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G8 and G20 Summits

My Lords, it may be a convenient moment to turn to the second Statement, which was made a few minutes ago by the Prime Minister in another place. "With permission, Mr Speaker, I should like to make a statement on the G8 and G20 summits which took place in Canada. First, I am sure the whole House will join me in paying tribute to the seven British servicemen who have lost their lives in the past week. From 40 Commando Royal Marines: Sergeant Steven Darbyshire. From 1st Battalion the Mercian Regiment: Colour Sergeant Martyn Horton, Private Douglas Halliday, Private Alex Isaac. From the Yorkshire Regiment: Lance Corporal David Ramsden. From the 4th Regiment Royal Artillery: Bombardier Stephen Gilbert, who died from injuries received in an explosion earlier this month; and the soldier from 101 Regiment Royal Engineers who died yesterday. As the country marked Armed Forces Day this weekend, people did so with tremendous pride but also great sadness. We will never forget what these men and so many of their colleagues have given for us. As I have said, I am determined that our forces will not stay in Afghanistan a day longer than necessary. I led a discussion at the G8, where we made it clear that we ‘fully support the transition strategy adopted’ by international partners. We are not after a perfect Afghanistan—just a stable Afghanistan, able to maintain its own security and prevent al-Qaeda from returning. So the G8 sent a collective signal that we want the Afghan Security Forces to ‘assume increasing responsibility for security within five years’. The presence of large-scale international forces cannot be an indefinite commitment. We need to get the job done and bring our troops home. Let me report to the House on the main conclusions of the G8 and G20. I have placed copies of the communiqués in the Library so that people can see the details of what was agreed. The G8 is a good forum for the leading democratic economies to give proper strategic consideration to the big foreign policy and security issues. It also plays a vital role in helping the richer nations to improve the future of the poorest. In my view, these two vital functions of this forum should continue. Let me take each in turn. On the big security issues, we discussed the Middle East peace process and agreed the importance of putting pressure on both sides to engage in the proximity talks with the aim of creating the conditions for direct talks. President Obama specifically said that he would make this his priority in the coming months. While the changes that Israel had proposed are welcome, they do not go far enough, and the communiqué says that the current arrangements in Gaza, "‘are not sustainable and must be changed’." On Iran, UN Security Council Resolution 1929 was welcomed. The communiqué states that all countries should "implement it fully". Since the G8 includes Russia, Britain believes this was significant. The UK also made the case for all members of the G8 to have positive engagement with Turkey, which could have a key role to play in resolving both the Iran issue and encouraging progress on Middle East peace. We also discussed North Korea, deploring and condemning the sinking of the "Cheonan", nuclear disarmament and non-proliferation. On development, while the G8 has played an important role in increasing aid spending by the richest countries in the world, some of those countries have not met the commitments they set out. I stressed the importance of transparency and accountability, and the accountability report sets out what countries have done in meeting their commitments. While not perfect, it is really good progress in making sure that countries cannot make promises without being held to account for them. Even at a time when our countries face difficult budget decisions, it is important we maintain our commitment to helping the poorest in the world. The UK is maintaining its commitment to increase spending on aid to 0.7 per cent of gross national income. This gives us the opportunity to exercise leadership. At the same time, in order to take the public with us, we also need to make sure that every penny will reach those who need it most—that means transparency and accountability. It also means that the projects we support must be deliverable, practical and measurable, addressing the causes of poverty and not just its symptoms. The Muskoka Initiative is a case in point. Today in the UK, the chances of dying in pregnancy and childbirth are one in 8,200. In parts of Africa, it is as low as one in seven. This is something we can change—and we must change. The resources agreed, including a big contribution from the UK, could lead to an additional 1.3 million lives being saved. As the White Ribbon Alliance points out, if you save the mother, you save the family; and if you save the family, you build a stronger society and a better economy. Turning to the G20, this is now the right forum for all the leading economies of the world to discuss the vital economic issues. The key goal of the G20 is to continue the recovery of the world economy and secure