§ Mr. Jacques Arnold (Gravesham)
Before referring to the subject of the debate, I should like to record my appreciation of the presence of the Minister, my hon. Friend the Member for Hove (Mr. Sainsbury). As we know from today's announcements, he is to move on to pastures new. Nevertheless, I very much appreciate his courtesy in being here to reply to the debate. Hon. Members certainly look forward to the interest that will be shown in Latin America by my hon. Friend the Member for Morecambe and Lunesdale (Mr. Lennox-Boyd), who I believe will take over the onerous responsibilities of our relations with Latin America, and we wish him well.
I do not know whether it would be appropriate to refer to the debate as the Latin American swansong of the Minister, but we hope that his experiences with Latin America, combined with his duties at the Department of Trade and Industry, will strengthen our trade relations with Latin America, which is one of the objectives of the debate.
This is the third debate on Latin America in as many years. It could not be more opportune. If the 1980s were a decade of stagnation for Latin America, the prospects are that the 1990s will be the decade of opportunity. Almost all the countries of Latin America have emerged into democracy, and almost all of them are struggling towards a free economy. They are facing the hard realities of a new world in which the big power blocs are breaking up, and they are determined to help themselves and progress towards the future on the basis of their own efforts.
The only fear among Latin Americans is of a fortress Europe coming about in 1992 excluding them from powerful economic relations with their spiritual home and, in turn, forcing them into the embrace of Uncle Sam, whom they have traditionally suspected.
This country certainly has a distinctive image in its deliberations with our fellow members of the European Community. We in Britain stand for the open market and free trade, and against corporatism and protectionism in the new Europe. We are not in the habit of subordinating ourselves to the current fashion of blind Euro-enthusiasm. That British approach will no doubt be of benefit to Euro-deliberations, but it can also be a rallying point for our Latin American friends. This country could once again act as Latin America's champion in Europe. Latin American countries would welcome us in such a role, for it would not be the first time that we have acted in that way.
In this very House the Foreign Secretary of the day, George Canning, put the stamp of approval and respectability in Europe on the independence of the Latin American states. In his famous words, he
called the New World into existence, to redress the balance of the Old.It is not for nothing that we are seeing more Latin American visitors in London than we have for many years. Those visitors have been received by Government, by this Parliament and, incidentally, by Canning house, the centre for Latin American relations in London. Over the past few months we have seen in London the presidents of Mexico and Colombia, the newly elected president of Brazil, the Finance Minister of Chile, the Economics Minister of 249 Brazil, the Foreign Ministers of Colombia and Venezuela, and, of great value in this place, parliamentary delegations from Argentina, Chile and Nicaragua. We have in London a more personally distinguished and powerful group of Latin Amerian ambassadors than in almost any other capital of the world. All the people of Latin America look to us as a vibrant economy, the home of "El Thatcherismo" and the inspiration to their new economic policies and restored democracies. Can we be their Euro-champions? Can we do it? Above all, will we do it?
Despite a marked improvement in Britain's trade with Latin America, we still have a long way to go. Too many British business men still regard Latin America as an uncomfortable, hot place run by Caudillos, saddled with debt, not paying their bills, destroying their forests and growing and peddling drugs. That caricature was never accurate. Today it is misleading, and we should all be wise to look at the changes that are occurring in Latin America.
I hope that more official visits will be paid to Latin America. Their Royal Highnesses the Prince and Princess of Wales are due to visit Brazil in the autumn. More royal, Government and parliamentary visits should be paid to that continent. It would be most valuable if the Minister were able to convince my right hon. Friend the Prime Minister to visit. A visit to the newly democratic Governments of Brazil and Chile and to Colombia and Venezuela would make a great impact and would be a great example which would considerably benefit Britain.
We are all obsessed by the changes in eastern Europe, but the changes in Latin America are no less profound. Democracy has broken out with a vengeance in the continent as country after country has reverted to its democratic base. In Chile the military dictatorship has been consigned to the history book—an aberration in Chile's long democratic history. The newly elected President Aylwin, who is of British descent, was elected from the united opposition in Chile. He is getting on with the job of safeguarding the country's impressive economy and is in the process of taking that country forward.
In Brazil, the largest Latin American country by far, there has also been a reversion to democracy. President Fernando Collor De Mello has set in train the most remarkable set of policies. He has launched a radical economic stabilisation plan involving the elimination of the Government deficit of 8 per cent. of GDP. He plans to turn that deficit into a surplus. He has sacked more than 100,000 public employees and has closed ministries. He has frozen the bank balances of the middle classes and has carried out a privatisation programme that would make Conservative Members blush with embarrassment. All the signs are that Brazil will break through to become a far more powerful economy in the future, following the stagnation that it suffered in the 1980s.
