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Latin America

6.27 p.m.

Viscount Montgomery of Alamein rose to call attention to political developments in Latin America; and to move for Papers.

The noble Viscount said: My Lords, we turn from sport to Latin America. Of course, there is a connection between the two because many Latin Americans are good at sports. Football has become the national game in many countries. Some of your Lordships will remember the famous "hand of God".

During the past 23 years in which I have had the good fortune to be in your Lordships' House, I have drawn attention to Latin America on many occasions. I must admit that I owe this good fortune to winning a genetic lottery--as I was the only ticket holder in that particular event there was not much competition--and was given the great opportunity to introduce the subject. I made my maiden speech on Latin America, and on various occasions during those 23 years I have drawn your Lordships' attention not only to the general aspects of this greatly exciting continent but to particular countries.

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I appreciate that, due to other legislation which is passing through your Lordships' House, my opportunity to address your Lordships will soon be terminated. That is understandable. Therefore, I am looking upon today's debate as a kind of valedictory review of my time here and my involvement with Latin America.

Perhaps I should declare a few interests because 44 years ago in 1955 I went to live and work in Latin America; briefly in Argentina and Cuba and for longer periods in Chile and El Salvador. I returned to England in 1962. Since then I have travelled, through very good fortune, to every country in the continent, in a variety of capacities: commercial, financial, pro bono publico, parliamentary activities and in honorary capacities. To be able to visit every country in that great continent has been a marvellous experience. I have also been to some of the countries many times, an unforgettable experience that I hope to continue, if the good Lord spares me.

When I first went to Latin America, the political panorama across the continent was completely different. Military governments tended to alternate with civil governments, and democracy was very fragile, with the possible exception of Chile and Costa Rica, followed by Venezuela. Of course, Mexico had its own democratic system, with just one party that won.

Now all that has changed. Democracy has arrived in Latin America. All the countries have stable democratic governments--representative plural democracies. Even Cuba, in its eccentric fashion, has convinced itself that it has a democratic system, although it is not a model that would necessarily commend itself to your Lordships. Things are changing all the time. It is a very interesting situation. The democracies have been established and they are stable. That is an extraordinary change.

I want to review how all that came about. In the 1950s and 1960s the economic philosophy that dominated Latin America emanated from the Economic Commission for Latin America (ECLA), located in Santiago, under the direction of a remarkable man, Raul Prebisch. That was based on centralised planning and such activities. At the time that did not really work.

I believe that a series of shocks brought about the change. First, there was the oil crisis of 1973 and then the banking crisis of the 1980s. But above all that has been the return of those countries to democracy and the introduction of liberal economic policies and market forces, the reduction of external tariffs with the end of import substitution, coupled with the end of the sort of tariff barriers that have made all the difference, and the gradual or, in some cases, sudden elimination of inflation. These have been major factors which have played a part in the great transformation of Latin America. Another factor has been the formation of regional trading groups, such as Mercosur, the Andean community, and the Central American/Caribbean basin grouping which have helped to develop intra-regional trade on a massive scale.

One cannot forget the coup in Chile in 1973, which replaced a catastrophic Marxist experiment. Although the coup had unfortunate side effects, it introduced a

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completely new economic thinking. That thinking, and that new philosophy became a model that was copied in many other countries in Latin America.

I do not intend to speak much about Chile due to the pending legal proceedings, but the decisions taken have undoubtedly damaged relationships with the most friendly country, historically, in the region. At the opening ceremonies of the current parliamentary session, for example, at which the diplomatic corps was present--as it is here--there were calls for the British and Spanish ambassadors to withdraw. That was a very sad day for our relations with Chile, which I hope we can rectify in due course.

I turn briefly to the important aspect of trade. From the beginning of the century and up to the time of the Second World War, Britain occupied a dominant position in Latin American trade, but that trade declined until 1990. Fortunately, since 1990 we have seen a reversal of that situation and things have started to increase from a very low base. That has produced quite substantial increases in our share of the market, to the extent that we now have a £3 million trade in both directions, which is encouraging, and that is growing fast.

Investment presents an even better picture. The United Kingdom is the third largest investor in Latin America after the United States and Japan, and it is the largest investor of all the European Union countries. Brazil is by far the largest country in Latin America with which we trade--it is the largest country in the continent--followed by Mexico and Argentina. It is probable that the figures for Mexico are slightly distorted because much of the trade into Mexico is channelled through United States subsidiaries of British companies, so the figures are probably higher. One should also realise that a great deal of our activity in the Latin American region is generated by what are generally known as invisibles: service industries, banking, insurance and so on. That is another factor that probably increases the impact of what we are doing.

A lot of credit for what has happened in the last decade has been due to the Latin American Trade Advisory Group (LATAG), which has been identifying priority sectors and acting as a catalyst to development. It started with mining, followed by oil and gas, automotive industries, consumer goods and now it focuses on healthcare.

The Latin American Trade Advisory Group is based at Canning House, the focal point for all our cultural and other relations with Latin America. I shall not say too much about Canning House because my noble friend Lady Hooper, currently the president of that fantastically successful and important institution will, I hope, develop that theme. She is a dynamic and energetic person, who is introducing some very good initiatives.

Despite all those good points, I believe that there is a problem about whether Her Majesty's Government take this area seriously. In 1979, when I started pressing for more visitors to the area, Conservative Ministers started going there. It was a trickle at first, but by the end of

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the Conservative administration there was quite a deluge and a great number of Ministers had visited the area. That was extremely encouraging.

By the same token, I believe that the present Government have started rather slowly. With their massive majority, I am hoping that that may accelerate. Latin American presidents and Ministers frequently visit the UK. Most recently we had an extremely successful visit by President Menem of Argentina, a country with which we have superlative relations now, and where trade has increased in a spectacular way since the restoration of diplomatic relations. That was followed by a reciprocal visit, earlier this year, by His Royal Highness the Prince of Wales.

However, it is a sad fact that only one Prime Minister in office has ever visited Latin America on a bilateral visit. John Major visited Colombia on his way to the Rio Summit in 1992. I find it deplorable that we do not take that seriously. The heads of state and the heads of government of the leading nations of Europe visit Latin America on extensive tours quite frequently. It is true that shortly the Prime Minister will visit the EU Mercosur Summit. Other people have been to summits, but that is not the same thing. I do not know why the Prime Minister's visit is not combined with visits to other countries, including a bilateral visit to Brazil. After all, Brazil is the eighth largest economy in the world and we ignore it at our peril. That is most unfortunate.

I do not have a great deal of confidence in what is going to happen at the EU-Mercosur Summit. Mercosur has been a huge success and has increased regional trade enormously. Unfortunately the negotiations between the European Union and Mercosur are not going all that well. The trouble is that it is bogged down with the European Union agricultural subsidies and that is the biggest single stumbling block. I feel that the EU-Mercosur Summit will not be much more than a great photo opportunity. But at least the Prime Minister will, for the first time, set foot in Latin America and hopefully that might stimulate him to get on with some serious visits elsewhere.

In the short time at my disposal I have tried to give a rather rapid overview, somewhat generalised and vastly oversimplified. I hope others will cover more specific aspects of the problem and I am gratified that such a splendid galaxy of speakers put their names down to speak, particularly my noble friend Lord Walker who is going to break his duck. We are looking forward to his contribution. I am sure that everybody knows him very well so I need not say much about him. But it is a very good thing that he is now an ally in this great cause of building relations with Latin America.

It is important to remember that Latin America is a great continent with a vast amount of opportunity and huge potential, and it behoves us to take it much more seriously than we do. I hope this will happen. I beg to move for Papers.

6.41 p.m.

