Derek McDowell (Labour)

I welcome the Minister of State to the House to debate this Bill, which my party also supports. I had the pleasure of serving on the parliamentary assembly of the Council of Europe in 1994. It was a very interesting time in the development of the council. It was shortly after the collapse of the Soviet empire and after the fall of the Berlin Wall. We were casting about for a way in which the countries of central and eastern Europe could be integrated into the European mainstream. It was obvious at that stage that these countries would not be ready for EU membership for quite a long time. As we now know, it took another ten years. It was necessary to provide a middle way that would facilitate them in accommodating themselves to European norms in order to become members of the European Union. The Council of Europe performed a remarkably good job in that regard. It was not easy and there were times when I felt that the council was turning a blind eye to inadequacies in the structure in some of the eastern European states. At one stage, it appeared to ignore the treatment of minorities in Slovakia, or the separation of the executive and judicial powers in some of the former communist states in eastern Europe. It was a difficult time, but there is no question that the Council of Europe performed an extremely useful function, as it was one of the very few institutions into which those countries could accede.

This was done through the use of the carrot and stick approach. Membership of the club was enough for the people of these countries to feel part of the European norm. However, it also brought home to them the way in which their practices had become totally undemocratic. It was quite normal, in countries that we regard as quite developed such as the Czech Republic, for ordinary citizens to accept and expect that the judiciary would effectively implement the will of the executive. It was accepted that the courts were incapable of vindicating individual citizens' rights if the government did not want that to happen. In making it clear that this was not an acceptable norm, the Council of Europe performed an extremely useful role.

The Council of Europe Development Bank is somewhat different in so far as it has a mainly financial role. It provides funds for what we in this country would call social inclusion. In that regard, it was quite distinct from other development banks in Europe and elsewhere. For many years, we have had the European Bank for Reconstruction and Development and the European Investment Bank, of which we are members. These banks also performed a useful role in funding large-scale projects in eastern Europe. For example, they funded the transfer from nuclear power to more conventional forms of power generation in eastern Europe. It is also useful for the bank to have this vocational, socially inclusive role and I welcome the fact that we have decided to join it at this stage.

I examined the Schedule to the Bill and the purposes to which it has been put. It is fair to say that we could borrow some of these purposes in Ireland, although I appreciate that we do not intend to do so. The treatment of minorities is something in which we have not excelled. It is true that there are still people in this country who have difficulty in accommodating themselves to the fact that the children and grandchildren of settlers who arrived here in the 17th century are Irish and are entitled to be treated as people who have rights.

More recently, we have not been good in the way we have treated our own recently arrived immigrants. When we look at countries like Romania and countries in the Balkans that have very clear minority problems, we should examine our own consciences. That should not stop us from telling countries like Romania, Bulgaria, the countries of the former Yugoslavia and Slovakia, that we do expect them to meet certain norms in recognising the ethnic rights of their minorities and in allowing them due expression, be it legal, political or linguistic.

We recently had a visit from the Croatian Minister for European integration who made a presentation to the European affairs committee. I asked her a number of questions on the issue of refugees, which is pertinent to the work carried out by the bank. While Croatia has made serious progress in the past couple of years, much of it driven by the desire to be part of the European Union, there is still a great deal to be done there. The Minister repeatedly made the point that while her Government has no problem with the notion of displaced people in Bosnia, the rest of Croatia and Serbia returning to their former homes in Croatia, these people have to recognise that resettling them is very difficult. It is all very well for the Croatian Government to state on the one hand that it would like the refugees to come back and that they have a right to do so, but on the other hand they are told they will not have houses and jobs.

In that context, the expressed will of the bank to become involved in those issues and to assist directly in the provision of housing for displaced refugees is very welcome. The message needs to go out that countries such as Croatia should not be allowed to reap the benefits of ethnic cleansing and that people who lived previously in Croatia, Serbia and different parts of Bosnia do have a right to return to their property and a right to be resettled should they choose to exercise that right. It is appropriate that the EU, or in this case the Council of Europe, should have that extra arm available to it to provide direct financial assistance to those who are looking to assist in the resettling of those refugees.

The decision of the Government to join the bank arose out of the 2002 review of our development aid. I guess it is part of a distinct shift in Ireland's development aid activities. There was a time when we provided "black baby" assistance through voluntary organisations. We then pursued a bilateral aid programme, which was correctly and properly targeted at providing assistance to individual projects on a bilateral basis. The increase in our contribution to multilateral organisations, including the Council of Europe Development Bank, in recent years can be partly attributed to the increase in our overall expenditure. We have increased the amount of money we give to other banks, such as the Bretton Woods institutions, the World Bank and the IMF. We have provided direct bilateral debt relief assistance in recent years.

Perhaps the shift to which I have referred has not been discussed to the extent it might have been. The non-governmental organisations which deal with such issues are largely supportive of it. While I do not criticise the broadening of our development co-operation base, I wonder if we sometimes fail to examine carefully the effect of the various forms of assistance we provide. Ireland is providing direct budgetary assistance to Mozambique, for example. The assistance is debt relief, in effect. The money is being allocated to assist Mozambique's budgetary position. Therefore, it seems to me that we have to take a greater interest in what is being done with that money by the Mozambican Government, which I do not intend to criticise as it has made enormous strides in recent years. We need to co-operate with the Mozambican authorities.