In Mexico President Gortari, who visited the House in the past year, is reforming the very system that put him into office. Since almost time immemorial, the PRI—the governing party—has arranged its electoral victories. With echoes of Gorbachev, President Gortari is opening up the democratic process. He is also tearing down the state sector and opening up the Mexican economy to the world market. Elsewhere in Latin America, Presidents Menem of Argentina and Carlos Andres Perez of Venezuela have turned towards realistic reforms, to the consternation of their traditional supporters.
In Bolivia, President Paz is transforming his country's economy and President Lacalle of Uruguay is following 250 the same path. In Peru everyone awaits the proposals of the newly elected President Fujimori, the first Latin American president of Japanese descent.
Only in Nicaragua, Haiti and Cuba is democracy in question. The House will recall the astounding elections in Nicaragua in February when the Nicaraguan people, watched by international observers—including hon. Members of this House, who showed that the elections were free—cast aside their fears and voted in Violeta Chamorro. The new president has followed radical policies, in common with so many newly elected Latin American presidents. President Chamorro undertakes that task, however, with a civil service, education system and army overwhelmingly staffed by Sandinista predecessors.
The shock of electoral defeat was so great at the time that the Sandinistas acquiesced to the will of the Nicaraguan people. Now, however, they are trying to give effect to Daniel Ortega's call for government from below. That obstruction by the Sandinistas could ruin Nicaragua's progress. The recent Sandinista-inspired strikes and disorder caused chaos despite the lack of widespread support. That does not augur well for the future of that country.
Haiti is promised new elections by its newly appointed president, Madame Pascal-Trouillot. It remains to be seen whether that Duvalier-infested republic will achieve free elections.
Only one country in Latin America remains to go democratic. The only Latin American republic worthy of the Bourbons is Cuba. Fidel Castro is still making his five-hour speeches—the only true Marxist believer left outside Albania. There is no democracy there. His rule has rested on the twin bases of ideology and Soviet subsidy. The one is bankrupt and the other is insolvent. Time is running out for Fidel. A coup d'etat from within his own regime is on the cards, and that might lead to the establishment of a Government who will come to terms with their neighbours in both Americas. Perhaps with that will come free elections for the long-suffering Cuban people.
Not only has Latin America changed politically; it has changed economically. "El Thatcherismo" is in All Governments are cutting deficits and inflation, dismantling state structures, privatising, raising the quality of the investment climate and opening up to overseas trade. The once fashionable import substitution model of development has been relegated as a failure. That provides opportunities for us. British business men should grasp those opportunities and the Government should review the Export Credits Guarantee Department policy to keep up with them.
The investment climate has also changed. The need to attract new inflows has changed the Latin American attitude to foreign capital. The new enthusiasm for privatisation may provide opportunities for debt conversion and certainly provides scope for privatisation expertise, in which this country is a world leader.
Unlike eastern Europe, Latin America has a cadre of economic leadership experienced in running large free enterprises in capitalist economies. We have many potential partners in Latin America for interesting new ventures. British industry should get up and go to look at Latin America and look to the opportunities for the future.
In summary, the continent of manana is fast becoming the continent of hoy—the continent of today. We could 251 ensure our participation in that surge of activity if we grasped the new opportunities. I hope very much that this debate will encourage that process.
§ Mr. Ray Whitney (Wycombe)
I congratulate my hon. Friend the Member for Gravesham (Mr. Arnold) on succeeding in launching another Latin American debate. As he says, this is the third in three years. The debate is becoming an annual fixture, which is of great importance to those of us who are enthusiastic in spreading the message in the House and in Britain about the importance of Latin America to Britain and to the European Community. Our previous two debates have inspired a surprising—I would say, a flattering—resonance and reaction in Latin American countries.
We should ensure that none of us in Britain overlooks the exciting things that have happened in Latin America. As my hon. Friend said, it is too easy to allow those developments to be overshadowed by what has been happening in the Soviet Union and eastern Europe, welcome though those developments are. We should be seen to take Latin America considerably more seriously than we do.
There is quite a lot of knowledge of our historical links and our traditional connections with Latin American countries; there is rather less knowledge of the developments that have been taking place in the past year or two and the cascade of democracies that that continent has witnessed. I understand that in the past 18 months, about 18 democratic elections have been held and in 14 of those, the opposition parties have ascended into power. These democratic Governments have inherited a serious raft of problems from the authoritarian regimes that they have succeeded. They face a legacy of protectionism and import substitution; of massive bureaucracies that overhang their economies; of the debt problem; and of the propensity to print money and the huge inflation attendant on that in nearly all Latin American countries.
