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Seanad debates

Thursday, 20 July 2017

Asian Infrastructure Investment Bank Bill 2017: Committee and Remaining Stages

 

Sections 1 to 3, inclusive, agreed to.

NEW SECTION

10:30 am

Photo of Grace O'SullivanGrace O'Sullivan (Green Party)
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I move amendment No. 1:

In page 4, between lines 2 and 3, to insert the following:“4. (1) The State, when acting as a Member of the Bank shall—

(a) work towards the full respect of human rights in accordance with international law in the operation of the Bank and the financing by it of projects,

(b) work towards the achievement of the objectives of the UNFCCC and the Paris Agreement in the operation of the Bank and the financing by it of projects,

(c) work towards the achievement of the objectives of the Convention on Biological Diversity in the operation of the Bank and the financing by it of projects,

(d) promote the development of safeguards to ensure the achievement of these objectives,

(e) promote the development and implementation of effective remedies for any human rights violations or abuses including those relating to the enjoyment of a safe, clean, healthy and sustainable environment, arising from their operation of

the Bank and the financing by it of projects,

(f) support the development and implementation of appropriate human rights, social and environmental due diligence processes across the Bank’s operations, including direct consultations with affected or potentially affected individuals or groups, and

(g) work to ensure the operations of the Bank support international standards relating to responsible lending and borrowing, such as the UNCTAD Principles on Responsible Sovereign Lending and Borrowing and the Guiding Principles on Foreign Debt and Human Rights.

(2) The Minister shall report annually to the Dáil in relation to Ireland's membership in the Bank and steps taken in accordance with subsection (1).”.

I welcome this Bill as it will facilitate Ireland's involvement in facilitating the infrastructure required in developing countries for sustainable development, co-operating with a wide range of other countries in doing so. This Bill, with its inclusive east-west partnership focus, will also boost Ireland's strong reputation on international development policy and our commitment to human rights, climate justice and food security in developing countries.Unfortunately, however, mistakes have been made in the name of development by large financial institutions and world development banks, leading to grave injustices in developed countries, such as Ireland under IMF austerity, but even more so in developing countries where banks have undermined human rights and damaged the natural environment on which we all depend. The AIIB has made commitments to human rights and on protection of the environment. However, it is vital that the AIIB practices what is preaches and is held to respecting human rights and the right to sustainable development. I am advocating a number of amendments which will ensure Ireland's investment within the AIIB goes towards supporting and protecting human rights rather than undermining sustainable development. As an example of the need for adequate checks and balances on Ireland's investment activity, the International Finance Corporation, IFC, the World Bank's private sector arm, has funded some of the south-east Asia and Pacific regions most destructive projects, contravening the IFC's performance standards and its own social and environmental guidelines. These projects include mega hydro-power dams in Vietnam and Cambodia, dirty coal-fired power plants and mines in the Philippines, Vietnam and Myanmar and massive industrial land grabs in Cambodia and Laos.

The purpose of the amendment is to ensure that the Oireachtas gives a clear mandate to the Minister and his officials to co-operate on the basis of existing policies. It makes good sense that the environmental climate and human rights principles we develop for Irish companies operating in Ireland and abroad should be applied to our financial investment activities overseas. The amendment emphasises three areas of concern: human rights, climate change and biodiversity and mandates that Ireland promote in the work of the bank the development of human rights and other environmental safeguards to achieve the objectives, the implementation of effective remedies for failings, the operation of due diligence processes and public consultation, with affected and potentially affected communities; and the implementation of international standards relating to responsible lending and borrowing. The proposed section 4(2) requires the Minister to report annually to the Dáil on the membership of the bank and the steps taken in accordance with the proposed section 4(1). These amendments will strengthen Ireland's reputation as a mediator on the international stage with regard to development, business and human rights.

Photo of Paul GavanPaul Gavan (Sinn Fein)
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On behalf of my colleagues in Sinn Féin, I support the amendment proposed by the Civil Engagement group. Sinn Féin has raised its concerns about this Bill at every Stage. We support the Bill but we believe what is proposed in the amendment would make it better. The amendment places a duty on the Minister to report to the Dáil on our social and environmental obligations as members of the bank. Sinn Féin mentioned on Second Stage that the wording in the agreement on these issues, while fine is pretty meaningless. It should be remembered that ultimately, the Asian Infrastructure Investment Bank is a Chinese bank. It is well known that China's record on human rights is not good. It is only right that we would use what little accountability we have over this bank. I am specifically concerned about investments that might be made above the rights of nations within states, for example. I trust the wording of this amendment, which covers human rights in a global way, covers that issue and I ask the Minister to support it.

