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Lord Thomas of Swynnerton: My Lords, before the noble Baroness concludes, perhaps I may inform her that according to Spanish press reports President Castro of Cuba applied for a visa at the Spanish embassy the day before yesterday.
Baroness Thomas of Walliswood: My Lords, sometimes President Castro is not as quick on the draw as one might suppose. Let us hope that he makes it to the summit.
7.32 p.m.
Lord Faulkner of Worcester: My Lords, the House is indebted to the noble Baroness, Lady Hooper, for instigating this debate. I am pleased to intervene briefly in my capacity as secretary of the British-Argentine Parliamentary Group. The noble Baroness is our distinguished vice-chairman. I am delighted to join other speakers in congratulating her on her honour. Her work in the region has been outstanding over many years. It is very gratifying to see her recognised in this way.
As my noble friend Lord Brennan said, the economic and social difficulties facing Argentina are immense, and, for us, their scale is difficult to comprehend. They have had nearly four years of recession, a reduction of 4 per cent in its GDP in 2001, an unemployment rate of over 20 per cent, and one-third of the population is now living in poverty. That is the background against which the government of President Duhalde took office.
Many of us who are happy to be regarded as friends of Argentina and its people looked on in disbelief at the television coverage over Christmas of civil disorder, looting of shops, and other displays of public fury at the consequences of economic collapse, especially those affecting the value of savings deposited in the banks. It must have crossed many people's minds—it certainly crossed mine—that a return to military dictatorship might not have been very far away. But, thankfully, that has not happened, and the democratic system remains in place.
The institutions of the country, law and order, and democracy have survived, despite awful recent events. Elections are planned for September of next year, and we must hope that they take place. The only form of destabilisation that we hope has applied in Argentina relates to the national football team, certainly as far as concerns the forthcoming match on 7th June. However, we should all hope that the adoption of a flexible exchange rate system, the devaluation of the peso, and the other measures that have been put in place, succeed in helping Argentine products regain their competitive edge in international markets, and provide an economic recovery largely led by exports. In this fragile situation, the last thing that Argentina needs is any resurgence of protectionism on the part of
its principal trading partners; namely, the United States and the European Union. I shall return later to the issue of protectionism.As the noble Baroness, Lady Hooper, said, Mercosur is an enormously important and potentially attractive economic block. It has a population of 209 million inhabitants, with a combined GDP of 1.071 billion dollars. It is the most important integrated market after NAFTA, the European Union, and Japan.
The performance of Mercosur in promoting regional trade and integration has already been impressive. Between 1990 and 2000 trade within the group grew by 328 per cent, from 4.1 billion dollars to 17.7 billion dollars. Outside the group, Mercosur trade with the rest of the world increased by 178 per cent during the same 10-year span. In particular, European Union exports to Mercosur rose by 254 per cent in that period.
The bloc has also succeeded in attracting foreign direct investment to its member countries with one of the best performances among emerging markets after China. Argentina alone received 98.7 billion dollars of total foreign investment between 1994-2001, and European Union countries were the leading investors with an inflow of 53.1 billion dollars—which accounts for 54 per cent of the total.
Trade and economic bilateral relations between Argentina and the United Kingdom have also benefited from the development of Mercosur. British companies that invested in Argentina have been able to use that as a base from which to expand business in the wider regional market. If the Argentine economy stabilises itself, as we all hope it will, Mercosur will be a very attractive market for encouraging trade and investment opportunities with European Union countries generally. When he replies, I hope that my noble friend the Minister will be able to say that the Government will do their best to promote this within the Community, especially at the forthcoming conferences.
Mercosur is playing an important part in helping to set up the Free Trade Area of the Americas (the FTAA), following the summit held in December 1994 in Miami attended by heads of state and governments of the 34 democracies in the region. The aim is to complete negotiations for the single market by January 2005, and eliminate barriers to trade and investment. The FTAA could create a market of 780 million inhabitants, 10 trillion dollars of GDP—that is, one-third of the world's GDP—and more than 20 per cent of world trade.
Mercosur is also engaged in negotiations with the European Union, with the aim of achieving gradual and reciprocal trade liberalisation. This follows a framework treaty signed in Madrid in 1995. The ultimate aim is to establish a free trade area with the European Union. In the sixth round of negotiations held in Brussels last year, Mercosur presented a proposal asking the EU to adopt a number of measures to eliminate trade barriers that affected bilateral trade, such as agricultural export subsidies.
Indeed, the noble Baroness referred to the common agricultural policy and the block that that is imposing at present on this sort of important development.The second European Union-Mercosur summit in Madrid offers a great opportunity to give a new impetus to the bilateral trade and economic negotiations process, so that it will then be possible to move on to the next stage of the negotiations. It is very much in Europe's interest to speed up the process, because a free trade zone stretching from Alaska to Tierra del Fuego could give the United States a huge competitive advantage in the region, if that was at the same time accompanied by trade liberalisation between Mercosur and the European Union. I hope that my noble friend will agree with that and confirm that the Government see themselves as having a role to play in providing a bridge between the EU and Latin and South America.
