Tag: Banking

Below is the text of Mr Major’s speech in Bangkok at the Standard Chartered Bank, held on Thursday 29th February 1996.

PRIME MINISTER:

Malcolm, thank you very much indeed, and perhaps I can thank both Standard Chartered and the Ambassador for this reception this evening, and I am delighted to be back here.

Malcolm was kind enough to refer to some of my past with Standard Chartered, and he was almost correct about it. They in fact called for volunteers to go to Nigeria. I think they were looking for those who were expendable. The situation in Nigeria at the time was quite volatile, I was deemed at the time entirely expendable, having been with Standard Chartered for a very short time, and I volunteered to go there. And although it ended after a rather miserable motor accident, I don’t regret, if Malcolm will forgive me for saying so, any of the time I spent with Standard Chartered and I am delighted to be here as their guest this evening. I have retained an affection for a bank I worked for for a very long time and I am delighted to see that they are doing so well in this part of the country.

Let me just say a few words about one or two other things.

Perhaps firstly starting most obviously with the conference that I and the Heads of other Western European governments and South East Asian governments will be attending over the next couple of days. Why have it, and why here? They are both I think questions worth asking because the answers are important. What actually strikes me most about the conference is that we have never done it before. We have had an axis between South East Asia and America, between the United Kingdom and the United States, between some Western European countries and some countries in South East Asia, certainly the United Kingdom has had a very great interest in many areas in South East Asia, but not Europe as a whole. And yet Western Europe, South East Asia and the United States are the great engines collectively of the world economy and I think it is long overdue that we should actually meet together to discuss not just economic matters, but security and other matters, in this format. And I can think of no better place to start than here in Bangkok. The next meeting will be in London, so I think the choice both in Western Europe and in South East Asia has been very wisely made by those people who chose those two centres.

What will we be looking at? It is a simplistic truism to refer to the extent to which the world market shrinks. But it does make a material difference to what actually happens in the world business environment. Many people have looked at Thailand and looked at their truly astonishing growth over the last few years and I see that, and I admire that, very much.

But if I may say so, from a British perspective, the growth in Thailand itself seems to me to be only part of the story that we should be examining. Because although the growth in Thailand is immensely impressive over recent years, the fact is also that Thailand is a superb centre for the whole of South East Asia. It presents an opportunity for Western Europe, and indeed beyond Western Europe, to develop a relationship with the whole of South East Asia through the entrepot opportunities of investment and trade with Thailand. And I think it is for that reason that I think it is particularly appropriate that this first conference should actually be here.

I would like, if I may, just for a moment or two, to say something about the United Kingdom’s relationship with Thailand and perhaps also what is happening in the United Kingdom economy at the moment. We have had a long and historical relationship with Thailand, a lot of historical investment, some recent investment, quite significant trade and investment, we are certainly the largest European investor in Thailand. But I push that largely to one side, because what actually strikes me is not that we are the largest European investor in Thailand, but that the opportunity for investment from Europe into Thailand, and from Thailand into Europe, has barely scratched the surface yet of what is possible. That is true both of two-way investment, it is true also of trade both in manufacturing goods, and also I think in invisibles as well, there is of course a very large relationship in oil, as one would expect.

But there are many other areas where that relationship can and should grow. And I would hope we are going to see in the next few years a promotion of those opportunities both in Western Europe and in Thailand. Because there is – I put this with a small ‘c’ – a conservatism in Western Europe sometimes about investment that I think we should push to one side. The speed of change is staggering these days. The first people to see what an opportunity is and begin to grasp it are the people who will take maximum advantage of that opportunity. And the opportunity that exists at the moment for Thailand with Western Europe, and for Western Europe with Thailand and with South East Asia, seems to me to be very important.

Let me say just a word or two about the United Kingdom economy. In the early 1990s the recession hit Western Europe very hard, harder than it hit this part of the world that shrugged it off with its astonishing growth rates. But it hit Western Europe, the United States, Japan, very hard indeed. We emerged in the United Kingdom from that recession some time ago. What is different is the way in which we emerged from that recession. Time after time in the 50 or so years since the Second World War we have had growth and decline patterns in a sort of roller coaster across Western Europe, and certainly in the United Kingdom. What we were determined about on this occasion was that when we went into the recession we would do nothing during the recession that would inhibit growth without inflation after the recession. And although there were a series of very difficult political decisions to take, that was the decision that we took at the time.

