and expert debate. I should also like to thank your Lordships for having recognised the efforts made by the Government. In the time available, I may not be able to answer all the questions that have been raised this evening, but if I fail to do so, I undertake to write to noble Lords and give the detailed answers which are required.

Hurricane Mitch has been devastating for the poor countries of Central America, particularly Honduras and Nicaragua, but also Guatemala and El Salvador. Many of your Lordships have referred to the scale of the devastation, and I shall not go into the details again. However, I am sure that your Lordships will agree that despite frequently hearing these figures, it is extremely difficult to grasp the impact in terms of personal tragedy and the effect on the people in those countries.

The long-term effect on their economies is being carefully assessed, but those fragile economies have been severely knocked back. Before this latest disaster, the United Kingdom had decided, following the publication of the development assistance White Paper a year ago, that we should increase our modest assistance

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programme to Central American countries because they are so poor. That point was raised by my noble friend Lord Ponsonby. Recent events underscore the vulnerability of those countries and their need for international assistance. We shall be re-focusing our own plans for the region to take account of their post-hurricane needs.

I take issue with the noble Viscount, Lord Waverley, in that the DfID response was immediate; it was focused; and it was effective. In my Statement to your Lordships in early November, I made it clear that DfID immediately contacted NGOs who were already working in the countries concerned to offer support. We made money available to the Red Cross regional appeal. We contributed to the Pan-American Health Organisation for basic health care needs; we gave money to CAFOD and to Christian Aid and to NGO care.

In addition, we greatly valued the eye-witness reporting from our very small HMG posts in the countries concerned. They also helped us to facilitate elements of the emergency response; for example, by giving advice and help to NGOs and others. However, I must say to the noble Viscount that it is my view that the FCO does not have the right kind of expertise, experience or resources to take on the job of co-ordinating United Kingdom emergency aid. I think that the DfID did an excellent job in relation to these issues.

Our first priority after the hurricane was to provide emergency aid to save lives and to offer some immediate relief. Four Royal Navy ships in the region made a magnificent contribution, both in delivering emergency supplies and in search and rescue operations. They saved many lives, and governments in the region have expressed appreciation of their efforts. The noble Baroness, Lady Hooper, referred to the importance of partnership, and the Government welcome the partnership approach to immediate relief and, in particular, the work between NGOs, the private sector and Government.

Once the immediate life-saving phase of the operation ended, we began to focus on reconstruction. The United Kingdom plans to operate within the framework of a "transitional appeal" launched and co-ordinated by the United Nations. We will provide, in addition to the £1 million already spent on emergency relief in the region, over £3 million in further humanitarian assistance over the next six months to enable people, especially those who have been left completely destitute, to survive and cope. I hope that my noble friends Lord Ponsonby and Lord Rea will be reassured about that.

We are also working on plans to respond to longer-term needs. We have already planned to spend £6 million on Central America over the next two years. We are now re-focusing this to take account of reconstruction needs, and we are also taking forward the proposals on debt relief which the Chancellor announced on the 7th and 10th of November. I will come back to that later in my response. The £3 million which we have allocated for the next six months will

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be spent on repairing and rehabilitating roads and small bridges in Honduras and also on a public works programme to benefit poor families by creating short-term local employment.

In Nicaragua we plan to work through UNICEF to repair the water and sanitation infrastructure and to restore primary health and education services for some of the communities affected by the hurricane. My noble friend Lord Rea and the noble Baroness, Lady Rawlings, also referred to health. We shall be supporting a regional health programme in this transitional humanitarian phase. There has been 60 per cent. damage to the health sector. Good research is already in place and that has given us a great deal of information about the spread of diseases and so on.

Early detection and targeted control interventions have already proved their value in the region through aborting potential epidemics. Continuing support for this will remain essential in the coming months. The diseases outlined are all endemic to the region. We recognise that the best work is being done by agencies which are already established in the region and are working on the ground. They are able to mobilise existing structures and systems and to draw on their local knowledge and on the trust which they have built up in the countries concerned.

The noble Baroness, Lady Hooper, talked about the next phase, and indeed this was also referred to by several speakers. The United Kingdom's contribution to the next phase has been put together on the recommendations of an expert mission from the DfID, which visited Honduras and Nicaragua at the end of November. In his opening remarks the noble Viscount, Lord Montgomery of Alamein, welcomed the mission and asked for particular information on its outcome.

It has reported that during the next few months, survivors of the hurricane will remain vulnerable in several ways because the lack of safe water and the disruption of health services increase the risk of disease. Food security will be threatened if seeds and other materials are not provided in time for the current planting season. If primary schooling is not restored, there is a risk that children may drop out permanently from education. The best way of delivering our assistance is by working within an overall international framework in order to target local communities, which are often very effective in mobilising self-help and reconstruction programmes.

In Honduras, however, there is a particular problem as regards access to poor communities because of disrupted roads and communications. This is why we shall be focusing on the rehabilitation of rural roads and bridges as part of our package of assistance. A consultant based in the region has started work today in consultation with the Ministry of Works in assessing priorities for assistance.