7.39 p.m.
Lord Moynihan: My Lords, it will come as no surprise to your Lordships' House that I believe that Her Majesty's Government should play a major part in the Euro-Latin American Summit. Our deep-rooted and longstanding historical ties of friendship and trade provide us with a solid foundation for our relationship with Latin America. In the 19th century, British engineers in Latin America built ports and railways, and British entrepreneurs provided capital to finance foreign trade and to launch the oil industry. In more recent years, the work of the British Council and the BBC World Service, as well as trade organisations such as the Latin American Trade Advisory Group, the UK/Brazil Joint Business Council and the UK/Colombia Trade Facilitation Group—in addition to Europe's generalised system of preferences and a series of EU horizontal programmes, as well as the EU co-operation strategy—have brought us much respect in the region and have succeeded both in bringing our business communities together and in establishing, cultural, social, economic and political contacts.
In an interdependent world, all countries face common challenges: how to compete and prosper in a world economy; how to halt the spread of weapons of mass destruction; how to prevent terrorism and stop the production, trafficking and consumption of drugs; how to reconcile economic growth with the sustainable use of shared natural resources; how to protect our environment; and, critically, how to strengthen at home and abroad the rule of law and democracy upon which foundations are built for future security, stability and prosperity.
The countries of Latin America, and Mercosur in particular, are natural partners in seeking to address these challenges. I hope that the Minister will take this opportunity to outline the Government's policy goals and the means by which these goals will be achieved with this in mind. These policy goals should include not only trade and economic issues but also the promotion of democratic institutions and respect for human rights; the improvement of judicial systems to ensure they deliver transparent, equitable justice; the fight against drugs and transnational crime; the
importance of sustainable development and the encouragement of sound environmental practices; and the substantial reduction of poverty through growth and job creation, as well as assistance in the creation of better health and education systems.For the sake of brevity, I shall concentrate my remarks on a number of key themes which I believe to be a priority in Europe's relationship with Latin America today. Economic liberalisation and free trade are two of the pillars upon which the architecture of a market economy are built. Britain has long been one of the foremost advocates of efforts to liberalise world trade and pursue transatlantic and global free trade. As long as trading blocs are inclusive and not exclusive and as long as the development of trading relations within blocs is not at the expense of economic relations with the outside world, regional integration is to be welcomed. NAFTA, Mercosur, the Andean Pact, the Group of Three, the Central American Common Market and a host of European multilateral and bilateral free-trade agreements are all evidence of the vigour with which Latin American economies have embraced the principles of liberalisation and open markets.
Indeed, Mercosur, the common market of the southern cone, is now the fourth largest trading bloc in the world, identified by the Export Forum as one of the key target areas for the United Kingdom. Like the noble Lord, Lord Faulkner, I hope that the Minister is equally confident that the aim of a free trade area of the Americas will contribute to greater growth in the region and wider opportunities for trade.
One key matter of importance to those attending the Euro-Latin American Summit is democratic development. I hear what my noble friend Lady Hooper has said—I also congratulate her most warmly on her honour—but neither democracy nor prosperity can endure unless they are broadly based. The policies of free markets and open investments which are the key to sustained growth will not be fully unlocked while people feel shut out or left behind. Fairness before the law is not an option for some while institutional weaknesses remain. As in some parts of Asia, a booming economy can be hijacked by corruption and lack of transparency and accountability.
I hope that the Minister will take the opportunity to say what initiatives the Government propose to take with our European colleagues to encourage the development of democratic institutions, legal systems, reliable civil services and higher levels of citizen participation, so that the region's economic success is firmly underpinned by a higher level of democratic development, a robust civil society and a broad-based middle class.
I should like in conclusion to say a few words about drugs. The global drug industry is particularly associated with the cartels of Latin America. I applaud the steps the countries of the region have taken to cut coca production, criminalise money laundering and permit extradition. However, the evil of drug abuse knows no borders. It is incumbent upon us to continue
to provide counter-narcotics assistance to Latin American countries both bilaterally and through international organisations such as the European Union in order to reduce the tragedies caused by the abuse of drugs both in the United Kingdom and the region.Colombia is a country in the front line of the fight against drugs and the war against drugs traffickers. Some 80 per cent of the world's cocaine supply is produced in Colombia or transits that country. It therefore must be a top priority to tackle the problem at source in Colombia, for what happens to the drugs trade in Colombia affects every government involved in the battle to stamp out drugs. I echo the reflections of the noble Lord, Lord Brennan, on this subject.
As I have said before in this House, Europe and Latin America have a joint interest in political stability, the promotion of democracy, the security of our investments and in further developing a thriving and growing trade partnership. I say to the Minister that Latin America, and in particular Argentina at this time, offers a compelling case for closer, active British and European engagement. I look forward to his response.
7.47 p.m.