These democratic regimes face hard decisions. The extraordinary thing is that they are taking those decisions; from Mexico to Argentina, almost all the Governments of the continent are facing up to what is required and putting into action a series of measures which my hon. Friend the Member for Gravesham described as "Thatcherismo". I saw the hon. Member for Hamilton (Mr. Robertson) smile somewhat wryly at that description; he may find it difficult to accept, but it happens to be true. As so many Latin American visitors to this country have attested, their interest in what has been achieved here is profound.
There have been enormous and surprising privatisation measures. For instance, the Argentines have privatised their airline and telephone systems. The same is happening in Brazil and other countries. The free market is believed in and is being established. Sound money is being introduced. The role of the state is being diminished.
The process, however, arouses political tensions, and the courage of the democratically elected leaders in Latin America is not sufficiently appreciated in the Chamber or the country. I heartily endorse the proposal that more visits should be made to Latin America by members of the Government, including, I hope, by my right hon. Friend 252 the Prime Minister. That would act as a symbol of our understanding of what has been achieved and of the continent's prospects.
As the House will have gathered, my hon. Friend the Member for Gravesham and I think similarly on these issues. I share his anxiety about Nicaragua. The remarkable victory for democracy in February's elections is under threat. I visited that country three years ago, and I said at the time and again subsequently that I did not find it surprising that the Nicaraguan people, given the chance, would throw off the yoke of Sandinismo. It came as a surprise to most Opposition Members, however. Most of them had not been there, and those who had allowed themselves to be led by the nose by the Sandinistas. The most obvious example of that was the wife of the Leader of the Opposition, who returned demanding that the outcome of the elections should be respected. Like other members of the Labour party she was discomfited to learn at the elections that the people of the country wanted not Marxism or socialism or Sandinismo but freedom and democracy—and that is what they have, but, sad to say, the events of the first two weeks of this month have left those assets under threat.
I hope that the Sandinistas and the people of Nicaragua will understand that we in Europe are watching developments there with the greatest attention. Last week we were delighted to welcome many Nicaraguan parliamentarians who were clearly deeply commited to the principles of constitutional, democratic government that we enjoy here. They want to root them ever more deeply in their country, and we have a duty to do whatever we can to help them achieve that aspiration.
Most of the new democracies in Latin America face many difficulties. Latin American history has had many false dawns, but this time the strong probability is that democracy will succeed. All the many efforts at regional co-operation have run into the sand, but this time there is every prospect that people will work together, inspired by what has been achieved in Europe. In that context I disagree with some of the implied strictures of the European Community offered by my hon. Friend the Member for Gravesham. However, I heartily agree that one of Britain's major roles is to ensure that the Community continues to develop as an outward looking entity, seeking co-operation with the rest of the world. Fortress Europe is a myth propagated by the Community's opponents.
We have paid insufficient attention to the initiative "Enterprise for the Americas" launched by President Bush on 28 June. The long-term goal of President Bush and the United States is that therewould be a time when all are equal partners in a free trade zone stretching from the port of Anchorage to Tierra del Fuego.That objective may be achieved and the Community should take full notice of it. The trade role of Britain and western Europe in Latin America has been declining. Over the past 20 years that trade has dropped to about 15 per cent. of all Latin American trade and that is less than half of what it was two decades ago.
Latin America has great potential. It has little-tapped natural resources and a population of about 400 million. Already its gross domestic product is about two thirds that of the combined GDP of the Soviet Union and eastern Europe.
253 It presents a great challenge which all nations, and especially the United Kingdom, must meet. The United Kingdom took a major step this year in its relations with Latin America. Our traditional problem has been with Argentina over the Falkland Islands. The House should take happy note that a few days ago Humphrey Maude presented his credentials as our newly appointed ambassador in Buenos Aires. We have been happy to welcome the distinguished new ambassador of Argentina to the Court of St. James. He is Dr. Mario Campora who, by the eminence of his person, is endowed with deep trust by the President of Argentina. That is a mark of the attention that Argentina clearly gives to the improvement of relations with Britain.
I pay tribute to the device, the so-called umbrella, which enables us to put to one side the vexed and for the moment insoluble issue of the sovereignty of the Falkland Islands. This gives us another opportunity to develop further our traditional links and relationships not only with Argentina, but with Latin America as a whole.
Those of us who are enthusiastic about Argentina have heard and made the cry many times that we must not allow exciting developments in eastern Europe to obscure the equally exciting developments in Latin America and the opportunities that they present. This time that cry is urgent and pressing. My final plea—though this is not the first time that I have made it is that the teaching of Spanish in our schools must be rapidly and significantly increased. It is a fascinating, attractive and easy language and is spoken in 20 countries. Any business man, scholar or young person with English and Spanish at his disposal has access to about two thirds of the world's people. That must be a wonderful achievement. It would be a tremendous boost to our export efforts. In that regard, I hope that as well as developing high-level visits to Latin America, the Government will respond to the pleas that we have made.