Referring to development co-operation rather than development assistance may be the real key in this regard. We need a mechanism that enables us to co-operate with such governments to provide the additionality. In other words, if we provide debt relief, we need to ensure that the money that becomes available as a consequence is used in a way we can support. We need to adopt a hands-on approach to our bilateral assistance to countries like Mozambique.

NGOs and other organisations which are directly involved in development co-operation are concerned about the role played in recent years by the Bretton Woods institutions, particularly the IMF. The World Bank, by contrast, has done much in recent years under the leadership of Mr. Wolfensohn to take a more caring approach. It seems that a "good cop, bad cop" approach is being adopted. The IMF is clearly the bad cop and the World Bank is sometimes the good cop. I have previously expressed concern about the use of ESAF funds, the operation of the ESAF programme and the conditions imposed on developing countries in the Third World which seek assistance from the World Bank and the IMF.

The imposition of the neo-liberal economic model, which is typically favoured by the economists who work for international banking institutions, can sometimes be inappropriate. It has frequently undermined civil society in developing countries. It has undermined the governments of such countries by making it more difficult for them to invest in education and health as they try to structure their economies in a fashion that fits into the IMF model. As a small but growing contributor of international aid, for example to the financial institutions in question, Ireland should make it clear that it is not comfortable with such an economic model. Given that the World Bank has slowly shifted its priorities in recent times, I am hopeful that one can make an impact on such institutions. They may not be totally impervious to political persuasion or the views of the governments which, in effect, fund them. At the meetings of such institutions, which are typically held each year, the Government should state clearly where it wants money to be spent and how it wants it to be linked.

Although the Minister of State has provided some information today, I do not know much about the workings of the Council of Europe Development Bank. Can he tell the House what is the bank's total loan portfolio? I assume that it operates from similar commercial ratios as most normal banks. I noted the Minister of State's comment that the bank gave loans of approximately €2 billion some years ago. I assume that its total capacity must be five or six times that sum. I would be interested to know the bank's total loan portfolio.

It is interesting that the Council of Europe Development Bank has been given the AAA standard by the international rating agencies. I am fascinated by how the bank has managed to maintain that standard, while seeking to provide soft loans with deferred repayment in the vocational and social sectors. It seems that one has to take a few risks when one is trying to get involved in the work of those sectors. If the bank has been taking such risks, it must have been extremely successful with their outcomes. It is a pretty clever trick to maintain the AAA standard in such circumstances.

I assume the Minister of State does not envisage that local authorities will apply for loans from the bank. I would like him to confirm that it is seen simply as a form of aid. If he has any further information about the geographical spread of loans in recent years, I would be interested to hear it. I assume that we are talking primarily about countries in eastern Europe, some of which are now EU member states. I would appreciate more information in that regard.

I cannot conclude without referring to the current debate on Ireland's overseas development aid allocation. I will not repeat what I said yesterday about the diminution of our ambition to meet the UN target, other than to reiterate that it is a pity and a shame and that people are extremely unhappy about it. I accept that the Government has reduced its target to 0.5% of GNP, but I ask the Minister of State to clarify whether the reduced target will be achieved. In the last 24 hours, non-governmental organisations, led by Dóchas, have expressed concern about whether the Government's new commitment to increases of €65 million this year and €60 million in each of the years 2005 and 2006 will enable it to achieve the 0.5% target. Having used my calculator this morning to examine the matter, I cannot envisage how the 0.5% target will be achieved. The monetary increases which have been announced will not amount to 0.5%, unless the Government foresees that there will be an economic recession in the next two or three years.

I read the comments of officials from the Department of Finance, who said they do not really know what the GNP figures are. That is nonsense. The Department produced an estimate of GNP just a couple of months ago as part of its mid-term review, just as it does every year. I am sure it is well aware of the figure on which it will base the national pensions reserve fund contribution, for example, which is due to be approved by the Dáil next week. The Central Bank produced its quarterly estimate of GNP just a couple of weeks ago. The notion that we do not have a decent estimate of GNP and we cannot, therefore, make a reasonable estimate of what the relevant figures will be in two or three years' time is nonsense. Officials in the Department of Finance are aware that three-year predictions are produced as part of the budgetary documentation.

We know, as best we can, that the money being committed as overseas development aid will not comprise 0.5% of GNP. The numbers are bogus. I have calculated that we will allocate 0.45% or 0.46% of GNP at best. It is shameful that we have decided to abandon the 0.7% target solemnly made by the Taoiseach at the UN four years ago in favour of a 0.5% target. It is absurd and dishonest to suggest that the new target can be met by the monetary commitment the Government announced a couple of days ago. I ask the Minister of State to explain the reasoning behind the decision at the conclusion of this debate or in the next couple of days. Can he confirm whether it is intended to allocate additional moneys to meet the 0.5% target? Will the Government meet a commitment on which the ink has hardly dried? The Government should realistically outline how the new 0.5% commitment will be met. The numbers which have been provided so far do not add up.

The Labour Party supports the Council of Europe Development Bank Bill 2004 and Ireland's proposed membership of the bank. I thank the Minister of State for coming to the House for this debate. I am fascinated by the Bill, which seems to deal almost exclusively with the issue of immunity. I assume that there is an obligation to provide immunity to the workers in the bank. Will the Minister of State clarify the matter?