Lord Lea of Crondall: My Lords, I join in congratulating the noble Baroness, Lady Hooper, on her new honour. As has been said, as president of Canning House, she has worked assiduously to improve relations between this country and Latin America. She must be very pleased about the happy coincidence of the honour bestowed on her, today's debate, and the very high profile now assumed by relations between the European Union and Latin America, as demonstrated by tomorrow's prime ministerial-level meeting in Madrid. I understand that, as has been said, that meeting will be starting at 9 am mañana.
Perhaps I can illustrate the work done by the noble Baroness, Lady Hooper, by giving one small example. After a parliamentary delegation of which I was a member returned from Bolivia, a group of us, with the noble Baroness, held a meeting with the director of the British Museum, to see whether we could ensure that the right contacts were being made with the Andean ambassadors in relation to the creation of a gallery of Andean civilisation. We shall be delighted to see that project going forward soon. Incidentally, Bolivia is, I think, the one country that straddles Mercosur and the Andean Pact. Cultural tourism in the Andes is not yet quite the thing for the grey generation, but I am quite sure that it will develop as one of the most sought-after experiences.
As I am mentioning distinguished colleagues in this field, I am delighted to see that my speech will be followed by that of the noble Lord, Lord Thomas of Swynnerton, who could forget 99 per cent of what he knows about the subject and still know a lot more about it than I do.
Following preceding comments, I shall briefly contrast Bolivia with Colombia. When we were in Bolivia, it was said that the elimination of coca growing by the peasants, and the reduction of smuggling of the drug, was costing the country 500 million dollars annually in lost trade. The EU and the US helped fill the gap of 500 million dollars by giving 50 million dollars each.
While we were in Bolivia Plan Colombia was announced under which the US provided 3 billion dollars to Colombia. Some Bolivians asked us rather plaintively, indeed, rather resentfully, "Do we have to cause as much trouble as Colombia to get that sort of money"? I am afraid that the answer is "Yes". It is rather like the upside down world experienced recently in the Balkans where the EU is still spending 1 billion euros on aid but 5 billion euros a year on ongoing military security expenditure. The Foreign Secretary and the United Nations have adopted an imaginative new outlook as regards the new programme of considering failing states before they become a mess. That constitutes an important challenge to the world community; namely, how to approach such a matter with some delicacy as we cannot always sweep up at enormous expense when the real job is to make sure that good governance is taken forward. I pick up the point made by the noble Lord, Lord Moynihan, as regards Bolivia and the Andes, where the key to success concerns the economics of alternative employment.
It has been said that the developments between the EU and Latin America are reversing the famous Canning dictum which states, if I may paraphrase, that the time has come for the old world of Europe to redress the balance of dominance in Latin America of the United States. That is certainly an idea whose time has come. I argue that the model of Europe—in my case that of Jacques Delors although that does not reflect everyone's view—is far more relevant to Latin America than the American model. The social dialogue that takes place between the EU and Mercosur is a good example. There are a number of reasons for that—language has been mentioned—but the ethnic/religious range of experience is also relevant. That dialogue has made it easier for us to visit many of the Latin American countries. I wish to put on record the thanks of the TUC delegation that recently visited Colombia for the help provided by the Foreign Office. It is never easy to meet imprisoned trade union leaders.
My limited experience leads me to believe that there is scope for greater EU cohesion—I hope that the Minister will comment on the matter—as regards missions in Latin America in 15 countries from 15 EU countries. I believe that that adds up to 225 delegations. We do not need so much duplication of experts on water supply, for example. Latin America could be used as a test bed as regards joint EU missions. I hope that that point will be commented on.
I hope that the Minister will also comment on the EU "road map". In parts of eastern, central and south eastern Europe the EU "road map" is not seen as a threat or the EU as a potential protectorate. It is rather
like the thing that you fling in the back seat of the car that you pick up when you have lost your way. Even when you think that you are going in the right direction you occasionally look at it. I was interested to note that Chris Patten, in introducing the summit, talked about the launch of the euro, the common foreign and security policy and the beginnings of autonomous military capacity in Europe. He mentioned those matters alongside an enormous range of events leading up to the summit in Madrid and the negotiation of association agreements between the EU and Mercosur and the EU and Chile and so on.I refer to Argentina in comparison with Brazil. I very much echo the comments of my noble friend Lord Faulkner of Worcester in that regard. However, it was not so long ago that we did not make any distinction between Argentina and Brazil. President Cardoso was in London recently. I refer to a most fascinating presentation at Canning House showing the enormous social progress and the doubling of productivity and of social provision in Brazil in the past 10 years when inflation was 40 per cent at the start of that period. It now has virtually 100 per cent education provision and AIDS is declining. It would be useful to discuss how some of the elements of that successful model could form part of the EU contribution at the summit to promote the development in a positive direction of all of the economies of Latin America.
7.55 p.m.
Lord Thomas of Swynnerton: My Lords, it is a pleasure to follow the noble Lord, Lord Lea of Crondall, whose remarks about the desirability of Latin America following a European example seem to me to deserve much attention.