Photo of Kieran O'DonnellKieran O'Donnell (Fine Gael)
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I will make a few observations on the amendment proposed by Senators Grace O'Sullivan and Higgins. In regard to the proposed section 4(2), I raised the issue of membership on Second Stage. I note the Minister of State indicated this is currently being worked out. Perhaps he would give a commitment today that once the structure for the appointment of an Irish representative has been put in place and an initial appointee has been selected, he will update the House in that regard.

On the proposed subsection 4(1)(a) to (g), I would have thought the growing European dimension to the fund would bring a level of comfort in respect of many of these areas.It is welcome. In his contribution on Second Stage, the Minister made specific reference to the general view that contributions to the bank can be counted as a percentage of our official development assistance target. That would come with the normal criteria which Ireland applies across a range of areas. I expect that many of the issues Senators Grace O'Sullivan and Alice-Mary Higgins have raised here can be dealt with. I would hope that the Senators would act in the spirit of the Bill and that a vote would not arise on this Bill.

Photo of Michael D'ArcyMichael D'Arcy (Wexford, Fine Gael)
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I thank the Chairman, or the Leas-Chathaoirleach to give him his correct title.

Photo of Paul CoghlanPaul Coghlan (Fine Gael)
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We will not stand on ceremony.

Photo of Michael D'ArcyMichael D'Arcy (Wexford, Fine Gael)
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Unfortunately, I cannot accept this amendment. I do not consider its inclusion in legislation appropriate or necessary. I certainly agree that the issues raised by Senator O'Sullivan are clearly relevant to the operation of the bank and Ireland's involvement as a member should the Bill be passed. The State will be guided by established Government policy when acting as a member of the bank, in particular Ireland's policy on international development. The latest statement of this policy is the One World, One Future document published in 2013.

I do not believe it is necessary or appropriate to single out specific aspects of our approach in legislation. Many of the points which the Senator raised are already reflected in the policies and frameworks of the bank. I also look forward to the publication of the national plan on business and human rights by the Department of Foreign Affairs and Trade, which Senator O'Sullivan mentioned on Second Stage. The Department of Finance has worked closely with the Department of Foreign Affairs and Trade throughout our application for AIIB membership and its work in this area will inform the development of our policy at the bank.

In respect of the development of safeguards, the bank's environmental and social framework released in early 2013 recognises and makes provision for issues such as climate change, gender, biodiversity, resettlement, labour policies and indigenous peoples. These safeguards reflect best practice across multilateral development banks and were drawn up with the input of AIIB members and civil society. Of course, the true test of such a framework is its implementation but this comprehensive document provides a very good starting point for the AIIB.

The bank is in its early stages but a number of developments suggest it is well placed to maintain high standards in practice. In respect of climate change, the AIIB's recently released energy strategy fully embraces the goals of the Paris agreement. The bank has promised to uphold the agreement and will seek to assist its clients in meeting their targets. With regard to the development and implementation of effective remedies, the bank has launched an independent stakeholder consultation to establish a complaints handling mechanism. I understand this mechanism will go beyond compliance and seek to address the problems of any people adversely affected by any AIIB project. This is an important step for ensuring that safeguards are applied in practice.

In respect of responsible lending, the AIIB has drawn its procedures and policies from those of other multilateral development banks. The standards adopted have been broadly welcomed by non-governmental organisations and member countries alike. The bank's financing policy makes clear that lending will be carried out with due attention to the fiscal sustainability of the borrowing member and its ability to meet its obligations under the financing contract. If Ireland were to become a member of the AIIB we would use our influence, in co-ordination with other members, to ensure that these policies are implemented in practice. Finally, with regard to the suggestion of an annual report by the Minister to the Dáil, I am sure the Minister will give his full consideration to the views expressed both in Seanad Éireann and Dáil Éireann on Ireland's dealings with financial institutions generally through the reporting arrangements to the Oireachtas .

For the reasons outlined, I cannot accept the Senator's amendment. I want to put on the record of the House that this is not a Chinese bank. It is important to be clear that it is a Chinese initiative.The Chinese will hold 26% of the shareholding while Europe will hold 20%. It is not a European bank, but equally it is not a Chinese bank. I wish to put that on the record.

