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The Earl of Sandwich: My Lords, does that mean that we must do away with economists and accountants?
Lord Desai: Absolutely, my Lords, and experts—and, it is to be hoped, statistics, which I have made my living from teaching and compiling. The noble Earl complained about bureaucracy. Let us get rid of all the intermediaries and give money directly to the people and see what they do with it. It might benefit them. I would benefit if someone gave me money!
8.14 p.m.
Lord Elton: My Lords, I think the speech of the noble Lord, Lord Desai, peaked in about the seventh minute. I commend the seventh minute to your Lordships' attention. After that, it became slightly haphazard. But the Lord loveth a cheerful giver, and I am sure that he loves the noble Lord, Lord Desai.
The world has shrunk astonishingly since I was born into it—and even more astonishingly since the Secretary of State was born into it. I join other noble Lords in welcoming her presence in marking the importance of this debate, which is far greater than the number of noble Lords present signifies or the attention that the subject is likely to receive outside.
When I was a child and a young man, the world was a solid rock platform from which one occasionally looked up to see an interesting collection of tiny scintillating lights and then got on with one's own local affairs. Since then, we have seen the world from space and we realise that we are surrounded not my tiny moats of dust but by millions of suns, all bigger than ours. We are not on a solid rock platform but on something more like a fragile raft in a perilous and lonely sea. We share that raft with the rest of the human race, which puts the debate into perspective. We were once able to see only those countries on our own side of the sphere, which meant that every country on the other side was reduced to merely a shape on a map and every condition to a statistic on a table.
The statistics have become frightening. I recently picked up a couple which shook me. I discovered that the average GDP per capita in a country such as Sierra Leone is one forty-ninth of what it is in this country and that the life expectancy of its children is less than half that in this country.
We can now see those statistics; they are faces on our television screens. Suddenly, those impersonal statistics have become as much our neighbours as did the man who fell among thieves become a neighbour to the man on the road to Damascus. We cannot therefore ignore them.
Today we are discussing the way in which we help those countries. I welcome what the noble Lord, Lord Desai, said about throwing money at the problem. While I confess that I know less about economics or aid than anyone else taking part in the debate, I believe that the focus of the debate is on the structures by which we can help these countries. That is not necessarily by giving them aid but by giving them a fair chance to take part in world trade.
That is currently achieved by representation at the World Trade Organisation. I recently picked up the report of the Economic Affairs Committee on globalisation. I read that Mike Moore, the Director-General of the WTO, indicated that 28 or 29 of its members were not represented in Geneva. He also indicated that the WTO attempted to respond to that uneven representation by funding poorer countries to attend meetings in Geneva twice a year.
Large countries have permanent representation on the WTO. I understand that the United States has about 40 representatives, half of whom are diplomats and trade delegates. The same applies to Europe. The United Kingdom has 15 to 20, of whom 10 are trade delegates. Bangladesh has only one representative and many countries have none. Merely to pop someone in twice a year and expect that to produce dividends for the country is ludicrous.
During debate on the G8 Statement, I suggested that we ought to consider something like Short money for countries which cannot be present in Geneva. That would enable them to be there on a permanent basis. Perhaps they should appear collectively—perhaps there should be a commonality, a group of these countries. They would then be able to have some influence. We already give a proportion of our aid to structural assistance, but I understand that that is given to the home countries, giving the basis on which they can obtain the information and administer grants. As I said, I am ignorant in this field but the Secretary of State will put me right. I am talking about addressing the problem at the WTO end, which is complementary, but the two together should make for effective representation.
Achieving change will be a slow process, considering the weight that is pitched against such countries and the fact that Europe is one of the most expensive places to produce sugar. Yet Europe produces 40 per cent of all world sugar exports. As a result of subsidy, we dump against the people in poor countries trying to produce it. That will take a long time to change.
There is, however, a still different picture. I speak of the moral position: I think it is unacceptable that we do nothing about this issue. We have to do something, for reasons obvious to anyone with a moral outlook, let alone a religious one. For those not concerned with that kind of issue, the stark fact is that a world which has such really repellent levels of wealth difference is a very unstable and unsafe world; but it is a very good world in which to recruit people to fly Jumbos into skyscrapers and claim that this somehow will redress the balance of wealth and power. So we have a purely material self-interest in addressing this problem.