Lord Rea: My Lords, I hope very much that this will not be the noble Viscount's valedictory address; of

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course, I am in the same boat as he. I propose, if I may, to take the noble Viscount's title in a rather general sense and not stick strictly to political matters as such.

I am not an expert on Latin America, certainly no rival to the noble Viscount who, in his wide-ranging speech, showed clearly that it is in Britain's interest to develop relations with all countries of Central and South America. The noble Viscount has much experience in facilitating trade between Britain and Latin America, but he knows that trade, cultural and scientific links go hand in hand. That is particularly the case, as my noble friend knows full well, when there is a thriving educational exchange programme.

Contacts and friendships developed during a stay for undergraduate or postgraduate study of a year or more are likely to endure. Many of those who take advantage of these scholarships or exchange programmes go on to have influential positions in government, business, academia or the media. And if they have had a good experience in their host country--and mostly they do--they are very likely to seek to build up trade or cultural links because they understand the other country's way of working and wish to continue the links they made.

That works in both directions--Latin American students coming to Britain or Brits studying or working in Latin America. Both cases lead to a better understanding and frequently to increased commercial links. I often wonder whether governments realise how great the long-term benefits are of such investment in human potential. All the staff I have met working for the British Council throughout the world know it; so do many working in the Foreign and Commonwealth Office and certainly in DfID. But the investment that we put into our scholarship programmes does not reflect its importance. Can my noble friend give any figures for aid to Latin American countries over recent years which takes this form? We have never quite recovered from the sad decision that the noble Baroness, Lady Williams of Crosby, felt she was forced to take some 25 years ago, when Minister for Education in a Labour government, to increase university fees for most overseas students to their actual cost.

One of the reasons for the comparatively low level of trade between Britain and Latin America compared, for example, with southern Africa or south east Asia is of course linguistic. In all the areas that I mentioned, Britain rather than Spain was the main colonial power and we found it convenient to teach people to speak English, which most of the educated people in our former colonial territories still do. However, British explorers and engineers played a major part in opening up South America in the 18th and 19th century. I think at least some of them--like the noble Viscount--took the trouble to learn Spanish, something which more British people should do today. As the second most widely spoken language in the world it should perhaps supplant French as the first foreign language to be taught in our schools; at least it should always be available as an alternative or as an addition to French. It is so much easier and effective to learn a foreign language when one is young, as I am finding out to my cost with my attempts at Spanish.

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As my noble friend may be aware, the Caribbean country I have most recently visited--twice, in fact, in the past two years--is Cuba. I include that country in Latin America. We have much to gain by increasing our scientific and cultural links with that country. We may be critical of its one-party system and suppression of dissent and we should not hide our wish to see political prisoners released and a Cuban style multi-party system come into being. But it should be borne in mind that Cuba is not being paranoid in its belief that the US will use any opportunity it can to overthrow the present political and economic system in Cuba. Most observers feel, however, that the present embargo on US-Cuban trade is actually providing a pretext for tighter control of political and press activity by the government than would be the case if there were a more relaxed US-Cuban relationship. In fact the effect of the present US policy is proving precisely the converse to what was intended. Cuba has survived the end of economic support from the USSR--at a cost--and is on the road to recovery, though per capita income is still painfully low. But, as one member of the IPU delegation of which I was a part put it, "At least the poverty is spread evenly."

The tourist trade and the legalisation of the US dollar, necessary though it was, have made inroads into this social equality. And the US embargo has had some very harmful effects, not least on the health of the Cuban people, as reported in great detail in the 1997 report of the American Association for World Health. But a remarkable Cuban achievement has been that, despite a lack of sufficient food and an increase in water-borne infections because of the breakdown of water and sewerage systems, infant and maternal mortality and expectation of life have all continued to improve and are at a level comparable to some developed countries. That is a marked difference to the situation in Iraq where a somewhat similar food shortage and breakdown in sewerage and water treatment as a result of the Gulf War and the sanctions regime have resulted in widespread child malnutrition and a doubling of infant and child mortality.

These Cuban achievements may serve to underline and give an example of why it will be very fruitful to further develop the scientific and academic links with at least one Latin American country. I gave my noble friend notice that I was going to ask if she had any news about the developments on the proposed trials of the Cuban vaccine for meningitis B, the first to be developed in the world, in which St Mary's Hospital in London is collaborating with the Finlay Institute in Havana. It is a very fitting collaboration since St Mary's was home to another world first in Professor Alexander Fleming who of course discovered penicillin. That is just one example of the interesting lines of research in biotechnology in which Cuba is quite advanced. It would benefit us to collaborate with them in that.

Finally, I should like to touch on another country with great potential but one which is caught up in a cycle of violence that seems at times to be insoluble--Colombia. Britain has a particular interest in Colombia at the moment because of BP's major investment. But my information--and it has also appeared in newspapers--

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is that this operation has exacerbated the violence in the province where it has been operating. The position, as one might expect, is that neither the guerrillas (the FARC) nor the paramilitary groups are in favour of oil exploration or extraction on their territory without considerable compensation. Installations are liable to be attacked by one or other group, although perhaps more frequently by the guerrillas in the first place because representatives of BP did not adequately plan with the local people what they were going to do and meet their requirements. The army was called in to protect the oil operation, with the result that the closely allied paramilitaries indulged in a reign of terror in the villages supposed to be supporting the guerrillas. As a fence-mending gesture, I understand that BP has now put resources into some local communities. How well this is working and whether the installations are now left alone by the guerrillas and paramilitary groups, it would be interesting to know. Can my noble friend the Minister enlighten us on the current status of the BP operation?

A contrasting approach was apparently taken by another firm, Kelt Colombia, which is a successor to Elf Aquitaine, the French oil company. Before undertaking any operations, that firm approached local communities and went out of its way to ascertain their needs and help to construct water supply systems, introduce electricity, and build schools and clinics. As a result, the guerrillas did not attack its installations and the company did not have to call in the army nor the paramilitary which usually does the army's dirty work.

Noble Lords may be surprised that I have talked about Colombia without mentioning cocaine. Of course it is in the background all the time. The war on drugs, it seems, has not seen any reduction in supplies. As I suggested in an Unstarred Question on Colombia some two years ago, drugs certainly exacerbate the problem in Colombia, but the basic problem is the existence of a large group of peasants with little or poor quality land and a small elite group who own most of the land, and certainly the best land. I wish President Pastrana very good luck in the extremely courageous negotiations he is now conducting with the leaders of FARC. But until the land question is faced and solved I suggest that there will be no lasting peace in Colombia nor in many other parts of Latin America.

6.51 p.m.

Lord Thomas of Swynnerton: My Lords, all friends of the diverse peoples of Latin America will be grateful to my noble kinsman Viscount Montgomery of Alamein for initiating this debate, as they have been grateful in the past when he has brought to their service, and to the service of this House, his knowledge, experience, wisdom and curiosity in relation to Latin America, as well as, and not least, I should say, his great name. If it indeed be the case that this is the last occasion when the noble Viscount will introduce a debate on this subject, I think I can say that they--the peoples of Latin America--like ourselves, will be the poorer.

The most interesting occasion that I can remember in connection with the contributions of the noble Viscount to the work of this House took place during the debate

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on the Falklands War in 1982 when the noble Viscount made a splendidly brave speech criticising the then government's position. I did not agree with him but, of course, thinking as he did, he was entirely right to speak as forcefully and as effectively as he did. Indeed, he is similarly right to point out that in the time during which he has been interested in Latin America the countries concerned have undergone such a major change. As a matter of fact, he did not claim any responsibility as regards the changes towards democracy but, nevertheless, we noticed the two events in passing.