I join my hon. Friend the Member for Gravesham in congratulating my hon. Friend the Member for Hove (Mr. Sainsbury) both on his presence here today and on his elevation a few hours ago. I wish him all good fortune in the Department of Trade and Industry. I hope that from that position he will be able to lend yet more weight to efforts to increase our trade in Latin America.
§ Mr. Hugo Summerson (Walthamstow)
I seek the leave of the House to speak briefly. I shall take no more than two minutes, if that is in order. I should like to mention three factors: aid, debt and environment. They come together in Amazonas, in the tropics and in the Andes.
In Brazil, the felling of part of the tropical rain forest has caused a storm of consternation among environmentalists. We have to be careful about what we say to Brazil. It is a friendly country and it would rightly resent any effort on our part to muscle in and tell it what it may or may not do with its territory. Nevertheless, it is important that we come to some sort of accommodation with it.
Moving across the continent to the Andes, I wish to say a few words about Peru. The other day I was sent a copy of that well-known property paper Estates Gazette. Attached to the front of it was a diez intis note of the Banco Central de Reserva del Peru. How disgraceful that a country's currency should be used for the purposes of advertisement.
254 I ask my hon. Friend the Minister to bear it in mind that some countries in Latin America struggle under a great mountain of debt. Those countries will find it much easier to rise again and promote a democratic way of life if they can see an end to the mountain of debt—if they can see light at the end of the tunnel. I do not imply that we should necessarily relieve them of their debt, but we should reschedule it in such a way that they feel more able to cope with it.
§ Mr. George Robertson (Hamilton)
I, too, must ask the leave of the House to speak. If the leave of the House is contested there may be no one happier than myself. In view of the acute interest in the middle of the night in foreign affairs, clearly the resources of both Front-Bench Members have been stretched to breaking point.
I am sure that my hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) did so earlier, but I also congratulate the hon. Member for Hove (Mr. Sainsbury) on his promotion from the Foreign Office into the depths of the Department of Trade and Industry. I am sure that he will inculcate an element of common sense into a Department which has sadly lacked that commodity for some time.
It is a matter of some regret that the Foreign Office team changes with such rapidity, leaving a consistent, well-tried and experienced team on the Opposition Front Bench. Clearly it is part of the Prime Minister's "change and destabilise" policy for the Foreign Office and its influence. However, the hon. Member for Hove goes to his new Department with our best wishes. We look forward to breaking in yet another team of Foreign Office Ministers.
The hon. Member for Gravesham (Mr. Arnold) introduced a serious and important subject for debate, albeit late in our proceedings, and made a number of valid points. Yesterday, the Financial Times published an interesting and significant article, which began:Latin American leaders have been watching the fast-moving changes in the international strategic order with a mixture of fear and fascination. Fear predominates.It is interesting that this debate should follow our consensual discussion on the future of Europe and the CSCE process. The Financial Times is right to suggest that attention is being diverted from the problems of Latin America and of the wider world by our natural and commendable interest in the events taking place on our own continent.
We are inevitably preoccupied with those changes, but the development of democratic institutions and the changes in the structures of Latin America have been as dramatic, even if they have been slightly more distant, as those on the continent. They are of no less significance than developments in eastern and central Europe in particular.
Chile, for example, has moved from having a particularly nasty and repellant dictatorship to a freely elected president, who needs all the encouragement that we and the rest of Europe can give him. I understand that a the Clerk of the House went to Chile to give advice on the creation of genuinely democratic parliamentary institutions, and that kind of initiative is highly commendable.
Socialist International played a major role in the transition from Pinochet's dictatorship to the successor dictatorship, and played a significant part also in the subsequent transition and the building of the coalition that 255 led to the election of Chile's new president. As a result of his regular visits to that country—especially for the plebiscite and the election—my hon. Friend the Member for Carrick, Cumnock and Doon Valley serves as a useful source of information for right hon. and hon. Members in all parts of the House.
Predictable partisan points were made by Conservative Members in respect of Nicaragua, but, contrary to all their expectations, and to all the accusations made about the Sandinistas, the transition from their Government to that of Mrs. Chamorro took place without any fear or rancour and with genuine dignity.
§ Mr. Whitney
The hon. Gentleman says that there was a peaceful transfer of power, and that that continues to be the case, but is he aware of what occurred in Nicaragua on 2 July and subsequently?
