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Latin America
7.3 p.m.
Baroness Hooper rose to ask Her Majesty's Government what part they intend to play in the Euro-Latin American summit planned by the Spanish presidency of the European Union, particularly in view of recent developments in Argentina and Mercosur.
The noble Baroness said: My Lords, when I originally tabled this Unstarred Question, the date of the European Union-Latin American Summit was not known. It now transpires that it will take place in Madrid tomorrow. This debate is, therefore, most timely, if a little at the ultimo momento. My apologies go to those approaching the Box who may have been adversely affected as a result.
Perhaps I may also add that this morning I was honoured by being appointed a Companion of the Most Distinguished Order of St Michael and St George for services to UK-Latin America relations.
Baroness Hooper: My Lords, this, too, was entirely coincidental, but I feel that this debate is a fitting way to celebrate.
Perhaps I may begin by congratulating the Spanish presidency on its initiative in calling this EU-Latin American Summit. Again, in the light of recent dramatic events in Venezuela as well as those in Argentina, this is a good opportunity to ensure that Latin American countries are aware of European
interest and opportunities for trade and investment so that they do not feel that they are solely dependent on the United States.I hope that the Summit will not be a "one-off" and that a regular EU-Latin American dialogue will continue to take place in future years. I urge and ask the Government to make it clear that the United Kingdom supports such a dialogue and has a useful and important, not to say key role to play in promoting further and better links with Latin America.
Over the past five years Canning House, the Hispanic and Luso Brazilian Council of which I have the honour to be president, has arranged European Union-themed conferences in Brazil, Mexico, Argentina and Chile, which have tied in with the bilateral negotiations for free trade agreements between the EU and Mexico, the EU and Chile and between the EU and the Mercosur countries, Argentina, Brazil, Paraguay and Uruguay.
The only such agreement to come into effect so far is the Mexican agreement. The Mexican Minister for the economy, who was in London last week, told me that Mexico's trade with the EU has already increased by 20 per cent as a result. That must be good news. I therefore ask the Government to play a role in ensuring that the negotiations with Chile are concluded as rapidly as possible and that the more complex negotiations with Mercosur are pursued vigorously.
As I understand it, the stumbling block, as ever, in the negotiations is that of the common agricultural policy and its system of subsidies, given that primary agricultural products form a significant element of the economies of all four Mercosur countries.
We all know that further reform of the CAP is—and has been for a long time—high on the UK agenda. Therefore, in this, our interests coincide. I hope that the Minister will be able to reassure us as to the progress of these important negotiations.
In discussing the EU/Mercosur relationship, it may be of value to examine Mercosur and its members in a little more detail. As a regional organisation, Mercosur—which literally means the southern market—looked to our experience in the Common Market, now the European Union, and started in 1991 (some 11 years ago) with four members—two large and two small: Brazil and Argentina, Paraguay and Uruguay. It has since concluded a special association agreement with Chile, and similar arrangements are under discussion with Mexico and Venezuela.
Intra-regional trade increased enormously and tariff barriers have been systematically reduced. Even in the political field there has been benefit. A few years ago, when the incident took place in Paraguay and it looked as though the military were taking over, under the pressure of the other Mercosur partners the country succeeded in maintaining a democratic process. That, too, must be very good news.
Mercosur has helped its member countries to weather the previous world and regional recessions, and two years ago its member countries could be said
to have fulfilled the Maastricht criteria rather better than some European countries. It is true that when Brazil devalued the real by 28 per cent some three years ago, Argentina was adversely affected because of its increased volume of exports to Brazil: its hands were tied because the peso was tied to the dollar. That was not the sole cause of Argentina's present troubles, but it was undoubtedly a factor. But on the whole, Mercosur has proceeded at a cracking pace. I hope that the present troubles, caused largely by the situation in Argentina, will not prevent it from continuing.The current troubles in Argentina have been a shock to us all. From the UK point of view, we have many special links with Argentina. There was the historic support for the independence movement provided by George Canning to San Marti, and the liberation of the Southern Cone countries at the beginning of the 19th century. There is a long-standing British-Argentine community; there are English-speaking schools; and the English Speaking Union and other such organisations are based there. I have led trade missions there, as have other noble Lords, to promote and consolidate this special relationship and to increase our trade. I very much hope that current British investments, particularly in the energy field—British Gas has an important stake there—as well as in banking and in traditional companies such as ICI, will continue to hang on in there.
Victor Borges, the famous Argentine thinker and writer, once said:
- "To understand Argentina you have to understand Europe—Argentina is a country of European exiles".
We must remember that, for example, an individual living in Buenos Aires enjoyed a lifestyle very similar to ours. There is a strong middle class in Argentina. They, as well as the increasing numbers of people below the poverty line—with real levels of unemployment at 30 per cent in some places—are having a very bad time. I do not think it is too dramatic to say that it could happen to us. Life in Argentina was very good. It is very sad to think what is happening now.