The noble Lord, Lord Redesdale, talked in particular about the need to rebuild the economies of the region. As has already been mentioned, the international donor community is meeting today and tomorrow in Washington, under the chairmanship of the Inter-American Development Bank to consider the

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medium and longer-term reconstruction needs of the region. The United Kingdom will be pressing for the reconstruction effort to be as well-co-ordinated and coherent as possible. We shall also be pressing for assistance to be delivered in a variety of ways which reflect needs: some assistance, for example, is best delivered through NGOs and organisations of civil society. The multilateral institutions, particularly the World Bank and the Inter-American Bank, are also likely to have a key role to play in pulling together the elements of the international reconstruction effort. As I have already mentioned, the UK's own bilateral contribution to longer-term reconstruction will be some £6 million over the next two years.

I said earlier that there are a number of statistics which have been mentioned by noble Lords in relation to the devastation. Honduras has lost 80 per cent. of its banana crop. The noble Viscount, Lord Montgomery, asked in particular about bananas and the noble Viscount, Lord Waverley, was also robust in his approach to the issue. The economic effect of Honduras losing 80 per cent. of its banana crop is that, in terms of replanting and the medium and long-term recovery of the economy, we need to look in particular at the agricultural sector. Those issues are being considered by the governments of the region as part of discussions on the planned international assistance effort.

On bananas in particular, our experience with Caribbean banana producers--and, indeed, with other developing countries whose economies depend on single crops--indicates the need for countries like Honduras, in the context of planned replanting of its banana crop, to consider the need to restructure the industry and also the scope for diversification into other crops.

On a separate matter, we are supporting the European Commission in seeking to resolve through established WTO dispute settlement procedures the current dispute between the European Union and the United States on EU support for ACP banana producers. We are also in the process of renegotiating the Lome Convention in the context of a new round of WTO negotiations. Indeed, the two things are coming together.

The noble Baroness, Lady Hooper, mentioned the expertise of the agricultural centre which she recently visited. We shall, of course, bear that in mind when looking at the reconstruction effort.

We are also discussing with the European Community how its own assistance to the region may most effectively be spent. It has already made available about 15 million ecu through its Humanitarian Office for immediate relief needs. The Commission is now considering the establishment of a regional reconstruction fund, for which a preliminary figure of 150 million to 200 million ecus (over several years) has been suggested. We shall be keeping in close touch with the European Commission about the delivery of this assistance. We shall also be pressing the EC to ensure that its own regional reconstruction fund is consistent with the wider international reconstruction effort. The EC is taking part in the Washington meeting today.

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I believe that all noble Lords who participated in the debate mentioned debt relief. Debt relief will also be an important element in the economic reconstruction of these countries. It is quite clear that neither Honduras nor Nicaragua will be in a position to service their external debts for some time; a point made by the noble Baroness, Lady Rawlings. Funds are needed urgently for reconstruction. So we have been working with like-minded creditors in the Paris Club to ensure that there is support for the cancellation of bilateral debt repayments. Yesterday, as has already been mentioned, the Paris Club met and agreed to defer bilateral debt service payments for the next two to three years, with no late interest charges.

However, most of these countries' debts are owed to international financial institutions such as the Inter-American Development Bank, the Central American Bank for Economic Integration, the World Bank and the IMF. These funds could not simply be written off without causing enormous damage to the institutions themselves; and, of course, jeopardising the likely future needs of Central American Governments to borrow from the development banks.

Therefore, we have proposed two courses of action. I have to point out to noble Lords that we are taking the lead in these discussions. First, we propose that the international financial institutions look at ways of meeting some of the costs themselves; for example, by financing existing loans on more concessional terms. Secondly, we propose the establishment of a multilateral trust fund to help service those debts. The UK proposed that such a trust fund be set up shortly after the hurricane, and the World Bank board has now approved the establishment of such a fund. The UK is contributing £10 million and I am pleased to tell noble Lords that total pledges already stand at over 100 million dollars. When the German presidency of the European Union begins in January, I can confirm that Germany will be putting together its own debt initiative for the G8 summit in Cologne next year.

I hope that noble Lords will bear with me while I say a few words in conclusion. The UK has also proposed to the international financial institutions that the timetable for relief under the heavily indebted poor countries (HIPC) debt initiative be shortened to help countries affected by the hurricane. The HIPC initiative aims to reduce the external debt of heavily indebted poor countries to a sustainable level. I shall not go into the detail of how that impacts upon Nicaragua and Honduras, bearing in mind the time factor.

However, I should remind noble Lords that 1998 has been a particularly bad year in terms of there being a large number of natural disasters, which some experts link to climate change. We believe that there is a stark lesson about being better prepared for disasters which emerge from events such as those which took place in Central America. Therefore, it would be critical to include in the international recovery programme for Central America specific elements to improve the ability of these vulnerable countries to withstand future

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disasters. We have worked hard to strengthen the capacity of the international system to respond in a co-ordinated way to emergencies of this kind. We shall be pursuing those aims in the context of a UN-led

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"lessons-learnt exercise" early next year. What we are seeking to establish is the basis of sustainable long-term recovery.

        House adjourned at eighteen minutes past seven o'clock.

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