§ Mr. Robertson
Of course I know what is happening, but, given the background of central American politics, we could not expect the kind of normal, peaceful process to which we have grown accustomed. However, that change has occurred, and it is clear that more support must be given to such Governments if their new democratic institutions are to remain in place. No Nicaraguan Government will find it easy—any more than President Ortega's Government found it easy to continue their work. 35The actions of the contras during the lifetime of that Government were a destabilising influence, and no one pretends that one can transfer instantly the values of western democracy to the countries of central America. We must recognise what is good and significant there and give whatever assistance is possible to maintain that process.
There have been democratic processes in Brazil, Uruguay and, significantly, in Argentina, as the hon. Member for Wycombe (Mr. Whitney) says. We now have a good ambassador in place in Argentina, and we hope that the British Council will set up its own representation in Buenos Aires. Obviously for those hon. Members who remember the past few years, these events must have major significance.
Democratic progress has also been made—almost unbelievably—in Paraguay. I single out the progress in Venezuela, where Carlos Andres Perez has been elected, again with substantial support from the Socialist International, and his credentials are very high. His close links with my right hon. Friend the Leader of the Opposition mean that Venezuela's future will be reassured when Labour come to power.
§ Mr. Jacques Arnold
The hon. Gentleman has singled out the republic of Paraguay and its progress to democracy. Is he not concerned about the close association for many years between the new president Rodriguez of Paraguay and the previous dictator, General Stroessner and what democratic credence does he give to that gentleman?
§ Mr. Robertson
The hon. Gentleman mentions democratic progress. I do not think that any hon. Member will be happy with that progress in the short term, but we are beginning to see the break-up of the old dictatorships and that must be welcomed. Future changes must be 256 studied, and there is no easy transition from all the years of dictatorship to the type of pluralist society that we would obviously want in place in Paraguay and elsewhere.
As I do not intend to detain the House for long, I shall deal with a number of individual cases. First, there is the whole question of peace in central America, and there is a long way to go before we can be happy about that. I hope that the Minister will be willing to say something about the role of the United Nations in that part of the world, and the role of Mr. Marrack Goulding in running the UN supervisory zone. Clearly, we must be involved in any outside help that would be supportive of the peace process in the area, we must not be associated with arms supplies and we must be part of the overall influence that will stop such supplies to an area where the killing continues at an increased level.
Also, could the Minister react to the situation in Peru? Recent reports have been forthcoming about the disappearance of a human rights worker in that country. Mrs. Guadalupe Ccallocunto Olano, who is the general secretary of the commission of the relatives of the disappeared, and who comes from Ayacucho, has recently disappeared. She had been arrested for the fourth time since 1986 for her peaceful human rights activities and there is considerable concern about her present status. In the past nine years some 5,000 people have disappeared in Peru, and this lady is one more, but she is much more significant. Will the Minister take the matter up with the Peruvian authorities? Perhaps he can give us his assurance that something is being done on her behalf.
There is growing concern in the world community about human rights. We know of the drug situation in Colombia, but there is also rising concern in the outside world that the crisis of law and order caused by that trade is masking increasing human rights violations. In the past year alone, 3,200 political killings in Colombia have been reported. The number of disappearances is far higher now than it was during the previous two years. Reports since March 1990 suggest that torture and murder have increased in the districts of Tabor and La Sonora in the municipality of Trujillo, in the north of the Valle department. Are the Government able to say anything about that?
§ Mr. Robertson
The hon. Gentleman spoke at some length. I am interested in what the Minister has to say. I do not wish to cut the hon. Gentleman off, but I should be grateful if he would allow me to continue with my speech.
Threats have been made against Jaime Prieto and Humberto Torres, the president and executive secretary of the committee of solidarity with political prisoners. That is a matter of concern to a number of human rights organisations. It would be regrettable, given the problems facing the Colombian authorities, if the tendency towards a generalised repression of human rights organisations were to be masked by the excuse that it was a law and order problem. I hope that the Government will make it clear that our concern over human rights runs deep.
Latin America's problems are considerable. There is a drugs problem and a huge debt problem. The United Kingdom must do something about reducing the demand for drugs. We must ensure that existing dependent territories are not used to launder drugs money. We must 257 also play our part in ensuring a fair world price if alternative crops are to be grown in those countries that now depend on drugs money.
Yesterday's article in the Financial Times rightly made the point about debt rescheduling and its related aspects. It referred to the fact that we, too, can play our part. I was impressed by the paragraph that says:The awakening of Latin America to the outside world has also flowed naturally from the disappearance over the past 10 years of military governments. A new generation of democratically-elected leaders has been quick to exploit the greater ease of international contacts that comes from political respectability.I am sure that no hon. Member dissents from that point of view. We must all wish to encourage that process. The article concludes:the pessimism of the 1980s has gone.That is undoubtedly true. The future of Latin America now lies in democratic hands, the hands of the people of Latin America. We in Europe have a major role to play in assisting the instinct for self-help. If Britain genuinely wants to do so, it can spearhead the drive forward.