And we have now emerged out of recession, I think probably for the first time since the Second World War, without the endemic problems that lead to future economic downturns in the future. The one of most importance of course is the tendency to inflation across Western Europe. We have emerged in the United Kingdom with the inflationary psychology, perhaps for the first time for 40 -50 years, securely under lock and key. Inflation in the UK has been lower for longer than we can remember for a very long time and it is still on a downward trend. It is below 3 percent now, we expect it to be 2.5 percent, maybe below, by the beginning of next year. And despite that, despite that ball and chain on that inflationary problem that has so often been endemic in the United Kingdom, we have actually also got quite a reasonable decline in the levels of unemployment. Our unemployment in the United Kingdom is too high, it is just under 8 percent, but it has been falling every month for the last two and a half years and it is far lower than unemployment in any of our comparative Western European countries, like Germany at over 10 percent, France at over 13 percent, Spain and Italy a good deal higher.

And it is that combination of growth towards the top of the European growth league, puny by comparison with your astonishing growth rates here in South East Asia, but then everybody’s growth rate is puny compared to yours, but growth rates up at the top end of the European league, inflation down at the bottom end, unemployment down at the bottom end and competitiveness, as those of you who deal with the United Kingdom will know, a good deal sharper and better than most people can remember it.

Somebody said to me a few moments ago, as we met: “I do a lot of business with the United Kingdom”, he said, “they are very tough people to do business with. And I said: Good, I am glad we are tough people to do business with. You are tough people to do business with as well, but we are doing more business and it is good business. And if you are competitive, and we are competitive, the one certain thing is that that volume of business is going to grow both in the short term and the long term, and that is what we wish to see.

Before I came to this reception this evening, I had a meeting with a number of the most senior businessmen in Thailand. And we looked at the opportunities that exist for greater mutual investment and trade. And there is no doubt that we have but barely scratched the surface of what is actually possible thus far and we need to go a good deal further. Thailand will make its own judgements about how to do it, and we in Britain will make ours. And we are thinking very long term, not in terms of 2 or 3 years but very long term indeed.

I will give you an illustration of that. I, like most of the people of my age around this room, and I think there are one or two, if it is not ungallant to say so, we see the huge change, the overwhelming change of information technology, change at a speed and a kind beyond the imagination of anything we had at school or in our early 20s. That is the world that is developing. It is not going to go away, there is no point in pretending that it is going to go away. Many of those changes are going to be very beneficial. We propose to plan for the very long term with those changes. There has been a huge development of medium and high-tech industries right the way across the United Kingdom. We are looking now at developing information technology training, and information technology possibilities in our schools, primary and secondary, in a way that we have never seen before. I want to see all our schools, all our children, with computers that they understand on their desks, I want to see them grasping what information technology is going to do for their future, their country and the international trading market in the years that come ahead. And we are looking at the moment at some of the biggest prospects that my country has ever seen, of developing private finance in partnership to bring those information technology prospects and training right to our youngest people in, school, right the way through the school, so that you as employers, and by then I am sure even more of you will have invested in the United Kingdom, will find that you have a workforce trained and skilled in the sort of information that you will need that will be the common currency of world trade in the years that lie immediately ahead.

So we meet at a time of almost unparalleled change and certainly of unparalleled opportunity if it is taken. Someone is going to take the opportunities that exist. Our job, mine in the United Kingdom, yours in Thailand, is to make sure that amongst those people who take those opportunities are our two countries. I think we can do that. I think to a greater extent than we have seen in the past we can actually do that together.

I was delighted, as an old Standard Chartered man, that Malcolm Williamson was here recently with a large trading group. I am delighted we have got an Anglo/Thai business community beginning to develop. I am delighted that the business community in the UK is looking increasingly to Thailand, and from what I have seen already, that the reverse is true. Those opportunities exist. I can do something to help with those opportunities, but you can do more, those of you from the UK who are here, those of you who are Thai but with interests in the UK. I would simply say to you as an external observer of the scheme, the opportunity is there, it is for you to take it. And from what I have seen and know of the Thai government, and from what I know of the British government, we will do what we can to help in that development.

So thank you for being here this evening, thank you for the joint interest you have in trade between our two countries. And thank you to the Ambassador, who is hiding somewhere, just here, a shy, retiring man, not often noticed, only about 6ft 4in. And thank you also to Standard Chartered for their hospitality.

I am delighted to be here for this conference. I have no doubt about its importance, no doubt that this conference isn’t a one-off event just held in Thailand, but the start of a recognition of what can be achieved between Thailand and South East Asia as a whole, and Britain and Western Europe as a whole. It is a good start, I am sure it will go further, and thank you for being here.

Below is Mr Major’s speech at the fourth annual meeting of the European Bank for Reconstruction and Development, held at the Barbican Centre in London on Monday 10th April 1995.

PRIME MINISTER:

Mr Chairman, let me first thank you for so ably launching this fourth annual meeting.

It is a genuine pleasure to welcome to London this morning the Governors and delegates from 57 member countries, the European Commission and the European Investment Bank.