That is a challenge to any government of any party because doing anything substantial about it will mean that we are less well off than we are now. It will cost us. Electorates do not like that. So, first, this requires courage in a government; secondly, there should be discussions between parties so that the matter is taken out of the electoral equation—I know I am talking about something almost impossible. Therefore, electors will know that voting for one party or another will not suddenly make them worse off because that party has a conscience about these matters and understands the threat to this country. Elections are fought on short-term issues and this is a very long-term issue.
Thirdly, the issue must be made more appealing in some way. I was caught by the idea of my noble friend Lord Saatchi of having a national holiday to mark the day on which one finishes working for the Chancellor of the Exchequer and starts working for oneself. I think that our party—and I commend other parties to do so also—should set a target in the next Parliament to bring that date back at least three days and to give the yield of one of those days to the kind of initiative I talked about—paying to help the less fortunate countries become more fortunate.
I thank the noble Baroness for bringing the matter forward. It is one of increasing and very great importance.
8.22 p.m.
Baroness Northover: My Lords, I, too, thank the noble Baroness, Lady Whitaker, for introducing this important and wide-ranging debate. As the noble Earl, Lord Sandwich, has said, how we reach the poorest is indeed a fundamental question; and it is surely useful to return to such fundamental questions. Once again the expertise in your Lordships' House has been very evident in the wide-ranging brainstorming that has occurred.
The need for over-arching international organisations is borne out by the debate today. Such organisations may need reform and improvement; but if they were not there, we would need to invent them; and we should always be wary of undermining and circumventing them.
The very existence of the Millennium Development Goals reflect international concern about this area and helps us focus on how aid is targeted, even if we know that many of those goals will not be met by 2015. Progress can be seen, and these important targets must have helped us achieve what has been secured so far.
I share the enormous concern of the noble Earl, Lord Listowel, about the way in which the tragedy of HIV/AIDS is plunging Africa, in particular, into worse problems.
The giving of aid has been a relatively recent historical development. Of course there are many factors in play. Those with an imperial past may well have stronger ties with their old colonies and seek to assist them first. But there are also many other political factors. Too often aid is tied to the interests of the donor countries. The EU's record in that area, as the noble Baroness, Lady
Whitaker, and the noble Lord, Lord Hannay, have said, has been highly unsatisfactory. There are a few welcome signs of that changing, and I look forward to hearing from the Secretary of State how that is progressing. I should also like to know what proposals for reform of the CAP we might see coming down the track. As the noble Lords, Lord Hannay and Lord Elton, rightly said, trade rather than aid must be the key to development.The United States has been quite blatant in its political use of aid. Thus an analysis of the £2.4 billion increase in aid announced by the Bush Administration earlier this year shows, for example, that one third of the total will go, not to health services or schools, but to supply foreign countries with US arms and training. So much for a budget that professed to "promote compassion".
We saw the use of the US aid budget in the run-up to the war in Iraq. Note the African Growth and Opportunity Act 2000, which allows eligible sub-Saharan countries duty-free and quota-free access to the American market. But a country can become eligible only if it,
- "does not engage in activities that undermine United States national security or foreign policy interests".
However, as others have said, the relief of poverty may often depend a great deal on the nature of governance in particular countries or areas. Thus the people of Iraq were impoverished by sanctions imposed by Western powers. The greatest challenge for the international community is surely to help poor people living under oppressive regimes without assisting the governments that oppress them. That can clearly be seen in the cases of Burma or Zimbabwe. In Somalia, there is no formally recognised government, and the United Kingdom Government have made further aid contingent on the peace process making concrete advances and there being subsequent political progress. It is an understandable position, but one that leaves the Somali people in poverty.
Is it important to have links to donor countries? I shall take the example of Burundi, which does not have such links. Burundi is currently the third lowest ranked country on the human development index. Life expectancy dropped from 54 years in 1992 to just over 40 years by December 2002. It lacks attention from donor countries, and the funds pledged to it are pegged to the resolution of conflict; therefore, so far, less than a quarter of funds pledged have been released. Yet, clearly, aid could help to reduce the conflict in Burundi, so it is in a catch-22 situation. Certainly it might be argued that a donor country with a strong interest in Burundi would have worked out the areas in which a limited release of development aid could play a real role in bringing peace.