§ The Minister for Trade (Mr. Tim Sainsbury)
As this is the third debate to which I have replied, I should point out that I must seek the leave of the House to reply to it. I hope that it is forthcoming.
The whole House is indebted to my hon. Friend the Member for Gravesham (Mr. Arnold) for having brought our relations with Latin America before the House on the third successive occasion at this time of the year. After a gap of 38 years, perhaps we can establish a tradition of 38 successive years of similar debates. I thank also my hon. Friend the Member for Wycombe (Mr. Whitney) and the hon. Member for Hamilton (Mr. Robertson) for their kind remarks about the new post that I am shortly to take up, or that I have already taken up.
I am glad that we have another opportunity to debate Britain's relations with Latin America and that the major theme of our debate has been democracy. My hon. Friend the Member for Wycombe referred to the cascade of democracy, which is a nice concept. The world's attention in the past year has been focused on the progress of democracy in eastern Europe, but that same year has seen the culmination of the democratic process in most of Latin America.
Last year in this debate I described events in Chile as attracting particular interest and excitement as that country embarked on the return to democracy. The journey was swifter and smoother than many of us had hoped or feared. We have great admiration for the maturity displayed by the Chilean people in returning to power a moderate and humane democratic Government, firmly wedded to the free market system and respect for human rights. At the time of the transfer of power we indicated our support for the new regime by asking my right hon. and learned Friend the Lord President to represent Her Majesty's Government at the ceremonies. Since then, we have been happy to receive distinguished visitors from Chile, led by the Minister of Finance, Mr. Alejandro Foxley.
I also note with admiration the continuation of the democratic process in Peru and Colombia, despite vicious armed opposition from terrorists and drug barons. As the hon. Member for Hamilton said, drugs remain a problem and narco-traffickers are a particular problem in parts of 258 Latin America. But the strength of dedication to democracy in those countries is an example to us all. They continue to face great difficulties, and I assure them and the House of the Government's continued support for their efforts.
As hon. Members have said, democracy also continues to develop and flourish in the rest of the sub-continent. We note with satisfaction the elections of the presidents of Brazil and Argentina by fully democratic means and the commencement of Paraguay's transition to full democracy, which we hope will be achieved in 1994. Naturally, we also welcome the restoration of full diplomatic relations with Argentina, achieved without any prejudice to our commitment to the Falkland islanders. Ambassadors are now installed in both capitals and we look forward to the re-establishment of traditional friendly and mutually beneficial relations.
In central America, the prospects for stability and the consolidation of pluralist democracy are brighter now than they have been for many years. I recognise that there are still problems to be faced, not only in Guatemala or El Salvador and Nicaragua, but the Government warmly welcome that trend and will do all that they can to encourage it. The election victory of President Violeta Chamorro in Nicaragua has been followed by the complete demobilisation of the contras under United Nations supervision, and I pay tribute to that organisation in achieving transition in Nicaragua, which has brought new hope to that country. As we speak, the latest round of peace talks is in progress in Costa Rica, between the Government of El Salvador and the Farabundo Marti de Liberation Nacional. Dialogue is under way in Guatemala between representatives of the Government and the Unidad Revolucionaria Nacional Guatemalteca.
Many complex political and social problems remain to be solved, but it is a mark of the recent success of the peace process in the region that the presidents of the central American countries and Panama were able to meet in mid-June in Antigua, Guatemala, and devote their attention to economic co-operation. The British Government and their EC partners have been actively promoting regional economic development. At their meeting in Dublin in April, central American and Community Ministers agreed that the Community would commit up to 120 million ecu to the creation of a regional payments system to promote regional trade.
I was glad to have the opportunity to visit Mexico between 14 and 18 July as a guest of the Mexican Government. My talks with Mexican Ministers covered a wide range of topics of mutual interest and helped strengthen an already excellent bilateral relationship, which we look forward to developing further.
The collapse of communism in eastern Europe and the spread of pluralist democracy in Latin America have left the unreformed communist regime in Cuba increasingly isolated. Far from adopting perestroika or democratisation, it is offering the Cuban people purification and the prospect of still greater sacrifices. Recent reports of further repression of human rights activists show the regime's contempt for basic human rights. The recent cases of people seeking asylum in embassies in Havana are an eloquent commentary on what ordinary Cubans think of the system under which they live. I hope that if we have a debate next year I shall be able to report progress to democracy in Cuba. Sadly, there is little sign of it at present.
