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1996 - PMQT Written Answers 2nd July 1996

Below is the text of the written answers relating to Prime Minister's Question Time from 2nd July 1996.


PRIME MINISTER:

Group of Seven Summit

Mr. Peter Atkinson: To ask the Prime Minister if he will make a statement on the outcome of the G7 summit at Lyon.

The Prime Minister: I attended the Lyon summit on 27 to 29 June with my right hon. and learned Friends, the Foreign Secretary and the Chancellor of the Exchequer.

I have placed in the Library of the House the communique, the chairman's statement and other statements and documents issued by the summit.

The summit started with a discussion of economic matters among the G7. In President Yeltsin's absence, we were joined by the Russian Prime Minister, Mr. Chernomyrdin, for a discussion of wider international issues. After the formal conclusion of the summit, we held a meeting with the United Nations Secretary-General and the heads of the International Monetary Fund, World bank and World Trade Organisation to discuss the role of the international institutions, in particular on development.

On the first evening we agreed and issued a declaration on terrorism, condemning the appalling attack in Dhahran and other recent terrorist outrages. We pledged ourselves to fight terrorism by all legal means and agreed that the relevant Ministers should meet in Paris in July to discuss further action. My right hon. and learned Friend the Home Secretary plans to lead the United Kingdom delegation.

Discussion of the world economy demonstrated the extent to which the United Kingdom's economic policy agenda is now shared by all our partners in the G7. Although growth has slowed in some countries since last year, it is picking up again. Unemployment remains higher than many of us would wish, particularly in continental Europe, but we agreed that the way to bring it down was by liberalising labour markets and through other supply side measures. This is reflected in the communique's endorsement of the conclusions of the G7 meeting in Lille earlier this year to discuss employment issues.

There was also consensus on the policies necessary to maintain international monetary stability. We endorsed the work done by Finance Ministers. Their report makes it clear that the key to stability is not management or fixing of exchange rates but sound domestic economic policies.

In Halifax last year we agreed steps to make the international financial institutions more effective. Many have now been taken and we welcomed the enhancement of the IMF's surveillance capacities and the agreement to increase the resources currently available to it under the general arrangement to borrow.

We recognised, however, the need to improve the co-operation between regulators of financial markets in the light of growth in the volume and speed of transactions. We agreed to study in more detail UK ideas for "lead regulators" of internationally active financial institutions. Officials will meet soon to discuss detailed proposals and Finance Ministers will report back to the Denver summit. We also agreed to co-operate more closely in combating financial crime.

We also reviewed progress in reforming the UN. Significant steps had been taken: 1,000 jobs have been cut, with high level posts reduced by 23 per cent.; these were 25 per cent. fewer staff than 10 years ago; and the 1996-97 budget incorporated a 10 per cent. cut in real terms. But much remains to be done and we agreed to review the situation at next year's summit. In particular, a rationalisation of the UN's role in development is necessary to avoid duplication and overlap between its various agencies.

Under President Chirac's theme of globalisation, and with valuable contributions from the heads of the IMF, World bank and UN, we looked at the problems of poorer countries and how they could best be helped. In particular, we focused on the countries of sub-Saharan Africa.

We agreed that in the long run no amount of aid would help unless these countries were willing to help themselves. Aid nevertheless has a crucial role to play, as long as it is effective. It must therefore continue to be conditional on sensible adjustment policies and good government. In particular, we agreed that bilateral donors should reinforce the international financial institutions' efforts to discourage unproductive expenditure by modifying their own aid and export credit policies. Aid should also be targeted at the poorest and focused on basic human needs such as health and education.

Following up initiatives originally launched by the UK, including ideas floated in 1994 in Valetta, the summit endorsed further steps to offer a number of highly indebted poor countries an exit from their unsustainable debt burdens. The IMF will offer more concessional lending from the enhanced structural adjustment facility, to be funded primarily by optimising the management of the IMF's own reserves. The World bank has offered to contribute in the order of $2 billion from its own resources to this initiative. We called on bilateral creditors to improve on the existing Naples terms which allow remission of up to 67 per cent. on a country's debts.

In discussion of trade, we reaffirmed our desire for further liberalisation on the agenda for the forthcoming meeting of World Trade Organisation Trade Ministers in Singapore, including new tariff initiatives. Many of us made clear to President Clinton our deep concern at recent US legislation of a extraterritorial nature relating to Cuba. Unilateral measures of this kind are a serious threat to an open world training system.

We discussed a wide range of global and political issues with Prime Minister Chernomyrdin. He briefed us on the prospects for the second round of the presidential elections in Russia. We welcomed the progress made on nuclear safety and security at the Moscow summit last April, and urged all countries to examine closely the 40 recommendations on combating transnational organised crime drawn up by our experts following the remit we gave them in Halifax.

There was considerable discussion of environmental issues. We agreed it was essential to maintain the impetus following from Rio and to play a positive role in the UN General Assembly's special session on the environment next June.

In pursuing non-proliferation, we affirmed our undertaking to conclude a comprehensive test ban treaty by the start of the next session of the UN General Assembly. We also called on all states to make every effort to secure a global ban on the proliferation and indiscriminate use of anti-personnel land mines, and welcomed the bans already adopted by some countries, including the UK, on the production, use and export of these weapons.

A separate declaration was issued on Bosnia and Herzegovina which emphasised that the prime responsibility for implementations of the Dayton agreement lies with the different communities and their leaders, and underlined the importance of the elections due to take place on 14 September. These should take place on time, in free and fair conditions. We also made clear our insistence that Karadzic step down immediately and permanently from all public functions and take no part in governmental decisions. We reaffirmed the importance of all those indicted by the international war crimes tribunal appearing in The Hague for trial. We warned of the costs of non-compliance with Dayton in terms of sanctions and the availability of economic assistance. We also pledged our full support for Carl Bildt, the high representative, and for efforts to accelerate economic reconstruction in order to encourage co-operation and reconciliation between the different communities.


Engagements

Mr. Harry Greenway: To ask the Prime Minister if he will list his official engagements for Tuesday 2 July.

The Prime Minister: This morning, I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.