Though this may be the European Bank for Reconstruction and Development, some of you have come from far beyond Europe – from Australia and New Zealand, from Korea and Japan, from Egypt, from Canada, Mexico and the US.

This wide support which the Bank enjoys, and the help given by countries far afield, is one of its great strengths.

One glance at the list of those present testifies to the Bank’s organisational skills. To the nearly 2000 here now, we should add around another 2000 who will play a part in the programme for the annual meeting. This makes the meeting one of the largest of international financial gatherings. The EBRD has come a long way in a short time.

Mr Chairman, two weeks ago I spoke at another large conference here in London, on the subject of “Britain in the World”.

I stressed then that – as an island with a trading and a seafaring tradition – the UK had always looked outwards. We depended on our external links and our foreign trade. One of the aims of our foreign policy was actively to promote democratic values and liberal economics – not only because they are desirable in themselves, but because we saw them as the best guarantors of peace and stability.

These values are reflected in our support for the EBRD. We are proud to have the Bank’s headquarters here in London.

We are glad that its close access to the City’s financial institutions is a factor in its success.

We value Britain’s partnership with the Bank.

And we will continue to give it our strong backing.

Mr Chairman, I spent part of last week in Washington and I’d like to say a little about a subject I discussed there with President Clinton and his colleagues.

We are all very conscious of the dramatic consequences of the collapse of communism and the end of the Cold War for the countries to the East.

But rather less attention has been paid to the effect on countries and trends in the West.

For over 40 years, the Cold War did more than anything else to underpin the cohesion of the Western democracies. Even among other difficulties there was a common threat about which we were always wholly united.

That cohesion was of huge value to international stability. It was a driving force in the world. It served as a focus, not only for the geographical West, but for great democracies further away.

Now the Soviet Union has collapsed. The Warsaw Pact is no more. The old threat has gone. We are liberated from the Cold War. These are very different circumstances. But the old democracies must not lose the habit of working together. We must not take it for granted. It is too valuable a habit to be lost. Even though, in some ways, we may have to work at it a little harder than before.

I see two focal points for the renewed, reinvigorated Transatlantic partnership which President Clinton and I discussed. And I know that there is support for this concept also in European capitals.

Both of these points are directly relevant to the EBRD.

First, I believe there is no more important objective in the years immediately ahead than to extend prosperity and free markets, security and stability, from West to East; and, in so doing, to ensure that no new dividing lines are drawn on the map of Europe. We want no economic iron curtains across any part of our Continent.

Second, trade liberalisation must not rest with the Uruguay Round agreement. We must take advantage of the new World Trade Organisation to press forward continuously. One by one, we should tackle the many non-tariff barriers which still abound. This will benefit us all.

This work should not wait for some grand review in some years time. We should continue with it now. And it is particularly important to the Eastern countries in transition that the West should open its markets. There can be no better way of helping them than through trade liberalisation. Closed markets and closed minds would be to miss an historic opportunity to bring our Continent together.

In the Cold War period, we made a huge collective effort to defend the security and democratic values of the West. In today’s changed circumstances, Western security will best be served by spreading those values.

This will require another collective effort. It will not happen automatically. We are not on an inevitable route to universal democracy. The beneficial changes we’ve seen are in their infancy and need our help. So we must adapt some of our institutions, such as the OSCE, NATO and the European Union; and develop some new institutions, of which the EBRD is a prime example.

Change is required in both East and West, and change will benefit both East and West.

When I spoke to your second annual meeting, two years ago, I said it was not surprising that many people in the East were daunted by the political, social and economic change which they faced.

People are much less daunted now. Even in a short time, they have begun to see some striking improvements. Free and fair elections have been held throughout Central Europe, in Russia and Ukraine, and in other countries represented here.

The Central and Eastern European countries have moved into growth. Privatisation has spread widely.

Over the past year or so, I have been able to see some of these changes at first hand.

I went to Russia early last year, and look forward to going there again next month. By virtue of its sheer size, Russia faces as daunting a task as any country. But Russian inflation fell from over 2,400 per cent in 1992 to around 300 per cent last year and is targeted by the government to be down to 2 per cent or less a month by the end of 1995. Over 60 per cent of Russian industrial workers are now in the private sector.

I was taken around Nizhniy Novgorod by Governor Nemtsov, whom I am delighted to see at this meeting. I met entrepreneurs and saw privatisation in action in Russia’s third largest city. I understand that over 1,200 businesses in Nizhniy Novgorod have now applied for help from the EBRD’s “Russia Small Business” fund, which was set up through a G7 initiative at the Tokyo Summit.

Poland, where I went last August, recorded 6 per cent growth in GDP last year, and has now got its mass privatisation programme under way.