On the other hand, there can also be a danger that links may be too close. In the Great Lakes region, the issue is not that the states lack strong links to major donor countries so much as that there has been no consistency or co-ordination between major donors. For instance, the UK has been the largest bilateral donor to Rwanda and Uganda for some years but has had a very limited relationship with the DRC. France, on the other hand, has supported the DRC but not Rwanda and Uganda. Given that those three states have been in conflict with each other over the past few years, better co-ordination between the UK and France might have applied more effective pressure to end the conflict. But, due to historical reasons, the agendas of France and the UK have remained opposed and regional conflict has continued.
From a UK perspective, some argue that the close nature of the UK relationship with Rwanda and Uganda made the UK less sensitive about its engagement in the regional conflict than perhaps we should have been. So even close relationships, then, may not be the answer. Consistent interest—but a truly effective international perspective—is surely important. That is why in so many respects the decision by the United Nations Security Council to send peacekeeping forces to the DRC, to be carried out under EU auspices—the first time that that has been done outside Europe—is to be welcomed.
Again, if we consider HIPC countries, we find that they have a fairly strong relationship with the major donors, because they are required to work in partnership with creditors. However, the World Bank itself, in a recent report, admits that donors need to take a more active role. Consistent attention is not necessarily given. The World Bank is itself considering what it defines as low-income countries under stress to address the particular problems of the poorest and least developed countries which suffer from conflict and poor governance. It proposes to facilitate change, but not necessarily through increasing lending. Various transitional measures are proposed to try to advance that, and I should like to hear from the UK Government their views on the proposals.
As we have heard, so many factors complicate whether aid is reaching those who most sorely need it. A lack of links with donor countries or international institutions may be one, but here the argument must be for strengthening and reforming international institutions so that the needs of the poorest can be best identified and addressed.
However, in many respects, that is probably not the greatest problem. Perhaps the most important issue that we need to address is that of governance—how, in countries with appalling and oppressive governments, the international community gets aid to the poorest people, so that their economies can develop and they can trade internationally. That must be the real challenge, and international co-operation to achieve that must surely be the way forward.
8.32 p.m.
Baroness Rawlings: My Lords, I, too, thank the noble Baroness, Lady Whitaker, for initiating this critical debate. It is timely following the recent G8 talks at Evian and covers a wide range of related topics, including HIPC and the Doha trade talks.
In the short time available, I shall explore in more depth one issue mentioned by the noble Baroness, Lady Whitaker: armed conflict in relation to poverty, because trade and all other solutions discussed by your Lordships in the debate become meaningless without peace.
One of the main stumbling blocks is the Government's lack of openness about exactly what criteria are used to make decisions on our involvement with a country. It is as simple as rewarding success and penalising failure, in terms of meeting set conditions: for example, economic growth policy; trade liberalisation; political freedoms; and good governance. As the noble Lord, Lord Hannay, said so clearly: why have so many of those initiatives failed?
Do DfID and the FCO use the same criteria? Will the Secretary of State make those criteria available to the House? It is difficult to insist that there is transparency and accountability in developing countries and their governments unless we are transparent and accountable. That is particularly obvious with regard to the problem of conflict countries, a problem that many noble Lords have woven through their speeches this evening. Countries with civil wars are more common today than they were 40 years ago. That is mainly because most of the countries fighting then were colonies, so it was possible for powerful outside forces to impose stability. Today, counting wars with more than 1,000 violent deaths, one country in eight is involved in civil war. Alas, we cannot separate conflict from development. A century ago, most conflicts were between nations, and 90 per cent of the casualties were soldiers. Today, almost all wars are civil wars, and 90 per cent of the victims are civilians.
Most conflicts today are in Africa, most notably at the moment the ongoing tragedy in the Democratic Republic of Congo, Burundi and Sudan. Those are the countries that find it most difficult to establish funding relationships with donors. The best predictors for conflict are low average income, low growth and high dependence on exports of primary products such as oil and diamonds. Poverty fosters war, and war impoverishes. A typical civil war leaves a country 15 per cent poorer than it would otherwise have been and with about 30 per cent more people living in absolute poverty. Having a neighbour at war reduces economic growth by about 0.5 per cent a year.
There are also non-monetary costs. For each 1,000 refugees who flee from one tropical country to another, the host country suffers an extra 1,406 cases of malaria, not to mention the transmission of HIV/AIDS by men in combat. That works against the achievement of the millennium development goals by 2015.