I had the distinct impression that when I had the honour of joining your Lordships' House some 21 years ago the only contact there seemed to be between Latin America and this legislature at Westminster was a distant recollection of a comparison made by Disraeli who said that the Treasury Bench in another place reminded him of,
- "one of those marine landscapes not very uncommon on the coasts of South America. You behold a range of exhausted volcanoes. Not a flame flickers on a single pallid crest. But the situation is still dangerous. There are occasional earthquakes, and ever and anon the dark rumbling of the sea".
The late Lord Beaconsfield, I should advise your Lordships, had more imagination than experience of Latin America. Things have changed. Judging from the number of distinguished noble Lords who are taking part in this debate, matters have changed radically. Some noble Lords may recall the commercial relations of this country in the 18th century when more Members of this House were shareholders of a South Sea company specially designed to trade with the Spanish empire than were not, but most of us will think of more modern and desirable commercial opportunities for the present.
Some of us, especially those interested in an ethical foreign policy, will recall how Britain led the way in the 19th century to end the slave trade to Latin America and may even recall that Lord Palmerston was wont to
say in his last years that the one thing he was really proud of was ending the slave trade to Brazil. Many noble Lords will recall—as did the noble Lord, Lord Moynihan—how Canning helped Spanish American independence. Others will recall the number of British volunteers who fought for Boliívar, particularly in Venezuela at the battle of Carabobo. Others will remember how a Member of this House no less, Lord Dundonald, when he was Admiral Cochrane, founded the navies of two Latin American countries.Other noble Lords will be reminded when thinking of Argentina how once that country was considered to be the sixth dominion and others—this has been touched on—will not be oblivious of the fact that the oil of Mexico carried here by Lord Cowdray seemed to secure victory in the First World War. I am even tempted to remember how two Lords, the third Lord Albermarle and his brother, Admiral Lord Keppel, captured Havana in 1762 and launched Cuba on a rapid era of economic development. I shall address that subject in a lecture in Havana later this year.
We know that Latin America is composed of old if not always of close friends. As for the future I have eight matters which we should think about in relation to this fascinating continent. First, the history which I have mentioned should be remembered by officials, politicians and businessmen as, for Latin Americans, the history of the British and European relations with Latin America in the past will not be forgotten. Secondly, we should be inspired by the fact that, despite border disputes and a reputation for violence in Latin America and despite refugees, which have been mentioned, interstate wars have practically never occurred. It seems to me that the last interstate war in Latin America was the War of the Pacific in the 1880s, unless we include—I do not really think that we should—Castro's attempts to overthrow other Latin American countries by terror in the 1960s.
We might also note that despite the fact that there is a multitude of peoples in Latin America—I believe that there are more than 50 separate peoples in Mexico alone, speaking different Indian languages—there is remarkable racial harmony. The Zapotecs and Mixtecs in Mexico might well be able to give Europeans a lesson in harmony. I refer not only to the Balkans. Race relations in general also continue to be relatively harmonious, even in Brazil and Cuba, which have large black populations. Even before the revolution, and probably after it, Cuba has had a relatively good record in terms of black/white relations.
I turn to literature. Surely someone should mention it. The great writers of Latin America include, for example, the late Octavio Paz, Gabriel García Márquez, Mario Vargas Llosa, Carlos Fuentes and Guillermo Cabrera Infante, a Cuban Englishman whose naturalisation papers I had the honour to sign. All of them exert considerable influence over the intellect and the imagination of Europeans.
Where too would Europe be, I ask noble Lords, without Latin American music, from the bolero to the salsa?
The noble Baroness, Lady Hooper, referred to the Aztec exhibition, which will be held in the Royal Academy later this year. In saying that noble Lords should go and see it, I should declare an interest: one of my sons, Isambard, designed the catalogue and I myself have written an essay for it.
I should refer to Mercosur and drugs, to new democracies and to new opportunities for commercial undertakings. Although I probably could do so, I shall leave that to others. In the short time that I have at my disposal, I conclude by recalling a point that is perhaps equally important. There was a 17th-century saying in Spain that if someone is very good mannered, they are as polite as a Mexican Indian. This House believes that manners make the man. That courtesy, so characteristic of Latin Americans, is now not confined to Indians but extends through all parts of the racial make-up of the continent. That is another reason why we should feel pleased and proud of our growing affectionate attachment to our Latin American cousins.
8.3 p.m.
Baroness Andrews: My Lords, I never thought that I would be able to lay claim to the mantle of Disraeli. However, I speak of Latin America with more enthusiasm, if not imagination, than expertise. It is particularly daunting to follow such a magnificent tour de force, delivered in such celebratory language. The spirit of this debate is celebratory indeed. I join other noble Lords in congratulating the noble Baroness on a magnificent honour, which is magnificently deserved. It is good to share in that this evening.
I am afraid that almost immediately I shall plunge the House into gloom. I thank the noble Baroness for giving us an opportunity to voice celebration and concern about the future of Latin America. As many noble Lords have said, this debate takes place during turbulent times. Even if we had not had the coincidence of the Madrid Summit, this would have been an extremely timely moment at which to discuss Latin America.