259 Hon. Members mentioned the environment, and the significance of the huge and beautiful expanse of Latin America in the global environment picture needs no emphasis from me. Every region has some part to play, from the rain forests of central America to the Antarctic ice cap.
In the interests of time, I propose to concentrate on the largest country in the sub-continent, Brazil—indeed, it is approximately half its land area—as did my hon. Friend the Member for Walthamstow (Mr. Summerson). I do not believe that it is necessary to remind hon. Members of the overwhelming importance of Brazil in these matters. I am happy to say that we are playing a key role. The benefits of the memorandum of understanding that we signed with Brazil last year are becoming apparent. A significant forestry project on climate research has been agreed with the Brazilian authorities. We recently told them that we are ready to provide finance to a forest management project in the Tapajos reserve sponsored by the International Tropical Timber Organisation, the detailed project agreement for which is under discussion between Brazil and the ITTO. A further dozen proposals are under preparation or are being considered by the Brazilian Government and we hope to reach agreement shortly on some of them.
On my visit to Brazil for the inauguration of President Collor de Mello, I was glad to see some of the rain forest, although I was told on arrival that it was not really a rain forest but a tropical forest. However, the experts had given up persuading anybody that that is its proper designation and said that it would be called a rain forest whether it was or not. Much excellent work is being done in the area and I am glad to say that the British Government, our aid programme and British people are playing a major role in that work.
To underline the importance that we attach to our relations with Brazil, their royal highnesses the Prince and Princess of Wales will pay an official visit to Brazil in the autumn and I am sure that discussion of environmental issues will play a large part in their programme. A seminar has been arranged on these issues in Brazil sponsored by the Overseas Development Administration and ICI to coincide with the royal visit.
It is not so long ago that the first word that sprang to mind on hearing any reference to Latin America was "debt", but hon. Members who follow Latin American affairs closely know that that is less and less the case. I attended a conference of The Economist recently, which had the nice title of "Life After Debt". It was clear from that conference that the Governments of Latin America have, on the whole, learnt the hard lessons to be drawn from the failures of the 1970s, have overcome the sense of hopelessness of the 1980s and, like so much of the rest of the world, are on their way to transformation in the 1990s.
To some extent, Latin America was the victim of negative external trends. Declining prices of major export commodities and high international interest rates were two obvious examples. The role of domestic policy for Latin American countries cannot be neglected. Inappropriate economic models and theories which led to policies that made the situation much worse contributed to the problems of the 1970s and 1980s. I am happy to say that Governments in Latin America, as elsewhere, now 260 recognise the need to jettison outdated ideologies. That does not mean abandoning fundamental principles, but it means making a radical reappraisal of the assumptions that determine how we pursue our common goals.
One lesson that has been learnt is that social equity and economic development are not incompatible. They can and must be successfully combined, as has been shown in, for example, Bolivia. I therefore particularly welcome the evidence that almost all Governments in Latin America now recognise that sensible economic policies are a prerequisite for establishing credibility and recreating confidence. Without those important steps, the vital inflow of foreign direct investment and the repatriation of flight capital are unlikely to occur.
In most Latin American countries, confidence remains fragile. Gains won at heavy cost over a number of years could evaporate at the first sign of backsliding and weakening commitment to the economic changes. It is crucial that efforts should not be prematurely relaxed and that rapid action is taken to tackle any adverse shocks. It is encouraging that most of the countries in the region have liberalised their foreign exchange regimes and done away with the absurdly overvalued currencies which allowed an import boom, but, equally, led to the collapse of competition in exports.
Trade at correct prices is crucial. Exposure to international competition may be a shock to start with, but in the long run it is beneficial. The efficiency of domestic industry is sharpened, inputs can be obtained more easily and foreign companies provide new sources of investment and state-of-the-art technology. Countries can assess more accurately the areas in which they have advantages. Effective employment of these allows countries that have felt themselves marginalised for too long to make progress.
The importance attached by the region to the multilateral trading system is seen in the positive contribution made by many nations to negotiations in the multilateral forums. Countries are increasingly using the general agreement on tariffs and trade as an instrument to support their developmental aims—we welcome particularly Mexico's membership of the organisation.
This must, however, go hand in hand with reform in the economy. It is surely unsustainable that in Argentina recently only 40,000 people out of a work force of 12 million paid income tax and that in Sao Paulo state only 58 per cent. of the assessed taxes were collected, leaving aside what was not assessed; yet is it not impossible to overcome this fiscal black hole. Bolivia has shown that simplification of taxes and transparency of administration can yield startling results. The tax take has increased dramatically from 1 per cent. of GDP in 1985 to 8 per cent. in 1988. This was achieved through cutting the number for taxes from over 400 to seven and significantly broadening the tax base. Mexico has followed a similar path, cutting punitive top rates of tax and increasing the efficiency of tax collection, leading to greater tax receipts.