It is interesting to note that for all the residual anti-Americanism which continues to exist in much of Latin America, those countries have usually adopted a system of democracy echoing that in Washington--a presidential system--rather than a parliamentary system such as might have seemed more inspiring given the change to parliamentary democracy in Spain, the mother country, under the leadership of King Juan Carlos. Indeed, the selection of that presidential system as opposed to a parliamentary system could be one reason for the continuing weakness of some of those democracies about which we have been talking.

It seems to me that another weakness is the continuing love affair which still exists, despite the collapse of communism, with the idea of revolution. We find this love affair surviving in surprising places in pockets of resistance, one might say--if it is not to mix a metaphor--in many of the polities of which we are talking. Mention has been made of Colombia. It is certainly true that that fascinating and important country is cut in half by the fact that many still subscribe to that outworn idea.

The noble Lord, Lord Rea, spoke about Cuba. But, as far as I could understand from his general approach, I believe that he, too, would agree that the tragedy of modern Cuba is that, for all the charm of its people and of the countryside--and, indeed, the beauty of the cities--the country is still in thrall to an exploded idea. That idea is as extinct, I would say, as the famous line of marine South American volcanoes to which Disraeli--or, perhaps I should say, the late Earl of Beaconsfield--referred with such wit and to such effect on the only other occasion when volcanoes have been mentioned in the Palace of Westminster in another place during the last century. What a tragedy it is that Cuba should still, nearly 10 years after the collapse of communism, be subordinate to such an extinct idea as Marxism/Leninism.

On the other hand, Mexico is undergoing a major and important change. I have not worked this out adequately, but I think that for the first time ever, or for the first time this century, it looks as though there is a good chance that if an opposition candidate wins the presidential election in the elections of the year 2000 he may be allowed into Los Pinos, the presidential palace, to take office as opposed to the official candidate of the Institutional Revolutionary Party. However, we must recognise that that Institutional Revolutionary Party, so well named, is still a formidable enterprise. It could even triumph in a fair election, thus giving one more victory to what might perhaps be described as "revolutionary traditionalism." There is another cloud

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over the future of Mexico; namely, that caused by the thriving United States drug market and those Mexican drug dealers who serve it effectively and for their own benefit, thereby accruing immense prosperity for themselves.

During the course of this year I expect to go to Argentina. I shall be interested to see to what extent the memory of my noble friend Lady Thatcher is looked upon. No doubt her memory will be viewed, with some degree of regret, as representing one of those who were creators of the democracy which they are now enjoying--or at least one of those who destroyed the old military government as a result of the Falklands War.

I shall also visit Chile for the first time since I visited it during the lamentable regime of President Allende. When I was there in 1970, it seemed to me that the country was on the brink of civil war with an ancient democracy, as the noble Viscount described it, being subverted by a popular front government very comparable to what existed in eastern Europe immediately after 1945; in other words, a kind of foretaste of the eastern European communist governments. Of course the coup d'etat of 1973 had, as we all know well, a dark side. However, the recollection of that should not blind us to the fact that the change from the Allende regime was a benefit to Chile, the continent and perhaps the world.

I think I have time to make one final point. Latin America is frequently spoken of condescendingly in Europe and North America as a violent place. That is rather a myth. There is no continent with such a large number of individual states which has been so relatively free from war between those states as has been the case in Latin America this century. In addition many of the changes which have occurred in Latin American countries such as Brazil have occurred with remarkable serenity. Race relations are on the whole rather good, even in countries with such large black communities as Brazil and Cuba, and are perhaps better than those which exist in Anglo-Saxon America.

Finally, there are in many of these countries peoples of quite diverse origin and character who live in mutual tolerance and respect. I think for example of the 50 separate peoples who speak different languages in Mexico. They could well offer to give an effective lesson in tolerance and mutual respect to other continents, including indeed Europe itself and not only perhaps the south east portion of it.

7.1 p.m.

Lord Walker of Worcester: My Lords, it is with some fear and trepidation that I make my first speech in a debate in your Lordships' House. I speak in fear and trepidation because for 31 years in another place I increasingly admired the quality and standard of debate in this House. I feel that my beginning to contribute may start the decline of that trend. Certainly I very much welcome the opportunity to speak on this subject. I express my gratitude to my noble friend Lord Montgomery, as to my knowledge it is the third time he has instigated a debate on this subject in this

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House. I know of few people in this country who have contributed more to improving relationships between Britain and Latin America than my noble friend, who has made an enormous effort in that regard both here and in Latin America. Almost everywhere one goes in Latin America one hears gratitude and tributes paid to him for the part that he has played in that process.

It is also particularly difficult in a maiden speech to follow the noble Lord, Lord Thomas of Swynnerton. I know of no other historian in the world with a greater knowledge of and impact on Latin America than the noble Lord. Those of us who are interested in Latin America have benefited greatly from reading his remarkable books on the history of various parts of that region. The reason I particularly rejoice in following the noble Lord is that I believe that in the coming decades the most important region in the world will probably be Latin America.

I remember the first time I visited this Chamber as a schoolboy aged 16. I had been invited by my Member of Parliament to attend a debate in the other place, which was sitting in this Chamber, its own Chamber having been destroyed in the war. I remember that the debate concerned Scottish affairs. On becoming a Member of the House of Commons I dreaded debates on Scottish affairs! The debate I heard then was a good one which contained a fine maiden speech made by a new Labour MP who had recently been returned on a by-election, Willie Ross, who later became a distinguished Secretary of State for Scotland. I remember the speech as he quoted many times from Robbie Burns. The English Members of this House at least will be relieved to hear that I have no intention of quoting from Robbie Burns today, partly because I know of no quotations of Robbie Burns and if I did I could not pronounce them!

I declare an interest in that I am involved in a bank and I was chairman of Kleinwort Benson--now part of Dresdner Kleinwort Benson--and we have offices in virtually every country in Latin America. We have been extremely active in the economic changes that have taken place. Therefore I have travelled there a great deal in recent years. I also travelled there as a Cabinet Minister on about five occasions. The transformation that has taken place in that region is remarkable. One of the things I regret is that in my view neither the business community nor the political community in this country recognise the dimension of the change that has taken place.

Mention has been made of Argentina. Twelve or 14 years ago Argentina was under the control of the generals. It suffered from high inflation, a declining economic performance and considerable corruption. It was making no impact on either the region or the world as a whole. In that short period of time Argentina has eradicated inflation--it has one of the lowest rates of inflation in the world--and has repaid a great volume of its debts. Argentina has stabilised its currency, has transformed its economy and has played a positive role in developments throughout the region. It now has a secure democracy. It is a tribute to what has happened in Argentina that as it approaches the presidential elections at the end of this year there is no doubt that

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all the political parties in Argentina are in agreement as to what the economic policy should be. The idea that that economic policy would have been acceptable 15 years ago is beyond comprehension.

In foreign policy Argentina has improved its relationships with its neighbours. It is now only on the football pitch that the relationships between Chile and Argentina are impossible. However, in terms of politics and economic policy they have worked closely together. This very week the parliaments in both Chile and Argentina have passed motions agreeing boundary changes, eliminating the last friction on the boundaries of Argentina and Chile. When I first started to travel to Argentina there were 47 border disputes, with the armies of both countries lined up on each side. There was enormous hostility. That has all been eradicated.

Chile is a remarkable country. It has been a leader in Latin America as regards economic policy. It has developed its own economy to a remarkable degree. It is now having a great impact upon the economy throughout the region. Chile has made a great number of capital investments throughout the region. A great number of top Chilean businessmen are helping other countries with their development programmes. But perhaps the most impressive factor of all has been the quality of democracy in Chile. After the virtual civil war that occurred, the military took command. Then the military handed over power to a genuine democracy. First, a Right-of-centre government took office and then a Left-of-centre government took office. The government coalition has just adopted its candidate for the coming presidential elections, someone from the Left of Chilean politics, and there will be totally democratic elections.