Far be it from me to talk about Europe—that has already been magnificently covered—but the European Union has been building links with Latin America since its inception. During the past decade we have celebrated and rejoiced as Latin America and Europe have grown closer together—we have doubled our trade and we have begun to build up agreements with Mexico, in particular, Chile and of course Mercosur. Those are the foundations for a much better future.
It is not simply in response to their roles as major trading partners that we should be concerned about the collapse of the Argentinian economy, the peace talks in Colombia or the chaos in Venezuela. We should also reflect on what those traumatic events mean for our international and Atlantic relationships and our hopes for building stronger civil societies. Even without the Madrid Summit we should surely be concerned, if we are to meet our own international
development targets, that after a decade of reform and democracy income equalities are still widening across Latin America. Two in five people in Latin America live on less than two US dollars a day—that is, 168 million people—and 77 million of them live on less than one US dollar a day. Moreover, 80 per cent of all the indigenous people fall into that category. Fuelling that continuing poverty, particularly in Central America, is the failure to ensure that education reaches the poorest.The debate asks the Government what role they intend to play in the summit. I believe—I absolutely follow the remarks of the noble Lord, Lord Thomas, in this respect—that we should ensure that at the first opportunity the summit should celebrate and promote the great economic and social diversity. Far more people know about the violence and the salsa than about the great liberal traditions and the great literature. It should also make it crystal clear that investment in Latin America—and in greater social protection and civil society—is not an act of international charity but a global safeguard. The EU's own five-year regional strategy document makes it clear that the political challenge internally in Latin America is to consolidate democracy and the rule of law and that the international challenge is to encourage the capacity of the countries of the region to take a more active part in international policy.
Those must be the priorities, because unless Latin American countries become more involved in international discourse and international action, we will never win against international terrorism or global poverty, as we want to do. We need the intelligence, the humanity and the practical experience that Latin America can bring in that respect.
I hope that the UK would will work hard to ensure that the summit takes every opportunity to respond to the "deepening gloom" across Latin America. I hope that we will make a positive and optimistic response to that by taking the lead in promoting an enhanced commitment to building democracy. It is time to reinforce what we can do. For 10 years we have rejoiced in the growing democracies. That would not have been possible without the courage and determination of the people of Chile, Venezuela or Argentina. The agreements that we have created bear witness to the relationship between economic growth and democracy in the democratic clauses that are attached to the agreements.
However, the reality check is that after decades of collaboration and support, economic growth has not meant better lives for the poorest. Human rights, as the noble Lord, Lord Moynihan, said, still have a fragile hold in many countries in Latin America. The débâcle in Venezuela, with the attempted overthrow of President Chávez, the continuing trauma in Argentina and the festering corruption and violence witnessed in Central America are all evidence of how fragile those democracies are. I endorse all of the calls that have been made for us to stand by Argentina as best we can.
I hope that our Government will take every opportunity at the summit to raise the confidence of European investors as a whole, but also to commit to
a practical and realistic programme with robust systems of accountability, particularly for technical, social and educational assistance.I hope that we will give a special priority to educational assistance. Unless we do that, neither aid nor trade will ultimately make a difference in the long run. The needs are immense: more resources for more schools, particularly in the rural areas; more teachers and teacher trainers; more vocational trainers; more technicians and engineers; more advisers; and more appropriate technologies. In the short term I think of the gifted and dedicated Argentinian teachers I know. They look to Europe for advice and support. Although they are now living off their savings, they continue to teach, despite not having been paid, because they know that the future of their children is their only future. I think of the very bright children whom I have seen in remote areas of Guatemala and Honduras who are taught in schools which have bare walls, a few benches and hardly any resources to speak of and yet who believe that the future is for them. Therefore, I hope that the summit will make a priority of meeting their human rights through education.
I also hope that it will recognise that attaching a democracy clause to trade agreements means having to take action when there are defaults on human rights. I hope that it will mobilise the range of investment that is needed for greater equality as well as greater growth. Above all, I hope that Chris Patten is right when he says that the summit,
- "provides a high profile platform to make a substantial joint contribution to stabilising the international environment, economically as well as politically".
8.10 p.m.
Lord Maclennan of Rogart: My Lords, I, too, congratulate the noble Baroness, Lady Hooper, on receiving her honour and on initiating such a wide-ranging and timely debate. I hope that she feels rewarded by the knowledge that has been deployed in the debate and by the evident interest in and feeling for Latin America that has been displayed by all who have spoken so eloquently about its needs.
In this country, despite our recognition of Latin America's trading importance and our interest, and the interest of successive governments, in promoting democracy and human rights there, too often, after the high drama has been played out, the press loses interest. Therefore, I believe that this debate is valuable, coming as it does on the eve of the most welcome Spanish initiative in holding the Euro-Latin American Summit in Madrid. It gives Europe an opportunity to develop the co-operation which was begun across a wide front on foundations laid in Rio in June 1999.
The EU is the first trading partner of Mercosur, Chile and the Andean group. The decade from 1990 saw a doubling of European Union trade with Latin America, with exports from Europe reaching 54.5 million euros. European firms have played a significant role in the privatisation process. Between 1996 and 1999 the European Union became the largest source of direct investment in Latin America.