We are all looking to the IMF to provide a solution. Perhaps the IMF should have done something three years ago, when Brazil devalued its currency. Perhaps the provisions of Chapter 11 should have come into play at that stage. My suggestion, therefore, is that the Government should press our European partners not only to stand by Argentina in this crisis but to look more generally at the way in which the IMF operates and reacts, so that preventive action can be encouraged before it is too late.
Because of the time factor, I have dwelt on the countries which are the particular focus of my Question. However, there are many issues affecting Chile, Peru, Colombia, Ecuador, Venezuela and the Central American countries which will doubtless arise
at the summit—such as the prevention and containment of the narcotics trade, as regards which Britain, as a consumer country, is working with many of the producer countries. There are the law and order issues, where again we can co-operate and exchange ideas for best practice. There are endless cultural opportunities. The British Council plays a very positive role in that respect, as does Canning House. We look forward in particular to the Aztec exhibition which is due to take place at the Royal Academy in November this year, and which we hope will be opened by President Fox of Mexico. It will be the largest collection of Aztec art and artefacts ever to be put on show.Given my admitted partiality for the region, perhaps I may be permitted to summarise by saying: the good news is that the democratic processes remain in place in all these countries. Inflation remains under control. Looking at the broad picture, it is interesting to note that foreign direct investment continues to flow into the region and portfolio investors, encouraged by greater global liquidity, are recognising the good value that can be found in companies in Latin America. The collapse of Enron has perhaps shown that even major groups in the developed world are not without risk; and in terms of emerging markets, Latin America is a star. I feel sure that the Government, and particularly the Minister with responsibility for Latin America, Denis MacShane, will make this known and will improve on the position.
In conclusion, perhaps I may thank all those who will contribute to the debate and say how much I look forward to the Minister's reply. I hope that we may receive some feedback from the summit meeting in due course.
7.17 p.m.
Lord Brennan: My Lords, I am sure that I speak on behalf of the whole House—those present and those absent—in congratulating the noble Baroness, Lady Hooper, on the honour accorded her today. It is a signal recognition of all that she has done over so many years to promote relationships between our country and South America. It is also a recognition of the depth of the relationships that have extended over centuries between our two regions.
This is an important debate. Of all the nations outside the British Commonwealth (England and its ex-colonies) the one European nation which has the greatest connection with the developing world is Spain. It is a happy coincidence that the Spanish presidency should coincide with the Latin American summit this weekend. It is a happy coincidence not only culturally but economically.
The two topics that I wish to raise for consideration are, first, business and, secondly, people. In regard to business, it should be noted by the rest of South America that the two countries, Mexico and Chile, with which the European Union has reached economic accords, have achieved that result by free market
development, economic and political stability and a firm intention to develop their countries' economies towards Europe as well as north towards America.Mexico and Europe have over £1 billion of trade a year. Some 23 per cent of Mexico's foreign investors are European companies. It is a country which can look forward to a confident future with the help of Europe, as can Chile.
That example should be followed by the inter-regional contact established between the European Union and Mercosur. From the many meetings that have taken place, there now appears to be a finality to the future arrangements in terms of political dialogue, economic co-operation and the promotion of common business interests.
There are two aspects that I would emphasise. If it works, the Mercosur example should be followed by the Andean countries and it should act as an encouragement to Mexico and the Central American countries which are themselves considering a common market arrangement in that part of the world.
The one sector in which this country should play its part in developing its European contacts with South America is the energy sector. Petrol and gas exploration, which is central to our national economy domestically and abroad, is a major element of future investment and development in South America. Britain should play its part nationally and through Europe.
All in all, Europe works well with South America, a relationship promoted in particular by this country and Spain. Business works only if those participating in it share common values and common trust. I shall refer to two countries whose people need co-operation from our end in a very important way. The first is Colombia. That blighted country has 1.5 million displaced people, of whom more than 1 million are children. Those internal refugees are living in dire circumstances. Europe has a major programme, of which we should be proud. We should ask yet more of it to help that country.
I turn finally to Argentina. It beggars belief that the fourth or fifth richest country in the world at the end of the Second World War should be in its present disastrous condition. How could it happen? There are many theories and many beliefs. But it is solutions we should be looking for, not explanations. Nearly half the population of an educated and civilised country are living in poverty or near poverty. The middle class is on its knees. It is a country whose people have no confidence whatever in either politicians or public institutions.
That terrible state of affairs demands our help. It is difficult to know precisely how such help can be given, but Europe is an obvious source of rescue for a country whose people deserve it whatever we think of its politicians who have produced the present situation.