A recent World Bank study by Paul Collier shows that, when income per person doubles, the risk of civil war halves and that, for each percentage point by which the growth rate rises, the risk of conflict falls by a point. Another study shows that halving military manpower correlates to a reduction of a quarter in HIV among low-risk adults.
We are stuck with a paradox, aptly demonstrated by the situation in Burundi: peace will not be possible without international financial support, and that international support will not be forthcoming until peace is achieved. I ask the Secretary of State to tell us what plans there are to break the cycle with the injection of carefully targeted and monitored aid. We recognise the danger of providing moneys to countries at war, and we recognise that there are many issues about aid effectiveness. Could it not be properly managed through independent NGOs, thus providing alternative livelihood strategies to generations who would otherwise, perhaps, pick up a gun? Spending money on education and health seems to provide immediate boosts to the economy of conflict nations. It shows that those Governments are serious about peace, buoying confidence and encouraging private investment.
The many developing countries involved in civil conflict need to be reassured that this country and this Parliament, as we heard this evening, take an intense interest in what is going on. We must be proactive and reactive. We must be critical in our assessment of what occurs and take what steps we can to encourage peace. We must try as best we can to help such countries to meet the millennium development goals. I look forward to hearing the Secretary of State's response to many of the questions that have been posed.
8.40 p.m.
The Secretary of State for International Development (Baroness Amos): My Lords, I thank my noble friend Lady Whitaker for raising what I think is a very important issue. That has been demonstrated by the speeches of all noble Lords today. The effective and fair allocation of aid to poor countries is essential to the task of achieving the millennium development goals. We have worked hard to ensure that United Kingdom assistance is targeted to those who need it most, in settings where it will have the greatest impact.
Challenges remain to ensure that donors, including the European Commission, deliver aid effectively to those countries where poverty is most acute. Even greater challenges face us in delivering aid to countries where joint working is difficult due to conflict, state failure or extremely poor governance. The Department for International Development is supporting the development of new strategies to engage with these so-called "poorly performing" countries. We are focused on getting the international system to work together more effectively, but much remains to be done.
The noble Earl, Lord Sandwich, is right when he says that we need to ensure that donor assistance is co-ordinated so that it does not become a burden on
developing country governments. Mozambique is a very good example of where donor co-ordination works effectively. That is why we have sought to align donor strategies and have moved to long-term aid partnerships. My noble friend Lord Desai raised the problems associated with criteria for giving aid. The noble Baroness, Lady Northover, raised the issue of tied aid. Perhaps I may remind the House that we have untied all our aid, but we want to support countries which are committed to reform. It is important to remember that our citizens expect no less.There is strong evidence that aid works to promote growth and it works to reduce poverty. Aid is most effective where good governance and sound economic management are in place. But we also know that the impact of aid is greatest where poverty is most acute. DfID's allocation of aid is targeted largely on the poorest countries. We also have smaller aid programmes in middle-income countries, such as the Ukraine and South Africa, where our targeted assistance can help with policies to promote growth and address poverty.
Although we provide assistance to a large number of countries, we do not try to cover all countries that are poor. It makes sense to have a focus on those poor countries where we have developed experience over the years. But we have also engaged with other countries where there are pressing problems and we think that we have particular knowledge or expertise to offer. Examples include Rwanda and the Democratic Republic of Congo.
We have made a commitment that by April 2006, the share of our country programmes going to low income countries will rise from 78 per cent to 90 per cent. Even where we do not give aid bilaterally, we still make significant contributions through international organisations, such as the World Bank and the UN agencies. I assure the noble Baroness, Lady Northover, who raised in particular questions about US aid policies, that we strongly advocate a greater poverty focus by other donors. We have a number of bilateral discussions, as well as discussions in the context of the World Bank and the IMF, on these matters.
It is important that donors do not ignore poor countries. It is even more important that we do not ignore poor people. My noble friend Lord Desai suggested that we needed to get rid of statistics. So I apologise to him as I am going to quote some now, but I think that they are relevant. One of the most telling statistics is the total aid divided by the number of poor people in a country. The people of Niger do not fare well, having received only £21 per poor person in 2000. Mali comes out somewhat better at £30, while Laos is £133 and Moldova is £153 per poor person. However, these figures are sobering when one considers the enormous poverty that these countries face.