We also welcome the progress in the negotiations on liberalising trade. Those have already extended to agricultural exports with Mercosur and Chile. I hope that, in replying, the Minister will be able to say something on the progress made in the April talks in Buenos Aires, particularly on political co-operation and trade facilitation measures.
With regard to Mercosur, I simply say that its objectives seem entirely admirable. I slightly regret that it has followed almost exclusively an intergovernmental approach, not following the European pattern of initiatives from a body comparable to the Commission. I believe that that has resulted in it being somewhat slower to achieve its goals than might otherwise have been the case.
Turning to the Madrid summit, I notice in the letter sent to all the participating heads of government that our own Prime Minister was asked by Prime Minister Aznar to introduce the subject of international terrorism. I hope that Tony Blair will tackle not only terrorism in that context but also the causes of terrorism, for that is where I believe the European Union has a particular role to play in Latin America.
In a debate as brief as this, it is difficult to decide whether to do a complete tour d'horizon—a historical analysis as brilliant as that of the noble Lord, Lord Thomas—or to decide where to point the searchlight. I am afraid that I have felt it necessary to focus particularly upon the parlous condition of Argentina. Its spectacular debt default in December casts a lurid light over the scene, and it is the most present destabilising threat to the continent, which has, to some extent understandably, resisted the worst of the fall-out.
It would be hard to exaggerate the awfulness of the Argentinian financial disaster. However, I believe that there are some parallels with the Russian default of 1998. But Argentina appears to lack a President Putin to face down corrupt provincial oligarchs and governors whose attitudes to public spending, failure to collect taxes and willingness to print provincial money threatens hyper-inflation—perhaps as high as 60 per cent this year—and a massive decline in GDP, possibly by as much as 11 per cent this year. The hardship that that involves scarcely needs to be spelled out to the House.
The IMF, which has bailed out Argentina before without securing the required reforms, has no choice but to insist on the necessary painful disciplines. Argentina's federal government must refuse the bail-out money to the provincial governments. An anti-corruption campaign must be mounted and with urgency, taking on the tainted judges, congressmen, civil servants and others who have sapped confidence in the ability of the country to govern itself.
Order must be restored to the banking system, the payments system and the foreign exchange market. Economy Minister Lavagna needs all the technical help that he can find from the international community, and particularly from the European Union—his most important trading partner. The need is to restore investor confidence. The role of private
capital is the key to this resource-rich country and not another bail-out from the IMF. The bankruptcy code needs to be reformed and creditors need to be able to recover their assets. However, what has been called the "standard cold turkey approach" is unlikely to succeed unless domestic and international confidence is restored by the active involvement in that process of internationally respected monitors and advisers—here, again, Europe could play its part, perhaps through members of the Bank for International Settlements—reporting to the Argentinians and the world that the painful adjustments are being made.Russia has shown that short-term pain can quite quickly lead to a real turn-round. If the pitfalls of the quick fix are to be avoided and if investment is to be resumed, workers must become profit-sharers and equity holders. Privatised business must cease to be monopolistic.
Finally, I draw attention to the wise words of Anne Krueger, the deputy managing director of the IMF, spoken less than a week ago when she drew attention to the importance in the context of Argentina of strengthening,
- "the social safety net at this time".
8.18 p.m.
Baroness Rawlings: My Lords, I, too, extend my appreciation to my noble friend Baroness Hooper for initiating this debate. I congratulate her on her timing and her very well-deserved honour.
It is always so worth while listening to the noble Lord, Lord Thomas of Swynnerton, who has such a wealth of expertise and experience in this area, and to the other well-informed and interesting contributions from all noble Lords who have spoken during the debate.
Summits such as this one are essential in building on the cultural and economic relationships that we are forming with Latin America. The first summit of leaders from the European Union, Latin America and the Caribbean, which took place in Brazil in 1999, marked the start of a new strategic partnership. It increased mutual understanding in the political, economic and cultural spheres.
The objective then was to strengthen political, economic and cultural understanding between the two regions in order to encourage further development. It is therefore timely that in the coming days we shall have the opportunity to evaluate the progress since the Rio summit and to set the direction for the future of the partnership. It is also timely as the European Union has undergone a significant transformation with the launch of the euro in 12 member states.
Over the past few years, the European Union has gradually deepened its economic and trade links with Latin America, at a bilateral level with Mexico and Chile and at a regional level with the "Mercado del Sur" or Mercosur. Indeed, the European Union is Latin America's second trading partner, being the first partner for Mercosur and Chile. We have enjoyed close links with Mercosur since its creation in 1991, witnessing the process of regional integration between Argentina, Brazil, Paraguay and Uruguay and providing technical and institutional support. That has resulted in a doubling of trade between 1990 and 2000. Trade at the bilateral level has also been nurtured. As neither Mexico nor Chile belong to any regional Latin American groups, they have developed stronger bilateral links with the European Union. Mexico is the only country on the American continent actually to have signed a European free-trade agreement with the European Union.