Regarding Senator O'Donnell's question about directors' posts, we are entitled to a post. There is a rotation agreement among the EU member states that are members of the AIIB. Ireland is party to the rotation agreement. However, the timing of our appointment of a director or alternate director will not be clear until after we are full members.

If the amendment is passed, we will have to revert to Dáil Éireann. Obviously, the Dáil is in recess so that cannot happen until September. Equally, it is important to inform the House that if the amendment is passed, in all likelihood we would not be accepted as a member of the AIIB. The AIIB has put its memorandum of understanding in place and feels it is appropriate. No other jurisdiction, to my knowledge, has attempted to put into legislation what the Senator is attempting to put into legislation. We feel the bank will be responsible with its corporate mandate. As I have said, this is part of the memorandum of understanding. I do not feel the amendment is appropriate. It is neither the right place nor the right method to deal with what the Senator is pursuing. I am not in any way disparaging her attempts to do so, but she must understand that if the amendment is pressed and passed, it will have consequences.

Amendment, by leave, withdrawn.

SECTION 4

Question proposed: "That section 4 stand part of the Bill."

Photo of Paddy BurkePaddy Burke (Fine Gael)
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Is there any control by a central bank, such as the Irish Central Bank or European Central Bank, on this type of bank, or is there any need for same?

Photo of Michael D'ArcyMichael D'Arcy (Wexford, Fine Gael)
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No. The AIIB is not controlled by a central bank, just as the ECB does not have control over AIB.

Photo of Paddy BurkePaddy Burke (Fine Gael)
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European banks, for example, are subject to some form of central bank control. However, I presume the AIIB is made up of various governments so there will be no control over the bank. It can lend with the agreement of governments or the board that governs it but it is not governed by anyone. Is that correct?

Photo of Michael D'ArcyMichael D'Arcy (Wexford, Fine Gael)
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Like many other banks of its type, it does not come under that standard type of regulation. The Irish Minister for Finance is a governor of the bank in line with other jurisdictions and other multilateral development banks of its type.

Question put and agreed to.

Schedule agreed to.

Title agreed to.

Bill reported without amendment and received for final consideration.

Question proposed: "That the Bill do now pass."

Photo of Michael D'ArcyMichael D'Arcy (Wexford, Fine Gael)
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I thank everyone involved in the legislation and thank the Senators for their amendment. It is good to discuss these matters and kick them about. I thank the staff within the Department and everyone else involved.

Photo of Gerry HorkanGerry Horkan (Fianna Fail)
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We had a very good Second Stage debate on Tuesday about this matter and a very detailed Committee Stage analysis in the Committee on Finance, Public Expenditure and Reform, and Taoiseach when the Minister of State himself was a member of it, along with Senator O'Donnell and me as Vice Chairman. We have looked into this and it is a good idea to be involved in it. It is estimated that our shareholding will be only 0.14% of the entire bank, which is not a huge exposure. I think it amounts to €5 million a year over five years. I welcome our involvement and Members' support for it and wish the bank and our investment in it well in the future.

Photo of Kieran O'DonnellKieran O'Donnell (Fine Gael)
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If we base our consideration of this Bill on whether Ireland should be an investor in this bank, on balance we would have to answer "yes" to that question. It is good for global business. It is also good to have such a European-Asian join-up.

I said during the Second Stage debate that this bank could provide exciting potential opportunities for Irish companies that want break into the Asian market to sell their exports and that this would provide jobs in Ireland. That is what we should be considering in terms of the Minister for Finance's role as governor for Ireland at the bank.

Photo of Alice Mary HigginsAlice Mary Higgins (Independent)
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I thank the Minister of State for his constructive engagement on the issues we raised and his recognition that the questions we raised are important ones. We appreciate the genuine discussion and engagement.

Members of both Houses could seek to ensure across all areas of our investment that we act in a way that is consistent with our principles and with environmental, human rights and other concerns. While we have not pressed this amendment on this occasion, we have engaged with and responded to the Minister on it. We would appreciate ongoing engagement on these questions. We look forward immensely to the publication of the business and human rights report and to examining it in detail. We will certainly be pressing for divestment of investments in fossil fuels and other areas in other sectors of our public investment. It is a conversation that will be ongoing. I recognise that the Minister of State has engaged very respectfully and honestly with these issues today.

Question put and agreed to.