The Government must consider carefully the problems connected with former President Pinochet. I recognise the legal implications. I fully understand that a Home Secretary must comply with the legal aspects of this matter and must go through the legal formalities. However, at the end of the day such is the power of the Home Secretary and the Government that when those legal formalities are completed they will have to make a political decision. All I ask is that in making that political decision they listen to advice on the implications to Chilean democracy of whatever decision is made. I refer to the anxiety of those of us who love Chile and who want it to succeed in the future. We are anxious with regard to adverse trends developing in the democratic processes in Chile.

There is an excellent diplomatic corps in the entire region to which I pay tribute. Those of us who deal constantly with the British ambassadors in the various countries of the region admire immensely their tremendous dedication to their tasks. We admire their knowledge and the manner in which they and their staff wish to enhance relationships between Britain and the countries in which they serve. I also pay tribute to the diplomatic corps of the Latin American countries in London. There has been a series of remarkable ambassadors from the major countries of Latin America who work hard to improve relationships between their countries and our country. They do a great job. In

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considering the potential growth of Latin America and its political importance, I urge the Government to make an enormous effort to improve those relationships.

My noble friend mentioned visits by prime ministers. The present Prime Minister took a delegation to Mexico. While he was there he created a Mexican forum between the two countries, which I very much welcome. I join my noble friend in hoping that the Prime Minister will make similar visits to countries such as Brazil. We are fortunate that at this time--this is unique--in the major countries of Latin America, Brazil, Argentina, Mexico, and in some of the smaller countries such as Peru there are presidents of quite outstanding ability. They are working together in collaboration. It is unique to find in one region such high calibre presidents all serving at one time. It is a very good time for the British Government to get close to those presidents and to exercise the greatest collaboration they can.

We must recognise that there is considerable competition between the United States and Europe so far as concerns influence in Latin America. I know that the present Commissioner for Trade Negotiations, Sir Leon Brittan, has recently devoted a great deal of his time to going to Latin America and talking to Latin American Governments. So far as concerns Mexico, it is part of NAFTA and within a free trade area of the United States. I do not believe that NAFTA will expand. The president wishes it to expand but, as the noble Lord, Lord Thomas, mentioned, there is a presidential system in the United States as well as in Latin America and Congress will probably stop any extension of that free trade area. That will provide a great opportunity for Europe to establish trade agreements with Latin America which will massively increase the flow of trade between the two regions. Latin America will obviously welcome that; parts of Europe will greatly benefit from it; and the whole world will benefit. The matter should be given a great deal of attention.

The noble Lord opposite mentioned education. I could not agree with him more. Again, the reality in terms of Europe and America is that the universities of America are full of students from Latin America on scholarships encouraged by businesses. The decline in overseas students attending the best universities in this country will have terrible long-term effects. All departments of government should concentrate on what can be done in Latin America-- particularly the Department of Trade and Industry and the energy department within the Department of Trade and Industry. Latin America has enormous energy resources yet to be developed.

Above all, the Department for Education and Employment should concentrate on Latin America. If that department can think of ways in which the bright, lively young of Latin America can make their friends and enhance their education in this country, it will have enormous long-term consequences, as happens in the relationships between Latin America and the United States.

The noble Lord also mentioned speaking Spanish. It is absurd that in this country we have French as our second language and German as our third. To the horror

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of the French, French is a declining language world-wide. The only people concentrating on it are the French; elsewhere it is in decline. German is primarily spoken in Germany. Spain is not only a major country within the European community but Spanish is spoken by virtually the whole of Latin America and a substantial part of North America is now Spanish speaking. I have endeavoured to persuade former Cabinet colleagues of mine at the Department for Education and Employment to make Spanish the second language of this country. The incredible reason that the department gives for not doing so is that, because we have always had French and German as the main languages, we have only French and German teachers; therefore it is a static position. If one wanted to recruit 2,000 people who could teach Spanish in the next few weeks, one would have no difficulty in doing so. We should recognise in this country the importance of the Spanish language. If we did that, the younger generation and the future generations of business leaders in this country would be far more successful in the region.

Finally, I had the privilege as a Minister and as a businessman of seeing a great deal of the Far East, a great deal of North America and a great deal of Latin America. Looking at this century, I believe that the increase in prosperity of countries like ours has been because we imported the raw materials of the world and processed them; thereby we have been able to export and increase our standard of living. I do not believe that there will be the same pattern in the next millennium. I believe that there will be an ever-increasing shortage of raw materials and that it will be the producers and the providers of the raw materials who will have the economic growth. If at the same time those countries with the raw materials learn to process and manufacture them, as they are doing throughout Latin America, they will have the great ingredients of economic growth. Latin America has the raw materials, the people and an enormous potential for expansion world-wide. If we were the first country to recognise that fact in an enthusiastic way, it would be of immense benefit to this country, to Europe and to the whole of that region.

7.14 p.m.

Viscount Waverley: My Lords, the whole House will join me in congratulating the noble Lord, Lord Walker, on his authoritative maiden speech. It is appropriate that he has chosen this debate in which to make it. Notwithstanding his accomplished career both as a Cabinet Minister and within the private sector, he brings a knowledge of South American affairs which has been recognised not least by the award of the most prestigious Chilean order of all, the Order of Bernardo O'Higgins. We all look forward to the noble Lord's next contribution to our debates.

The noble Lord, Lord Rea, touched on Colombia. I had the honour of leading an investigatory parliamentary mission with members from both Westminster and the European Parliament to Colombia, including BP's producing region in Casanare. Our only criticism of BP's activities, while in no way flawed, was

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that they did not do enough to promote its good works. BP operates in difficult circumstances and executes its responsibilities with a greater degree of distinction.

A 40-year internal armed conflict in Colombia has escalated to intolerable levels. It has placed Colombian democracy and the state of law at risk, engendering economic, political and social disorder in a country seeking to settle this war. It is a conflict exacerbated by armed guerrillas, self-financed from the proceeds of systematic mass kidnapping of civilians in urban and rural areas and increased trafficking of illegal drugs.

Incredibly, a fragile but welcome consensus is now emerging wherein all social, economic and political circles of Colombian society, including armed groups, proclaim peace as the country's principal objective. The new Colombian Government recognise that at the heart of a formula for lasting peace is the need to balance social and economic development. Strenuous efforts are being made but it is absolutely clear that this will not be achieved without the full co-operation of the international community. Britain is perceived as being able to play a vital role in supporting the peace process, aiding the Investment Fund for Peace and helping to strengthen the Colombian Government's capacity to promote the protection of human rights for all its citizens.

I wish to say a few words about these vital ingredients. The peace process is a priority for the new Colombian Government and they are fully prepared for a negotiated solution. They have designed an integral peace policy that incorporates three phases. First, a process of negotiations with the armed groups seeking to reach agreements on the social and economic issues that give rise to the conflict, with the objective of disarmament and full resettlement into society. Secondly, the implementation of investments before, during and after the negotiations in an effort to eliminate the very economic and social factors that have led to this war. Thirdly, a political reform directed towards creating true political pluralism.

Following the creation of a more than 40,000 square kilometre tension-free zone in south-western Colombia, negotiations with the FARC guerrillas--under way since 7th January this year--have already set a common agenda and an open-ended framework for adversaries to reach decisions and adopt measures. Agreements are to be verified to maintain high levels of commitment.

The Colombian Government's policy links peace to economic development. Thus investments in depressed areas of the country are important elements to build the foundations for peace. The international community's involvement at this level would be crucial in advancing the peace process.