However, we have also heard that while much progress has been made, the continent is now facing a serious financial crisis and economic instability. Argentina, which, as we have heard from the noble Lord, Lord Brennan, is a wonderful country with educated people, is going through a difficult period. There has been a 70 per cent fall in the value of the peso since the 11-year peg to the US dollar was ended in January, which has sent the prices of imported goods soaring. According to a survey by the Argentine business chamber, CAME, the prices of fresh eggs and vegetable oils, as well as the prices of computers and televisions, have risen by between 100 per cent and 200 per cent.
The new Argentinian Government have devalued their currency by at least 30 per cent in order to boost exports and to help restore Argentina's foreign currency earnings, which may be needed to pay off huge foreign debts. There is an unfortunate consequence, however, for those businesses that have invested in Argentina and which may now suffer as their investments in the country become less valuable. I fully support my noble friend Lady Hooper and the noble Baroness, Lady Andrews, in saying that we should help Argentina in whatever way we can to overcome her present problems.
In contrast to its regional peers, the Peruvian economy is pulling clear from a recession. Last year it even managed to edge out a slight increase in growth. So far, however, the recovery remains based on two singular events: the ramp-up of commercial production at the Antamina copper-zinc mine, which is on its way to becoming one of the country's largest mining operations, and additional public spending. That in no way represents an economic recovery, so it is with sadness that at this stage the Government see fit to close the CDC office in Peru.
The European Union needs to maintain a close relationship with Latin America if we are to continue to have a major and positive effect on improving economic and social development. There is a risk that governments will become distracted by the financial crisis, creating an opportunity for an increase in drug
trafficking, money laundering, drug abuse, organised crime and, of course, terrorism, as we heard from my noble friend Lord Moynihan.The European Commissioner, Chris Patten, was right when he said that the Madrid summit,
- "represents the opportunity to build upon the common foundations which we put in place at Rio and to launch specific and ambitious initiatives to strengthen our ties".
8.24 p.m.
Lord Grocott: My Lords, we have had an extremely interesting and wide-ranging debate. If this were a sermon for which I needed a text, my noble friend Lord Brennan has provided me with one. He described the countries concerned in this debate as countries of "much difficulty but great hope". I am grateful to him for that text as it sums up a number of contributions.
I also congratulate the noble Baroness, Lady Hooper. By now she must be feeling embarrassed by the adulation. She said that the timing of the debate was a pure coincidence. As well as her knowledge of Latin America I thought that maybe she had considerable skills in persuading the powers that be to hold an appropriate debate on an appropriate day. She could not have picked a better day.
Foreign ministers of the European Union, Latin America and the Caribbean countries have already gathered in Madrid for a meeting this evening. Tomorrow, the full summit of heads of state and government will begin. During the summit the EU will be holding separate meetings with representatives from the Mercosur countries, the Central American and Andean states and Mexico, as well as individual meetings with many countries—noble Lords will agree that they are important countries—including the Caribbean.
Heads of state and heads of government from 48 countries will be at Madrid, together with foreign ministers and other representatives. It struck me that in replying to this debate, with 48 countries and 12 minutes in which to reply, I could speak for 25 seconds on each country. Mercifully not every country has been referred to. As the House will know, my right honourable friends the Prime Minister and the Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs, Denis MacShane, are representing the Government.
I want to speak about the importance of Latin America and the Caribbean to this country. Our strong historical ties, have been emphasised by many speakers—I shall not try to add to what has been said—most notably by the noble Lords, Lord Thomas and Lord Moynihan, and my noble friend Lord
Brennan. We have heard a tremendous depth of history and experience that we would do well to remember.Our current relationship is driven by a renewed emphasis on modern political, cultural and economic links and on significant trade with and investment in Latin America and the Caribbean. A number of noble Lords stressed the importance of the economy and of trade, particularly my noble friends Lord Lea, Lord Faulkner and Lord Brennan. Annually, our exports are worth some £2.5 billion and the list of British companies operating in the region reads like an A-Z of the FTSE 100. Brazil and Mexico are particularly important for UK exports.
Political links with Latin America continue to grow. Between May 1997 and the end of 2000, over 70 British ministerial visits to the region took place. My noble friend Lord Lea rightly reminded me that not only are ministerial visits important, but also trade union visits and others. Last summer, the Prime Minister took relations an important step further when he visited Brazil, Argentina and Mexico, and had an extremely important meeting with Caribbean leaders in Kingston, Jamaica.
With Brazil and Mexico, bilateral ties have been given additional impetus by regular high-level talks covering a range of global and regional issues. Brazil and Mexico are not just key players in Latin America. Their population growth and the size of their economy makes them increasingly important global players.
Of course, there are problems. The issue of drugs was raised by the noble Lord, Lord Moynihan. There are also the problems of human rights and conflict resolution. They are important matters in our relationships with Latin America and the Caribbean. Drugs-related terrorism of both the left and the right threaten democracy in Colombia and could spill over into neighbouring countries. The influence of drugs and drug-related crime has dramatically affected the economic and political stability of the Caribbean, most notably in Jamaica. We all share a common interest in ensuring that the men of violence do not prosper and that democracy and the rule of law prevail. The importance of democratic institutions was repeatedly stressed, and rightly so, by my noble friend Lady Andrews.