I am happy to report that the zeal for privatisation in Latin America outstrips even that of the British Government, as my hon. Friend the Member for Gravesham pointed out. Chile privatised twice the assets in half the time. Mexico shows signs of following the same road, particularly through the privatisation of the banks. Argentina and Brazil both have ambitious plans to introduce the virtues of private enterprise into previously stagnant state sectors. Combined with the opening of the region to foreign investment, this should return the private 261 sector to its proper role as the motor of growth. In countries with the courage to try them, such changes are a breath of fresh air.
Outside help is also needed, and in this context there is much to welcome in President Bush's initiative. The Houston summit concluded that the United States effortshold great promise for the region, and shall help improve prospects for sustained growth in the Americas".Some aspects naturally require further discussion, such as implications for debt strategy, and the proposed multilateral investment fund. While the initiative largely involves bilateral actions by the United States, we shall be considering carefully the elements in which the United States is seeking European participation.
My hon. Friend the Member for Gravesham spoke of the fear that was felt by many Latin Americans about the diversion of resources from Latin America to eastern Europe. This seems to me to be one of those myths that grow constantly in the telling, and I should like to scotch it here. The return to democracy in eastern Europe—nearly 10 years after the same phenomenon started in Latin America, incidentally—is a thoroughly good thing for humanity, and will, I hope, remove a dangerous area of instability in global politics.
Of course we pay closer attention to what is happening in eastern Europe, and of course we shall help the fledgling democracies there. For decades, tension in Europe was of vital concern to our national security; now that that era is coming to an end, no one should be surprised at the enthusiasm with which we support the changes. But let us ditch the idea that eastern Europe will starve Latin America of investment. In 1989—a difficult year for Latin American economies—United Kingdom companies were the second largest investors, after the United States of America, in many Latin American countries, and in Colombia they made more investment applications than all other countries combined, including the United States. Many United Kingdom investors tell us that this or that country in the region yields them the highest returns in the world.
What will determine commercial investment in Latin America is not what is happening in eastern Europe, but the opportunities for attractive investments in Latin America. Investments go where the conditions are right, and only regional Governments can create those conditions.
Human rights have been mentioned, quite correctly. Hand in hand with the return to democracy in Latin America goes a welcome improvement in the human rights performance. We warmly commend the Governments in 262 Argentina, Uruguay and, most recently, Chile for the way in which they have put paid to torture, arbitrary arrest, military courts and "disappearances". We sympathise with the democratic leaders who are trying to come to terms with the damage and polarisation of society brought about by such abuses. The hon. Member for Hamilton referred to a number of individual cases; I shall not respond now, but perhaps I could write to him later.
We shall maintain the pressure on countries in the area whose human rights performance remains unsatisfactory. It is not difficult to see how pressure from ruthless opponents may tempt Governments to respond in kind. That is no excuse, however, and we and the rest of the international community expect such Governments to observe the norms of international law.
Hon. Members will be aware that there are continuing and increasing demands on our aid programme. They will also be aware that, for good reasons, United Kingdom aid is targeted at the poorest countries in the world, and at the Commonwealth. None the less, we have been able to maintain, and indeed increase, our aid provision for Latin America. The relative prosperity of the area as a whole, when compared with the world's poorest nations, means that only a small proportion of our overall financial aid is directed towards Latin America—Bolivia benefits from that. The remainder of our aid activity is in the form of technical assistance, and we propose to increase it to assist forestry projects with an environmental aspect.
I conclude that the three interrelated elements for sustained prosperity in Latin America are now in place: a flexible and well-managed domestic economy, a positive world environment and an appropriate balance of external financial support. If the trends of the recent past are continued, the future for Latin America is bright indeed, and a return to the years of rapid growth and fulfilment of the region's huge latent potential will again become a real possibility.
It is almost exactly a year ago that I made my first speech in the House after taking up my responsibilities at the Foreign and Commonwealth Office. It was in reply to a debate on a similar occasion on Britain's relations with Latin America. Since then I am delighted to have seen much of Latin America, met many of the leaders, politicians and business men and learnt a lot more about the area. Perhaps it is appropriate that, 363 days later, the last remarks I shall make before moving to the Department of Trade and Industry are also in reply to a debate on Latin America. I am delighted to have had the opportunity to do so and I am grateful to my hon. Friend the Member for Gravesham for making it possible.