Despite arguments claiming that drug-trafficking has had a positive effect on the Colombian economy, there is much evidence to the contrary. Studies undertaken by the National Planning Department show that violence and criminality produced a reduction of 2 to 3 per cent in the annual rate of growth of the Colombian economy during the 1990s.

Illicit crop eradication is, at present, the key aspect in the fight against drug trafficking, although renewed by

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the state security forces with US Government support for spraying and manual eradication. That has met with limited success. It may be that that aspect of the strategy might be re-evaluated if it is not seen to work.

Notwithstanding that, my visits with the anti-narcotic police to the producing areas clarified the difficulty of this type of operation. The interruption of flows of coca-leaf from neighbouring countries, particularly Peru and Bolivia, has forced cartels to integrate the agricultural and industrial phases of cocaine production within Colombia; at present, Colombia has the largest cultivated area of coca leaf crops, with 79,500 hectares.

This expansion creates demographic pressures and the destruction of the social fabric of Colombian society. Illicit crops exert a serious negative impact on the establishment and strengthening of legal economic activities. Even though large economic surpluses are generated, these do not contribute to reducing the isolation of many of these regions.

Although there is an apparent positive impact on the income level of those families involved, these have negatively affected the characteristics of the market system in those areas through a fictitious increase in price levels, deteriorating the real income of rural inhabitants.

The capacity of the state to carry out justice and security is seriously affected, further undermining confidence in the commercial arena.

Fragile and rich bio-diversity, including forest reserve zones and national parks, have suffered tremendous damage, and the full environmental effects have yet to be costed. The Ministry of the Environment estimates that the cultivation of illicit crops has implied the destruction of 850,000 to 1 million hectares of Colombian forests from 1974 to 1998. The indiscri- minate use of chemical products aggravates the problem.

The Colombian Government have decided to deepen the implementation of their alternative development programme with a new approach. Strategies to fight drug trafficking are directly related to the achievement of increased levels of economic and social development and to the consolidation of the peace process.

Colombian policy varies according to the origin and purpose of the crop. Commercial crops deemed to be assets of drug traffickers are to be eradicated without compensation. In the case of subsistence crops resulting from poverty and the absence of economically viable alternatives, the government, through the alternative development programme, will offer production substitutes--vital in the areas where 61.4 per cent of the population have unsatisfied basic needs.

The government will rely increasingly, and literally, on carrots rather than sticks to integrate subsistence growers into the economic and social system. Success will, however, depend critically on the capacity of the government and the international community to offer competitive options for the generation of incomes that will encourage the elimination of those crop productions.

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The programme will be supported by an investment fund for peace which will encourage society to "put its money where its mouth is" by redirecting capital flows away from such areas as military expenditure, to more productive activities and funding expenses for the peace effort, including the issuance of peace bonds.

Colombia is infamously linked to violent acts of guerrilla and self-defence groups against the civilian population, which sabotage and undermine state activities and disturb public order. A state under constant threat from insurgent armed groups that boast renewed resources, extorted from the civilian population and the proceeds of drug dealing, faces enormous difficulties in guaranteeing the full enforcement of human rights in its territory. Mechanisms must therefore be sought to bring about humanitarian agreements to reduce the suffering of civilians.

Commendably, in addition to undertaking to observe all the provisions of international humanitarian law, the Colombian Government are seeking their full implementation by all players in the armed conflict. Moreover, the government have signed the International Criminal Court statute.

Logistic and financial support for state bodies engaged in investigating and punishing human rights violations is being improved: a special committee to further investigations into human rights violations, composed of the Vice-President, Interior Minister, Prosecutor General and Attorney General, has been established.

The government intend to continue their policy of strengthening and updating the Armed Forces by raising efficiency standards, and introducing stricter observance of human rights and international humanitarian law. Reforms of the military criminal justice system in order to combat and punish infringements of human rights and international humanitarian law by state agents and prevent any connections with private armed justice groups are proceeding.

Colombia maintains a policy of openness that keeps international bodies and human rights organisations abreast of developments on such issues. The government have therefore requested an extension for a further year of the Colombian Office of the United Nations High Commissioner for Human Rights. Last month, that office entered into a technical co-operation agreement with the presidential human rights counsellor with a view to raising the profile and supporting the activities of the UN office.

Altogether, it is an ambitious programme, calling for vision, courage and commitment from the international community and all law-abiding Colombians. No effort must be spared in ensuring that the scourge of illicit drug production is eradicated in Colombia and that long-awaited peace prevails.

It would be inappropriate to conclude without congratulating the noble Viscount, Lord Montgomery, on his support of all matters Latin American, not least by initiating this important debate.

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7.25 p.m.

Baroness Hooper: My Lords, I, too, am glad to be able to join in this debate. I thank my noble friend Lord Montgomery for yet again giving us the opportunity to emphasise the significance and importance of our relationship with all the countries of Latin America, and to update ourselves on political developments in the region.

After the many years that he has spent working on the ground in Latin America, my noble friend has put his knowledge and expertise to considerable good use as chairman and president of Canning House, as chairman of the Latin American Trade Advisory Group, and in various capacities in bilateral societies and parliamentary all-party groups. Moreover, he has always tackled the issues with such infectious enthusiasm that he draws others into the arena. I sincerely hope that this will not be the last opportunity that he will have in this House to initiate a debate on this topic.

My noble friend pre-empted me by declaring my interest as president of the Hispanic and Luso Brazilian Council, better known as Canning House. Perhaps I may say a few words about Canning House and its work. It is a membership based, non-political, non-profit-making organisation. It was founded in 1943 to develop understanding between ourselves, Spain, Portugal and the Latin American countries. It acts as a forum for heads of state, Ministers, politicians, diplomats, businessmen, academics, artists and students in order to promote links between the United Kingdom, Europe and Latin America. We also have a splendid library which is open to the public and is used by many generations of students and others who are interested in the region. To achieve our objectives, we organise conferences, seminars, round table discussions, lectures and other cultural and educational events. Perhaps I may use this opportunity to advertise the fact that we are holding our annual seminar for parliamentarians two weeks today, on 23rd June. I hope that many noble Lords will attend that event.

Also, as one of our recent developments, the council realised that it was important to raise its overseas profile. As the Minister may be aware, we have held conferences in Brazil and Mexico, and the latest, this year, in Buenos Aires. The theme has always been the European Union and Latin America, whether a regional organisation or on a bilateral basis. It is important that the United Kingdom takes a strong lead in the European context in this field. Canning House is playing its part. We are also forming an international council. I have just returned from two days in Spain meeting like-minded organisations with a view to working with them, developing the theme of providing a bridge between Europe and Latin America from Spain in the south and from the United Kingdom in northern Europe. We should be proud of ourselves for taking the many initiatives that we have. I am happy that Canning House is often acknowledged not only in this country but also in others as a unique institution which is important in all those areas.

In the context of the debate and some of the remarks made, I point out that in terms of future elections, last year with the elections in Venezuela we were able to

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host meetings for three of the candidates. We therefore had a pre-election knowledge of President Chavez and his views. This year we hope that, in relation to the Argentine elections, the two front-running candidates, Duhalde and Fernando de la Rua, will come over and speak to members of Canning House and, we hope, to a wider audience.

On a more general note, whenever we talk about Latin American countries we recite the impressive changes that have taken place in recent years in their economies and the statistics about trade and investment opportunities. Reference has already been made to them. But most experts and commentators explaining the reasons for a third of total world investment in emerging markets going to Latin America cite as of prime importance the democratisation of all those countries. Democratisation means not just elected governments and parliaments but freedom of speech, openness and transparency of government, accountability and action on human rights. Any of the activities to which I referred that we undertake in Canning House and other contexts and all the increasing interest in parliamentary contacts through the IPU visits are important. They underline the progress that has been made and the continuance of the democratic process in all those countries.