Our relationship with the Caribbean region is as strong as ever. My right honourable friend the Foreign Secretary paid full testament to the strength of that relationship in his opening remarks at the recent UK-Caribbean Forum in Guyana earlier this year. He underlined our readiness to engage with our friends in the Caribbean to tackle the many challenges that we face. The forum agreed to take forward work in a number of key areas: regional security; trade and investment; sustainable development; and health, especially the spread of HIV/AIDS.
I turn to the purpose of the summit. It is the second event of its kind, following the first three years ago in Rio. I can give an absolute assurance—almost every speaker asked for an assurance on this point, and it is nice when one can stand at this Box and, hopefully,
give an absolute assurance—that the Government attach tremendous importance to the summit and to the work that we hope that it will undertake.To recap on some of the events since the last summit, Rio gave political impetus to trade negotiations with Mexico, leading to entry into force of the EU-Mexico Association Agreement in October 2000. It also gave impetus to negotiations with Chile, the conclusion of which will be celebrated in Madrid—a point raised by the noble Baroness, Lady Hooper. Other examples of co-operation since Rio include human rights, higher education and many other important issues that time does not allow me to enumerate. My noble friend Lady Andrews mentioned the importance of education. The first EU-Latin America and Caribbean Ministerial Conference on Higher Education was held in Paris in November 2000.
The summit's principal purpose will be to give political impetus to the process of building a deeper strategic relationship between the EU, Latin America and the Caribbean. That relationship will centre on the key issues where both regions have mutual interests and concerns. Those can be summarised under three headings that will provide the timetable and framework for the summit: political, economic and cultural, and there will be one session on each. Of course, we cannot anticipate precisely what the summit will endorse, but we hope that there will be a political declaration, a paper on common values, and an assessment of progress made on projects since the last summit.
We have a real incentive for the summit to produce some practical commitments from everyone taking part. We want discussion at Madrid to focus on areas where the two regions can work together and can make a real difference. We want heads of government to agree to undertake a series of commitments that will benefit both regions that, above all, will be relevant to the interests and well-being of ordinary citizens in the two regions. That undertaking will form the political declaration to which I referred.
The summit agenda is ambitious. Four areas are especially important to us and we very much hope that commitments in those areas will form part of the final communiqué. The noble Lord, Lord Moynihan, asked about the summit's objectives, and I shall touch on those four key ones. They are, first, terrorism and the international response to it. That will be no surprise to noble Lords. The second is agreement on moving forward on further world trade liberalisation following the Doha meeting. The third is agreement to work together to make a difference on sustainable development, not least in the run-up to the World Summit in Johannesburg. The fourth is the encouragement of more investment in the Latin American and Caribbean regions—never forgetting, as my noble friend Lady Andrews said, that it is not just a question of achieving economic growth but of ensuring that it is sustainable and coupled with strategies for the elimination of poverty.
Throughout the preparation process, we have worked to keep those four areas in focus and to ensure that they receive adequate attention at the summit. As I said, we have agreed the themes for discussion, but of course not all countries approach the summit in exactly the same way. Some Caribbean countries are especially concerned that we should pay more attention to the special problems that their economies face. Some Latin American and Caribbean countries would like new trade agreements with the EU. There are calls for a greater EU commitment on aid to the region and a recognition that the disbursement of aid, especially in the Caribbean, needs to be speeded up and made more effective. Those are all complicated economic and political issues and we hope that they will get a good airing at Madrid.
As was no surprise to anyone interested in the region, several speakers mentioned the problems of Argentina. The noble Lord, Lord Maclennan, described the situation well when he said that it is hard to exaggerate the awfulness of the economic disaster that has overtaken the region. The noble Baroness, Lady Rawlings, spelt out some of the consequences and tremendous difficulties caused by inflation.
The Government are watching the economic crisis in Argentina with much concern. We support the efforts of President Duhalde's government to tackle the serious problems that they face. We have stressed to Argentina that it must do all that it can to carry through a sound and sustainable economic policy consistent with the criteria set out by the International Monetary Fund. We recognise that that may take time; no one underestimates the scale of the challenge that Argentina faces.
I must say a word about the Caribbean. A key issue for the Caribbean is, of course, sustainable development. The region has requested our help in representing their concerns about the lack of attention that they receive in addressing their development needs. The UK is therefore pleased that sustainable development features prominently on the agenda for the summit and we look forward to the discussions, which we hope will lead to a greater awareness of the concerns of small states and allay the sense of marginalisation which Caribbean leaders have reported.
Latin America and the Caribbean matter greatly to the UK and I hope that I have been able to reassure all those who have spoken in the debate in the short time that I have had. I welcome the opportunity provided by the debate for me and others to spell out the importance that we all attach to the region. We look forward to developing new and closer links with all the countries of the region. We want to work together to tackle some of the international problems and challenges that we will face this decade. We welcome the opportunity offered by the Madrid summit to make progress on those matters.
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