Yet they must be seen in comparison with other countries—particularly the large population countries—where need is also great. The comparable figure for Nigeria was only £1 per poor person in 2000. That is because Nigeria is the country in Africa with the greatest population. For India, the figure was £2, China, £5 and
Bangladesh, £20 per poor person. If there is discrimination, it is against those countries with large populations. That is why our strategy in the Department for International Development focuses a great deal of effort in sub-Saharan Africa because that is where we are least likely to meet the millennium development goals, but we are very conscious that we have significant aid programmes in Pakistan, India and Bangladesh because those are the countries that have the greatest proportion of poor people.However, we and other donors could not justify giving most of our aid to a handful of very large countries. We need to consider the balance of countries and where aid will make the most impact for every pound spent. We must also remember that our development programme is not only about funding, it is also about building capacity, transferring knowledge and skills and securing fair global policies on trade and investment.
The noble Lord, Lord Elton, raised the issue of building capacity, in particular as regards trade negotiations, and my noble friend Lady Whitaker referred to the need for developing countries to have an equal voice. The WTO is a membership organisation, which is why it is so important that developing countries have a voice. We have been building the capacity of developing countries. For example, we fund a regional negotiating machinery mechanism for the whole Caribbean region to enable those nations to engage more effectively in trade negotiations. We have also supported developments in the World Bank and the IMF in respect of giving developing countries a stronger voice.
With respect to the European Commission, the latest figures show that only 44 per cent of EC assistance goes to low-income countries, and we contribute up to £1 billion annually to the EC's external activities. That is why we have focused on reforming EC aid. Increasing the Commission's poverty focus is one of our priorities and I can assure my noble friend Lady Whitaker that we have worked to ensure that these issues are considered in relation to the discussions on the Convention on the Future of Europe.
My noble friend also raised the question of aid to governments that are weak, corrupt or undemocratic. On the whole, countries with weak governments, institutions and policies tend to receive less aid and it is usually the people in poverty who suffer, not those in power. The noble Lord, Lord Hannay, was quite right to say that the long-term cost of ignoring these countries is significant, and I agree with the noble Lord, Lord Elton, that part of that cost could be increased global instability. Many of these countries are in situations of conflict, such as Somalia, DRC and Sudan, and our first task must be to lend support to end the conflicts and provide humanitarian assistance. Other countries such as Afghanistan are just emerging from conflict and need targeted assistance to rebuild their institutions.
Countries that have undemocratic and repressive regimes such as Zimbabwe and Burma are unable to attract much aid from donors. In any event, they would not be able to absorb aid effectively until democracy and sound governance are restored. There are also states where the capacity of the government is weak, where corruption is endemic or where the breakdown of law and order threatens both growth and human security. In those states, too, our traditional systems for delivering aid are not likely to work.
We cannot abandon the poor in such circumstances. To neglect these countries would not only perpetuate poverty, it could well contribute to the collapse of the state, with adverse consequences for both neighbouring states and the global community. The noble Lord, Lord Hannay, spoke very powerfully about that. The answer is not to disengage, but to engage differently.
It is difficult to provide aid effectively to poorly performing states. We have to find ways of delivering assistance to poor people without stimulating dysfunctional politics or inadvertently aiding repression. I can assure the noble Lord, Lord Hannay, that we are examining the policy options in this area so that we can make our own programming more effective.
The noble Baroness, Lady Northover, spoke about the work of the World Bank and the unit it has established, called the low income countries under stress unit. The unit receives its main bilateral support from DfID and is promoting new ways for the World Bank to provide strategic assistance to poorly performing countries, even when those countries do not qualify for bank funds through the usual channels.
We are also working with other bilateral donors through the Development Assistance Committee of the OECD and we are taking the lead in supporting and co-chairing a learning and advisory process on difficult partnerships. The aim is to ensure that bilateral donors do not ignore the poorly performing states.
Let me deal with specific questions raised during the debate. The noble Earl, Lord Listowel, referred to Angola. Of course Angola is in a post-conflict situation and we need to work with its government to ensure that they put reform processes in place to release resources which can then be spent in areas such as health and education.