Of course, as in our own country, there is always room for improvement. Perhaps I may cite two areas where there could be improvement and development. One is the need in some countries to change their out-of-date legal and judicial structures. That is acknowledged by the countries themselves and recent initiatives by the British Council and ourselves in Canning House in that respect have been welcomed.

Another change is the development of regional groups in Latin America. Perhaps the one with which we are most familiar is the southern cone grouping of the Mercosur countries--Argentina, Brazil, Uruguay and Paraguay. Those are essentially trade groupings, but it is interesting on the political side that, with the recent unhappy events in Paraguay, the fact that Paraguay is a member of Mercosur and that the other countries of Mercosur insisted on the democratic process being retained there has been of considerable importance.

I agree with the noble Lord, Lord Rea, and my noble friend Lord Walker, in his excellent maiden speech. They emphasised the importance of educational contact and more teaching of Spanish and Portuguese. Two interesting developments are evidence that there is more contact and more going on in these fields. There is the GAP programme, the pre-university year programme. Last year, in Ecuador alone, one of the smaller of the Latin American countries, there were about 31 or 32 British students doing the GAP year. That is replicated throughout Latin America.

There are also all the university language courses with students doing the overseas year in Latin American countries. I came across the fact that in this country, in terms of Latin American students, we have from Mexico alone 800 students, most doing post-graduate work. So there is an enormous amount of contact and at Canning House we are focusing on it as an area for further development.

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I wish to bring into this all-too-short opportunity to speak a reference to the recent talks in London between our Foreign Minister, the Argentine Foreign Minister, Guido di Tella, and four councillors from the Falkland Islands. We all welcome it as a step in the right direction. Sovereignty was not on the agenda, as we all know, but I understand that a number of areas of common interest such as measures to combat illegal fishing, hydrocarbons and mine clearance were discussed. Issues such as access to the islands by Argentine passport holders were also discussed. I urge the Government to continue the initiative and conciliation process. We hope that such contact will continue so that areas of co-operation for mutual benefit will develop and the islanders and the Argentines can learn to live together as neighbours in an atmosphere of mutual respect.

Finally, I wish to ask the noble Baroness two questions. Many people, including the Foreign Office Ministers, welcome parliamentary pressures, so I make no apology for supporting my noble friend Lord Montgomery in his comments about a prime ministerial bilateral visit. Perhaps I may say to my noble friend Lord Walker that the arrangements for Mexico were made when President Zedillo was over here on his official visit last year. I emphasise that we welcome very much the important presidential visits that took place last year with Presidents Fujimori from Peru, Zedillo from Mexico and Menem from Argentina. I equally emphasise as important that when visiting ministers are over here they have the opportunity to meet for however short a time with the Prime Minister or the Foreign Minister. That is important.

Our ambassadors in Latin America do a terrific job. May we put pressure on the Government to confirm that they will keep them all in post?

7.36 p.m.

Lord Grenfell: My Lords, I join other noble Lords in congratulating the noble Viscount, Lord Montgomery, and thank him for introducing this debate. We are all aware of his persistence in bringing the issues of Latin America to your Lordships' attention and we always learn a great deal from him.

I know that the debate calls attention to the political situation, but I would like briefly to address some of the economic issues because the two are inseparable. I begin by saying that prospects are still good for stronger regional growth in the longer term, largely due to the recent reforms that have taken place in the region. Productivity and growth turned positive in the 1990s as opposed to the declines during the 1970s and l980s. Privatisations, particularly in the telecommunications and transport sectors in the early 1990s, very much helped that trend. Labour market reforms have been slow, due mainly to political sensitivities, but nevertheless even in that area some significant progress is being made. Foreign direct investment is now producing capacity expansion and not just the transfer of asset ownership, as was the case in the early 1990s. When the current downturn in the markets eases, foreign direct investment should rise substantially again.

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Another point which is important is that as pension reform takes hold in more countries of the region, over the next five years there are expectations that domestic savings will rise as well. That is crucially important for the region, since domestic savings rates need to rise if the region is to reduce its reliance on external financing for growth.

However, at the same time we must recognise that many Latin American countries face a difficult transition to sustain growth and further social development. Many of them remain highly indebted or heavily dependent on commodity exports and are therefore highly vulnerable to interest rates in terms of trade shocks. Access to international capital has become more difficult in the current environment, and elections in several countries of the region have increased and are increasing nervousness about a slippage in fiscal policy at a time when the economies must still rely heavily on private capital flows to re-finance existing debt.

On balance though, the growth potential of many countries in the region has improved with better public and private management, suggesting, as has recently been mentioned by the World Bank, a growth potential in per capita incomes averaging about 2.2 per cent. over the next 10 years. That is a full percentage point better than was achieved over the past 10 years.

However, there are risks. I need hardly say that what happens outside the region is crucial. For example, when the East Asian crisis hit it had little immediate effect on the region, but with the spread of the crisis to Russia in August 1998 investors started to pull their money out of all the emerging markets. That had a particularly severe effect on Latin America. That was not the fault of Latin America. There have also been natural disasters. El Nino in early 1998 and Hurricane Mitch in November brought unexpected problems. Any forecast of economic growth in the region must be very heavily hedged.

But the unexpected can sometimes be positive. Brazil pulled out of recession in the first quarter of this year as the economy continued to confound expectations about the pace of recovery from the January currency crisis which brought a devaluation and a very sharp rise in interest rates. This means that Latin America's largest economy, which has suffered two successive quarters of declining GDP, has now technically come out of recession. Nobody thought that it would happen so soon. The January devaluation convinced many economists that there would be a severe recession this year and perhaps a much dreaded return to high inflation. But here again over-confidence would be misplaced. Investors are currently worrying about the likelihood of increased interest rates in the United States and the difficult economic situation in Argentina. Domestically, a great deal in Brazil will depend on whether the Government can strictly enforce the proposed fiscal responsibility law to restrain municipal and state government spending.

What happens in Brazil matters enormously to the rest of Latin America, but what happens in Argentina also matters a great deal. New curbs on provincial government spending, a commitment to a new fiscal convertibility law to place limits on deficits and

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clarification of the issue of currency convertibility will help enormously. Argentina and Brazil are key members of Mercosur, the embryonic customs union linking those two countries with Paraguay and Uruguay. Mercosur has been under a great deal of stress recently because of problems in Brazil and Argentina. While there has been much progress in removing tariffs from intra-group trade, there has been too little progress on non-tariff barriers, even less progress towards a common external tariff, and little sign of any movement towards common macro-economic targets, which will be very important if Mercosur is to be more than just a NAFTA-style free trade area and become a real customs unions like the EU, which was the intention of its founders.

That said, the governments of Brazil and Argentina have invested far too much political capital in the agreement to allow it to collapse. Let us not forget that Chile and Bolivia are associates and Venezuela has ambitions to become a member. There is a great deal of political capital tied up in Mercosur and therefore I do not believe that they will allow it to collapse. It is therefore deeply worrying that the European Union is currently treating Mercosur in such a cavalier fashion. The noble Viscount, Lord Montgomery, and the noble Baroness, Lady Hooper, have made reference to this. It was, after all, the European Union Commission, admittedly under very strong but understandable pressure from Spain, which proposed late last year a comprehensive free trade agreement with Mercosur. The two trade blocs were expected to start formal negotiations on a trade deal at the 28th to 29th June Latin American-EU Summit in Rio de Janeiro which is just upon us. That summit brings together the heads of state of 22 Latin American and 15 European countries.

