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Latin America

My Lords, I congratulate the noble Viscount on having persuaded the Convenor to include this debate in our proceedings and thank him for his helpful introductory speech. As the two previous speakers said, the debate is topical in view of the troubling events of this week. Latin America has probably had more column inches devoted to it in the British press than for a considerable time. This remarkable debate has as usual shown the range and depth of knowledge in this House. I am rather embarrassed by my relative lack of expertise compared with those who have spoken. I am a relative neophyte. My personal interest in, and knowledge of, Latin America was very much enhanced by participation in an IPU visit to Uruguay and Argentina at the end of last year. I agree with what the noble Baroness, Lady Hooper, said about the importance of the IPU and with the suggestions made about how the links with the IPU might perhaps be developed as methods of assisting democracy. Events in Bolivia this week have shown that of the two largest foreign companies producing natural gas in Bolivia one is Brazilian and the other is Spanish. The focus of the political and economic relations of Latin American countries is no longer overwhelmingly with the United States, but increasingly with other Latin American countries, with Spain—the foreign direct investment of which is growing enormously in many of the countries—and, as was said by the noble Lord, Lord Walker, with the developing role of China. The higher world prices for oil, metals and other commodities have been enormously advantageous to Latin America in recent years. Whereas five years ago the region had an overall deficit in overseas trade of $44 billion, last year it had a surplus of $37 billion. That swing in the region’s overseas trade and the prices earned for its exports have given those rather significant growth figures already referred to in the cases of Chile, Argentina and a number of other countries. I was able to see that when I was in Argentina and Uruguay. The sad thing is that in spite of this significant increase in GDP in recent years, there is still little progress in tackling the acute poverty and inequality, which continue to be widely considered as the major problems facing the countries of the continent. The possible exception is Chile—I very much agree with the remarks of the noble Lord, Lord Giddens—where social policy has been built on to a liberal economy. Indeed, the liberal economy now means an effective society with the introduction of the recent social policies. Over the past 15 to 20 years Latin America has seen in almost every country deep economic reforms, following fairly rigorous neo-liberal policies, sometimes introduced without very much attention totheir implications. This can be seen in particular by the privatisation of utilities, leading to investment by European and American companies in many places. Unfortunately, as Professor Ricardo Ffrench-Davis, the senior adviser to the Economic Commission for Latin America and the Caribbean, reports in his recent book:"““Although these reforms have made some progress possible, their impacts on growth and equity have also brought disillusionment””." In spite of the recent economic growth, average real wages in 2005 were lower than in 1980, taking Latin America as a whole. The number living in poverty, according to some calculations, was higher. Attempts to reduce fiscal deficits have meant reduced spending on roads and physical expenditure and on health and education. As a number of noble Lords have said, some of the recent swing to the left in elections in Latin America has no doubt been influenced by these trends. Another disappointment has been the slow and sluggish development of the institutions of regional integration, referred to by the noble Lord, Lord Walker. The creation of Mercosur in 1991 was something of which much was expected as a method of integrating the countries and also as a useful partner for the European Union. It was intended to provide for the southern cone a basis for economic and political union comparable to that of the EU. I have been puzzled by this for some time, so when I was in Montevideo last year I visited the headquarters. I discovered that in spite of the aspirations for Mercosur, there were very many obstacles to its effective growth. There is an asymmetry; Brazil and Argentina are so much bigger than Uruguay and Paraguay. There is limited interaction in trade between the members; only 10 per cent of Brazil’s foreign trade is with other members of Mercosur. There is a lack of commitment within the member states; Mercosur tends to be an instrument of foreign policy, being dealt with by the president and foreign ministries, rather than the economic and commercial ministries. As the noble Lord, Lord Walker, pointed out, there is no Commission; there is a limited technical secretariat—120 people are employed by Mercosur, which is not much of a basis for developing an effective institution. There are also considerable membership ambiguities. If you had read the press last December, you would have got the impression that Venezuela had been admitted. That is not the case. It has to detach itself from the Andean community before it can join Mercosur. The people I spoke to said that it would take a further five years. Bolivia was supposed to have started negotiations in December. However, all of those existing structures are obviously affected by the announcement—to which reference was made by the noble Lord, Lord Rea—in Havana of the ““Bolivarian Alternative for the Americas””. It is by no means clear what that will mean in future and certainly makes it very difficult for the European Union, which I do not believe will be able at Vienna to make any progress on its negotiations with Mercosur for a proper trade agreement. Indeed, as the noble Baroness, Lady Symons, suggested, we may need to look for bilateral arrangements rather than trying to do something comprehensively, in the same way that the Americans have moved away from the FTAA towards a series of bilateral free trade areas. One of the most positive developments of the past 20 years has been the movement away from authoritarian rule to democracy. But it is one thing to have elections, it is another thing to have effective democracies with effective relations between the executive and the legislature, effective civil services and an effective rule of law. There is still a great deal to be done in some of the countries to make the institutions of democracy work. A recent report of the United Nations development project talked about developing a concept of social citizenship, including efforts to combat poverty and inequality, or people might get rather tired of democracy. In this respect I ask the Minister, whose enthusiasm for his work in this area I recognise and admire, as has been said by so many other noble Lords, what plans the Government have for the Chevening fellowships. They have been extremely important as a way of bringing to Britain young people who are likely to take on responsibilities in the countries of Latin America. At a lunch at the embassy when I was in Buenos Aires I met some people who had been Chevening fellows and I realised what an investment that sort of thing was. I hope that stories that they are being cut or reduced are exaggerated. However, we need to do more. I was interested to discover that the German Foreign Minister is making a visit to some Latin American countries this week. Germany is not a country among our partners that one would have thought had a significant interest in Latin America. I refer to ministerial visits at all levels, not only those carried out extremely effectively by the noble Lord, Lord Triesman, and to the building up and extension of the work of the British Council. I am glad that the noble Lord, Lord Kinnock, was present for part of our debate and I hope that he caught the enthusiasm which we have for its work. We also need to find ways to develop our links. I was surprised to find in both Montevideo and Buenos Aires the great friendship there is in those countries for Britain. There is a potential for co-operation and they are in many ways our natural allies in economics and politics. I once again thank the noble Viscount, Lord Montgomery, for giving us the opportunity to have this most useful debate.