The Government of Angola have to put the needs of their people first. We have discouraged the Government of Angola from holding a donor conference until such time as they have clearly instituted an internationally acceptable political and economic reform programme. I stated to the Government of Angola when I visited that country that we are willing to play our full part in such a conference when the time is right.
The noble Earl also referred to Angola's application to the Global Health Fund for help in tackling HIV/AIDS, TB and malaria. We have recently increased our funding to the Global Health Fund to 280 million US dollars. I hope that Angola's application to the fund is successful
but I agree with the noble Earl that we cannot look at the issue of HIV/AIDS in isolation. That is why we have focused a great deal of our attention on strengthening health systems in the developing countries in which we work. I shall of course communicate with the Government of Angola and encourage them to continue to work on their HIV/AIDS strategy, and in particular on the implementation of the strategies referred to by the noble Earl.The noble Earl, Lord Sandwich, referred to the departmental report and gave it a positive response. I cannot take any credit for that report. It was launched on the day after I became Secretary of State for International Development. The department and my right honourable friend Clare Short should take the credit.
As to the noble Earl's question on decentralisation and devolution, we support the decentralisation efforts of many countries. It is an effective means of enhancing responsiveness to the poor and, in the PRSP context, we support decentralisation only if it is government policy; we do not impose it.
The noble Baroness, Lady Northover, raised the question of greater co-ordination between the United Kingdom and France in the Great Lakes region. She may recall that my right honourable friend the Foreign Secretary visited the Great Lakes with his French counterpart last year. Britain and France have not always agreed on policy for the Great Lakes—I agree with the noble Baroness that this has been to the detriment of policy for that region—but we are now working much more closely together. Our contribution to the French-led international force in the DRC is a good example of that.
The noble Baroness, Lady Rawlings, raised the issue of the criteria we use in regard to funding and stated that she felt that the Government lacked openness and transparency. I am surprised. We have long-term partnerships, which are negotiated with the governments of developing countries and include consultations with key stakeholders; we publish a country assistance plan setting out our analysis and the areas we will support; and those plans are evaluated. It is probably the most open process there is.
Noble Lords will find on our website a wealth of information about the issues we take into account when considering our support for developing countries. The Foreign and Commonwealth Office is developing criteria for its own global opportunities fund and I have no doubt that that criteria will be open.
The noble Baroness also raised the issue of Burundi. I agree that peace and security are absolutely critical, and we are giving direct support to the people of
Mozambique who, with South Africa and Angola, are contributing to the African peacekeeping force in Burundi. Until that happens, we cannot move to any kind of wider development programme.I have run over time, but perhaps noble Lords will let me answer the last two points and conclude. My noble friend Lord Desai suggested the development of a human development bond. I would like to discuss that with him. As he knows, my right honourable friend the Chancellor has suggested an international financing facility which would double the amount of aid available and enable us to meet the millennium development goals by 2015. The noble Lord, Lord Elton, also came up with a creative solution which perhaps I should discuss with him outside the Chamber.
We are committed to building strong donor partnerships, particularly with the poorest countries. It is important that states are not overlooked due to historical accident or donor fashion, and that subjective aid allocation systems are put in place to help ensure fairness.
The noble Lord, Lord Hannay, suggested four areas in which he thought we should take action and which would assist. The first was reform of the European Union. We are working hard to find ways of reforming the Commission's aid policy. The second was with respect to debt. The noble Lord will know that we have pushed very hard to ensure that countries do not leave the HIPC process with unsustainable levels of debt. We will continue to do that.
The third area the noble Lord mentioned was working through regional and sub-regional organisations. We continue to do that, not just in the area of building peacekeeping capacity and dealing with conflict but with respect to trade and other areas. This is a key mechanism with respect to the New Partnership for Africa's Development.
The fourth area was trade, which was also mentioned by the noble Lord, Lord Elton, and others. We are pushing very hard for reform of the common agricultural policy; we want to see a decoupling of subsidies for production. Noble Lords will know that my right honourable friend Margaret Beckett has been arguing our case very strongly in the EU Agriculture Council. We will continue to press for reform because we want these reforms now, ahead of the discussions at the WTO meeting in Cancun in September. We continue to work hard to find new ways to engage with poorly performing countries to ensure that neither multilateral nor bilateral donors neglect them.
These are some of the challenges that must be met. I believe they can be met, and the Government will continue to work towards that end.
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