But at the EU's General Affairs Council last week an eleventh hour effort to overcome internal disagreements on a common EU position to take to the summit was not even attempted. It is true that Kosovo was very high on the agenda at that meeting, but the EU-Mercosur issue was simply swept off the agenda. Some European Union countries such as France, Ireland and, to a certain extent, Italy oppose the idea of a trade agreement because they--in particular France--fear the opening up of Europe's farm markets to Latin American products. But the exclusion of agriculture makes a deal much less attractive to Mercosur countries and could only fall foul of WTO regulations.

A compromise is still being worked out in the EU under which talks may start late in 2000 on relatively easy issues, such as non-tariff barriers and trade in services, while the big issues, such as tariffs in agriculture, will be delayed until the WTO millennium round is well under way, or even until the date that it is completed some time in 2003. This really is not good enough. If the World Trade Organisation round resulted in the EU opening its doors to agricultural products, it would help solve a major problem for the Mercosur countries, but not until 2003. In any case there is no guarantee of that.

In the meantime, the European Union will go empty-handed to Rio, and Mercosur countries may well be tempted in their frustration to turn northwards to

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NAFTA. As was suggested by the noble Lord, Lord Walker, in his remarkable maiden speech, if that happens perhaps they will in any case come up against a brick wall in the form of the United States Congress. What a terrible lost opportunity for Europe. Latin America deserves very much better than this from Europe, and in the interests of Europe and Latin America Europe must deliver.

7.46 p.m.

The Earl of Radnor: My Lords, it is at this stage of the debate that I begin to regret putting down my name on the list of speakers. The speeches have been so learned and knowledgeable that I cannot begin to match them. I do not have the knowledge of economics or politics to do so. Nevertheless, I am hugely grateful to the noble Viscount for tabling this debate. I look at the whole South American scene in a different way. In spite of my lack of knowledge of economics--I have a passing acquaintanceship with it which I would not dare to air before the noble Lord, Lord Walker--I married a woman who carries an Argentine as well as a British passport. That gives me a completely different insight into South American affairs.

My wife has a large family of her own that stretches from the Paraguayan border down to Carmen de Patagones, all through the province of Chubut in Patagonia, Bariloche, San Martin de los Andes and also into Chile. Some of them, grandchildren, are English; some are Chilean, but most of them are Argentine. They provide a wonderful network of information as to what people in those countries feel at that level rather than at the high level of economics and guessing what is likely to happen to the Mercosur, America or whatever.

Apart from that, there is no other country that I have visited except Paraguay. I start with a word about that. Reference has been made to democracy. It is absolutely splendid that democracy has, so to speak, come to South America. Some English people do not realise that it is not precisely the same kind of democracy as we have here, not just because it is presidential rather than parliamentary but because of the nature of the people. That is the whole fun of it--or that is how I look at it.

Some years ago, I had the pleasure of entertaining to lunch President Wasmosy of Paraguay and the whole of his Cabinet. They had come over en bloc on a business visit and they wanted to see fish farming, which I could show them. The noble Baroness was there. I remember her telling me, which I did not know, that Wasmosy was the first pluralistically, democratically elected president of Paraguay ever since the conquistadores. It is, therefore, not just fragile; on occasions, it is quite new.

The noble Baroness referred to "a rather messy affair". Indeed it was. The vice-president had just been shot, a calculated act. I know this because an ex-ambassador to the Court of St. James was staying with me two nights ago and I learnt that they have apparently caught the fellow who fired the bullet. Cars were closing in, bodyguards were being avoided, and so on. They do not yet know who was behind it. It was miserable. However, one has to be a little cautious with

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some of those countries about how long democracy will last. I am sure that it will strengthen with the years, but it is still quite new.

Perhaps I can, so to speak, go southwards to the Argentine, a country in which I worked in a very lowly manner from 1948 until about 1950. I fell in love with the country and the people and I still think that it is a most wonderful place. Then, most unhappily, the war began. My wife and I found ourselves in a ridiculous position. I had a godchild in the Welsh Guards who avoided being burnt on "The Galahad" but who might well have come face to face in war with her nephews. For us, this was an extraordinarily unhappy period. We did not know what was going to happen next. Then the war was over. It is arguable that the main question was never precisely resolved.

The noble Viscount then got together with friends on both sides of the Atlantic, and also with an American friend of great talent who lived in Buenos Aires and England most of his life, and formed--I think I am right on the title--the ABC, the Argentine-British Conferences. These were designed to follow the Konigswinter conferences after the German war. Groups of important people from each country--about 16 strong, two chairmen, no communique at the end, no press, say what you like--got together about every two years, first of all in the Argentine and later in England. We lived together--I was there twice or three times--either in an hotel or an Oxford College, we had breakfast, lunch and dinner together, and people of importance got to know each other.

I truly believe that it is all very well to have matters settled on a high political basis, but it is important to get a start with people both knowing each other and suddenly realising that what one called a foreigner was, after all, a very nice fellow who you could get on well with; it worked both ways. The people who organised it should be congratulated.

I mention this particularly because I feel that it would be valuable if it were kept going. I believe that the Konigswinter conferences went on for a long time. I do not know whether they still go on. Not only did they help the whole political process, which ended very happily with the Prince of Wales going to Buenos Aires and President Menhem coming to this country for a highly successful visit, but they cannot do any harm if they are carried on a little further still.

I must return to the family network in Chile, who are very unhappy indeed. The telephone rang almost straight away to say, "It is no good trying to fly a Union Jack"--I shall not say in which town it was, but it was a big town--"because they have all been burnt". Perpetually, there seemed to be a total lack of understanding, not just in Chile but perhaps on my part as well, of how this matter is progressing.

Some of the newspapers said the other day that the appeals might go on for years. I do not understand the law any more than I understand economics. The law obviously has to be obeyed, but I state quite firmly that as far as I am concerned, and as far as the people in Chile who I know are concerned, the General should be allowed to go home. Otherwise, I fear that we will lose

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a very good friend. In the Argentine, we have a very good friend now. Chile was always a good friend. That has been lost; trade has been lost; the sale of two destroyers has been lost. Chileans have telephoned me to say that life is going to be very difficult for the Brits in Chile. One knows one or two who work there and who rely on work there.

I hope, therefore, that the noble Baroness in her reply will be able to give us some sort of reassurance that this matter is not going to go on and on, until possibly the General becomes ill, or may even die, and this would cause untold trouble.

My time is up. I shall end, before the figure 11 comes up on the clock, by saying a quick word about the environment. The Argentine east coast and the Chilean fisheries are the only fisheries in the world which have not been beaten to death. Please let us ensure that they stay that way.

7.57 p.m.

Lord Ponsonby of Shulbrede: My Lords, I wish to concentrate on one of the smaller countries in Latin America, namely Uruguay. Before doing so, I join in the tributes to the noble Viscount, Lord Montgomery. He said that he had spent 23 years in this House. I know that he has actually spent 40 years promoting better relationships between the United Kingdom and Latin America. He said that this may be his valedictory address. I point out to him that nine of the 13 speakers in tonight's debate are in the same boat as he is, and I hope that it is not a valedictory address for any of us!

With regard to bilateral relations between the United Kingdom and Uruguay, they have a long history which goes back to the origins of Uruguay's independence from Spanish rule at the beginning of the 19th century. A treaty of trade and friendship between the two nations was signed in 1815. I believe I am right in saying that there has since then been a mutually beneficial relationship which has grown stronger over the years.

Today, Uruguay plays an important role in Mercosur, of which we have heard a lot this evening, it being the seat of the secretariat of this agreement, as well as its geographic centre, offering its financial and brokerage expertise to its partners in Mercosur and to third countries wishing to use its developed tele- communications and infrastructure.