sustainable growth. The argument, proposed by some, that deficit reduction and growth are mutually exclusive is completely wrong. The whole approach underlined by the IMF for this G20 and the subsequent meeting in Seoul is all about how the world should maximise growth through the right combination of three things: deficit reduction, tackling imbalances, particularly through actions by emerging economies, and structural reform in the advanced economies. There was broad agreement on all three and this is reflected clearly in the communiqué. On deficit reduction, the G20 agreed: ""Those countries with serious fiscal challenges need to accelerate the pace of consolidation"," and that there was, ""a risk that failure to implement consolidation … would undermine confidence and hamper growth"." The advanced G20 economies committed to at least halve current deficits by 2013 and stabilise government debt to GDP ratios by 2016. While we agreed that the speed and timing of deficit reduction will vary with national circumstances, the verdict of the G20 was unequivocal. For countries with large deficits, the time to act is now. Britain has one of the largest deficits in the G20, and the summit specifically welcomed the plans set out in our Budget last week. In terms of addressing the fundamental imbalances, China’s recent decision to move towards greater exchange rate flexibility is welcome. As, in the end, growth comes only from rising productivity, we also agreed on the need to pursue structural reform across the whole G20 to increase and sustain our growth prospects. On financial reform, the G20 agreed ‘a set of principles’ on bank levies to ensure that the financial sector makes a, "‘fair and substantial contribution towards paying for any burdens associated with government interventions to repair the financial system’." That is very much in line with the plans for a bank levy, which we announced in the Budget. On making sure that the banks in all countries can withstand future crises, we also agreed that, "‘the amount of capital will be significantly higher and the quality of capital significantly improved’." We agreed that new standards on the quality, quantity and transparency of capital and liquidity should be finalised by the Seoul summit in November. Basle took 10 years and this looks like it will be completed in one. Although the drawing up of clear, robust new rules is absolutely essential, it is important that they are not implemented too quickly. We do not want a further monetary squeeze or a reduction in bank lending at this stage of the recovery. The biggest stimulus we could give to the world economy today is the expansion of trade. Although the G20 agreement to extend its pledge that no additional trade barriers should be put in place is welcome, continued failure to make progress on Doha is deeply disappointing. This has now been eight years in negotiation and there can be little confidence that, as things stand, the round will be completed rapidly. A completed trade round could add $170 billion to the world economy. The UK led the working session on this issue at the G20. One potential way of making progress is to try to add to the benefits of the round so that all parties can see reasons for going that final mile. That was supported by President Obama. The director-general of the World Trade Organisation, Pascal Lamy, suggested that all trade negotiators should return to the table and consider both what it is they really need from the round and what it is they are prepared to offer to get it moving again. That will lead to a report at the Seoul meeting in November. Too many people still see this as a zero sum game, where one country's success in exports is another country's failure. That is nonsense. Everyone can benefit from an increase in trade flows. We will play our part in breaking the logjam. I want this country to lead the charge in making the case for growing trade flows around the world. On climate change, while the G8 communiqué was strongly positive on limiting the rise in global temperatures to less than two degrees and on seeking an ambitious and binding post-2012 agreement, at the G20, the communiqué was more limited. This is partly because some countries do not see the G20 as the forum for discussing this issue. In discussions, it was also clear that there was widespread disappointment at the way that Copenhagen failed to deliver a legally binding global deal. We must not give up on this. We will be playing our full part in pushing for a successful outcome at Cancun. This long weekend of summitry was a good opportunity to build Britain's bilateral relationships. Among others, I had useful meetings with President Obama, President Hu of China, Prime Minister Singh of India and Prime Minister Erdogan of Turkey. In building a very strong friendship with our leading European partners, I also suffered the exquisite agony of watching England lose 4-1 to Germany in the company of my good friend Chancellor Merkel and the German summit team. Although I cannot recommend the experience of watching football in the margins of a G20 summit, I commend this Statement to the House".