Those are two examples of countries in a continent experiencing much difficulty but where great hope still exists. It is a hope that Europe should nurture, both in business and with regard to people. How far we in Europe have come with those in the Americas! Many
years ago my Spanish wife asked an Irish relative of mine the word in Irish for mañana to which he replied that there was no word that embraced such a sense of urgency.The Government's timing is most efficient. Our debate is taking place on the day before the international conference. I hope that our comments will be heard and that my noble friend the Minister will tell us in due course that the United Kingdom will play a full part in European Union efforts to improve business and the progress of the people in South America.
7.24 p.m.
Baroness Thomas of Walliswood: My Lords, I join the noble Lord, Lord Brennan, in offering my sincere congratulations to the noble Baroness, Lady Hooper, on her honour, which is very much deserved. She and one or two others have kept the flag of Latin America flying in the House and she thoroughly deserves the acknowledgement that she has now achieved for all her work here and in Latin America.
I also welcome the role of the Spanish presidency and the Euro-Latin American Summit. In the early days of the European Community the United Kingdom was regarded as particularly well placed to keep open the channel of communication between Europe and the United States—Norte America in Latin American parlance.
Now Spain can demonstrate its special role vis-à-vis Latin America, which is a sub-continent that some people in this country and in this place feel has been somewhat neglected by us in modern times. I remember being in Cuba, where Spanish colonial rule is a good deal more recent than in other parts of Latin America, and admiring the way in which the Spaniards could swim through those dangerous currents and conduct good commercial relationships with that difficult country.
This initiative can be seen in different ways, both in Latin America and the European Union, as a recognition of the substantial social and economic strength of the region. It is an indication that the EU and its members could provide another powerful partner to balance the United States, or as the culmination of a number of trade negotiations that have been running for some time, either bilaterally, as with Chile, or with Mercosur, the negotiations of which have been described in great detail.
I remind the House that during his visit to Brazil in August last year the Prime Minister said that the EU should overcome its old practices of farm subsidies and trade barriers which disrupted the economy and hurt developing countries. Do the Government now feel that a treaty with Mercosur is still available, if not immediately, then in the fairly short term, especially as a similar sort of arrangement appears to be on the verge of being successfully concluded with Chile?
A major source of concern for all participants in the summit must be the current parlous condition of Argentina financially, economically and politically. Banks have closed or been suspended; the currency has
plunged against the dollar and is not in use as a means of exchange in some parts of the country. The noble Lord, Lord Brennan, reminded us that Argentina was one of the most powerful and richest countries in the world not that long ago. Output is expected to decline by 10 to 15 per cent this year. The numbers of unemployed and the poor grow and the political processes seem incapable of resolving such situations. One must ask what others can do. I want to follow the noble Lord, Lord Brennan, in asking whether the UK Government think that any action on behalf of the EU could assist Argentina in its current plight and what such action might be. Are proposals of support expected to come out of this summit? If so, what conditions might be required of Argentina in terms of better governance?Argentina is not the only country in Latin America which faces difficulties. In Colombia a drug-fuelled war still rages. The Government of Venezuela have recently been badly shaken, although they may yet re-establish themselves. Peru, Ecuador, Paraguay and Bolivia are still very poor, although they are no longer among the poorest nations in the world.
Vincente Fox, the first non-PRI president of Mexico for 70 years, is not finding it easy to bring in the tax, constitutional and economic reforms with which he wanted to modernise and transform his country.
Cuba still manages to defy the US embargo, which is now 40 years old, and still, by its very existence, causes ripples of unease as neighbours pick their way between Castro and Uncle Sam. In fact, it would be interesting to know whether Fidel Castro has been invited to this conference; and, if so, whether he will attend. He is one of the least travelled and longest serving heads of state in the world today.
However, one should not allow doom and gloom to dominate one's view of Latin America. As has already been said, its people have a strong dose of what one might call "Europeanism". They are well educated in comparative terms. When I lived in Peru 30 years ago, I remember being convinced—with some reason—that there would be more illiterate people in Peru and in all of Latin America, both as a percentage of the population and in absolute terms, by the end of the century than was the case at that time. I have been proved completely, and thankfully, wrong. Widespread education provision is available to a large percentage of the population in all the Latin American countries.
People in Latin America have also achieved much in other ways; for example, access to clean water, which is always a guide to health, is widely available. Indeed, the majority of the population in most of its countries now have access to clean water. Moreover, the use of contraceptives has increased enormously and infant mortality has significantly reduced in the recent past. These countries have a great deal to offer to the world, even if they sometimes seem curiously unable to preserve a stable government for any useful length of time. There must be something that we can do to assist them—we, who represent some of the most powerful, rich and reasonably well-governed countries—to play
their full part in the world and to maintain good relations with us. I hope that the Minister will be able to reassure us that the United Kingdom will play a full part in the summit to promote such ideas.
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