I want to talk mainly about bilateral relationships and particularly about trade and investment, scientific and technical co-operation and cultural co-operation. Dealing first with trade and investment, Uruguay has undergone a huge process of industrial restructuring so as to adapt to the new trade environment created by Mercosur. The United Kingdom has played and can continue to play an important part in this process, not just as a provider of capital goods but as a direct investor in industry in Uruguay. British firms such as British Gas and Shell, to mention two examples, have either started new businesses or expanded existing ones in Uruguay as a result of the privatisation of the public utilities, a point that was briefly referred to by noble friend Lord Grenfell. But we have competitors in Uruguay. The Americans, the French and the Germans are also investing ever more in Uruguay.

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Uruguay has seen a healthy increase in its GDP, with a 3 per cent average for the past 10 years, and it has also seen a significant reduction in its inflation rate. Uruguay, per capita, is now the second most successful country in Latin America. It is second only to Argentina. British exporters have played their part in creating this success and have benefited from it. However, there is great room for improvement, particularly in the areas of mining, agri-business and tourism. There are tremendous tax advantages to investing in Uruguay. There are no Customs duties or VAT and there is no income tax.

The second issue to which I wish to refer briefly is scientific and technical co-operation. Uruguay is an important exporter of beef, wool, leather and dairy products. There is ample room for co-operation in this field through direct bilateral talks and particularly between our scientific institutions. The Royal Agricultural Society has an ongoing relationship with the State University of Uruguay and I hope that they will be able to share their knowledge on animal health, breeding and genetics. That could be a great area of co-operation for years to come. In addition, Uruguay is also a consultative party to the Antarctic Treaty and has two permanent installations there currently developing scientific and technological programmes in the region. Britain and Uruguay are already co-operating in logistics and fishing under that framework. That relationship is mutually beneficial. The British Antarctic Survey and the relevant Uruguay national authority could co-operate further in the scientific and technological fields.

On a slightly more negative note, perhaps I may refer to cultural co-operation. My noble friend Lord Rea referred to the importance of the British Council. I have to report to the House that the British Council office in Montevideo was closed a number of years ago, which is regrettable. That situation is rather awkwardly referred to by the Uruguayans. They do not understand why it has happened and they certainly think that there is a strong case for reopening the British Council office, particularly when Uruguay has one of the highest percentages of population which speaks English as a second language in Latin America. I hope that my noble friend will be able to say something about the prospect of reopening the British Council office in Uruguay.

In opening my contribution to the debate, I referred to the long history of relations between this country and Uruguay. I have to declare a personal interest because one of my ancestors, John Ponsonby, was a founder of Uruguay. Indeed, he is sometimes referred to as the "midwife" of Uruguay. The truth of the matter is that he shared a girlfriend with the Prince Regent at the time and was sent there by the Foreign Office. What happened is that the Prince Regent got the girl and Uruguay got its independence. I am very pleased about that and I am particularly pleased because the Uruguay authorities honoured my ancestor in a number of ways. I am pleased and proud that they thought fit to do so.

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8.4 p.m.

The Earl of Dundonald: My Lords, I, too, give my thanks to my noble friend for introducing this timely debate. We all know what a valuable contribution he has made to relations between this country and Latin America.

I should like to address my remarks to the country of Chile. This country occupies a very special part in my family's history. Indeed it is precisely because of this history that I have the privilege to be Chile's Honorary Consul in Scotland.

The Royal Navy owes a great deal of its current, although temporarily strained, relationship with Chile's navy to my ancestor, Thomas Cochrane, later the tenth Earl of Dundonald. In 1818 Chile sought its independence from the yoke of Spain, but it could not dislodge Spanish naval power. My ancestor answered the call, went to Chile at the invitation of Bernado O'Higgins and proceeded to kick Spanish and Portuguese sea power out of Chile, Peru and Brazil. He was not alone; there were many other British answering the call to establish the fledgling democracies of this great continent.

It is interesting to note that the British government of the day passed the Foreign Enlistment Act to prevent men like my ancestor from helping these fledgling democracies. Britain liked to interfere in other countries' development as much then as it does now. The only difference is that the tools and tone have changed considerably.

My ancestor's influence in the Chilean navy continues to this day. Every year on Chilean Navy Day the ambassador and the naval attache lay a wreath on his grave in Westminster Abbey. The First Sea Lord of the British Admiralty is normally in attendance.

The Chileans, as a result of early and continued British influence, have a very great regard for both the traditions and our sense of fairness in this country. Chile has as a result been a good and loyal friend to Britain and has had, as a result, a far less troubled political history than some of its neighbours. Chile continues to maintain strong political and economic links with Britain. Many British businesses continue to have a strong presence in the country and in the course of the past 10 years UK plc has invested heavily, reaping considerable returns from the fast growing but stable economy.

I have always had a close relationship with a number of Chilean people. I had a Chilean godfather, the late Victor Santa Cruz, who was ambassador in London in the 1960s. One of my father's closest friends, the late Cran Kendrick, was the Honorary British Consul in Valpariaso for more than 20 years. He used to visit us in the UK regularly. His daughter was a regular visitor to our home throughout my childhood and I have a number of close Chilean friends.

During the Allende presidency I remember well the stories of the armed gangs roaming the streets of the outlying areas of Santiago and businesses and farms being expropriated by the government--in short, government-inspired and supported anarchy. The Allende presidency had lost all control over the country

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it was supposed to govern. One could more mischievously suggest, and many political historians have already done so, that it was the presidency itself promoting the armed lawlessness. It is no wonder then that a desperate parliament towards the end of that ill-fated presidency invited the military to take control of the country in order to rid the country of a state of near revolution. They had of course underestimated the resolve of one member of that junta, General Pinochet. They had thought that the junta, having cleared the near anarchy from the streets of the capital, would simply hand back power to the parliament. The rest, as they say, is history. Pinochet consolidated his position and became dictator.

I wonder how we would react to a similar threat to this country--we who sit on comfortable red Benches in the oldest democratic parliament in the world. If we were faced with near revolution on the streets of our cities, would we call in the army to sort it out? I do not expect an answer to that question. I just want all of us to understand the political environment that catapulted General Pinochet to become dictator of his own country.

What the junta did is known to all. It is well documented. Few noble Lords present tonight would seek to justify some of the brutal excesses in the early years of that regime. But the junta did rescue the country from the very brink of political and economic disaster. None of us can deny that achievement. Some people will of course argue that the cost was far too high. But who could tell the cost that might have befallen Chile if Allende had remained?

Pinochet was eventually persuaded by all political parties to hand power back to Parliament and have full democracy restored. There were strings attached but, importantly, they were fully understood and accepted. Moreover, the judiciary accepted them. A plebiscite returned a new president. Pinochet, who had polled more than 40 per cent of the popular vote--more than most British Prime Ministers succeed in doing in their lifetime--and handed power over to his successor. This was a story with a happy ending. A compromise certainly; but Chile was once again on her democratic way.

The relationship between the UK and Chile at government, social and economic levels once again flourished; and relations were more than normalised. Then suddenly a wildcard magistrate in Spain thinks he can go for gold. He applies to the UK for extradition of the general. He is a magistrate in the very country that Chile fought to remove in 1818; the very country which fought a bloody civil war of her own; the very country that has only just returned to normalised democracy and might indeed have sunk once again into a dictatorship had not its newly installed king intervened personally. Talk about the pot calling the kettle black.

We must hope that our morally intoned Home Secretary properly took, and continues to take, into account all issues--this very same Home Secretary who as a young impressionable man travelled to Chile to meet the man who single handedly almost took his country over the brink: President Allende. The right and

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only decision for this Home Secretary is to send the General back to his country to face whatever music his fellow countrymen wish to play.

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