After Poland, I met the Prime Ministers of the Baltic States in Vilnius. In their separate ways, the three Baltic States have made rapid progress in privatisation and developing trade. They have also largely resolved the sensitive problem of Russian troop withdrawal – through negotiation and in a way which does credit to all concerned.

In December I attended the CSCE Summit in Hungary where the beneficial effects of foreign investment are plain to see. With support from the international financial institutions, the Hungarian Government is now tackling its budget deficit and large foreign debt.

Without taking you on a tour of all 25 countries, there are of course many other encouraging indicators. In Ukraine, under President Kuchma, there has been remarkable progress over the past year. Ukraine’s accession to the Nuclear Non-Proliferation Treaty was an important step forward for stability in Eastern Europe; and the President’s economic measures have already produced a sharp fall in inflation and in the budget deficit.

I think it important to make these points because all too often we hear of problems rather than progress. There are deep problems – but the overall picture is much better, much sooner, than most observers dared to predict. It is a success story we do not hear enough about and we must do all we can to ensure it continues.

A balanced picture, Mr Chairman, must of course take account of areas of concern.

Nuclear safety is one which confronts many Eastern countries. They depend on energy supplies from reactors but too many of those reactors fall short of international safety standards. Nuclear safety needs a high priority and a coherent approach.

I hope that the Western-backed action plan for Ukraine, which would involve the closure of Chernobyl, can soon be implemented. And the improvements which have been made to nuclear plants in Bulgaria and Lithuania, with the help of the EBRD Nuclear Safety Account, need to be matched elsewhere.

I know the difficulties of this issue but it is important and it must not be pushed aside in the hope that another accident may never occur.

The conflict in the former Yugoslavia has directly or indirectly affected several of the countries represented here – especially the former Yugoslav Republic of Macedonia. And it has provided a sobering example of the damage which ethnic tensions can bring.

In Croatia, President Tudjman’s agreement to accept a continued UN presence is a welcome sign of realism. I hope that last December’s economic agreement between Zagreb and Knin will now be implemented, and will lead towards a political settlement within Croatia. The Bank, with other institutions, can help to demonstrate the economic benefits of peace there.

The situation in Bosnia is less encouraging UNPROFOR and international aid agencies have done an enormous amount to sustain the population through three terrible years, and to damp down the conflict. But the cessation of hostilities is now being breached, and the risks to UNPROFOR and aid workers are again rising. There has been renewed shelling of Sarajevo over the past few days, and UNPROFOR has appealed to both sides to respect the ceasefire.

The parties to the Bosnian conflict should heed this appeal. They are literally playing with fire. If they rekindle all-out war, I do not believe that any of the participants can make lasting gains. But what is certain is that UNPROFOR’s ability to operate would be placed in jeopardy, and the civilian population – men, women and children – would endure further casualties and suffering.

No responsible leader should choose such a course. War will not produce a settlement.

There is an alternative.

The Contact Group have proposed a basis for a peaceful settlement. The Bosnian Government are ready to negotiate on this basis. But the Bosnian Serbs have so far set their face against the Contact Group’s proposals. While they refuse to negotiate, they will remain under sanctions and in self-imposed isolation.

In the absence of direct negotiations between the parties, the Contact Group is aiming to promote mutual recognition as a step towards more stable relations. To carry this forward and to try to reinvigorate negotiations, a Contact Group mission will visit Belgrade, Sarajevo and Zagreb later this week.

However hard the task, the Contact Group should continue its efforts and pressure to encourage direct negotiations between the Bosnian parties, because the alternatives are bleak. And no-one could question Bosnia’s need for a lasting peace which would allow reconstruction of the country to begin.

Moving further Eastwards, ethnic tensions and war have also had a terribly destructive effect in the Caucasus.

In the northern Caucasus, the Russian army’s misconceived operations in Chechnya are not yet at an end. Civilians have been killed in large numbers, and their homes destroyed. I hope the Russian Government will now cooperate fully with the OSCE, and seek a negotiated solution.

Georgia has been ravaged by civil war, and the conflict over Nagorno-Karabakh has blighted the development of Armenia and Azerbaijan. All three countries desperately need peace so that their economies can make the transition and begin to grow.

Mr Chairman, as Bosnia has shown only too vividly, there is only so much the international community can do to help if the parties to a conflict are not prepared to help themselves, and to take responsible decisions. But the success of the EBRD, and the willingness of so many countries and institutions to support the Bank, is a graphic illustration of what the international community can do, where the necessary conditions exist.

So let me turn now to a success story.

I shall not say a great deal about the Bank, Mr Chairman, because others will do so more expertly during this meeting.

But let me pay a sincere tribute to the Bank’s President, Jacques de Larosiere, and his staff.

In only eighteen months, Mr de Larosiere’s clear and strong leadership has transformed the Bank, redirected its activities, and restored confidence in it.

We have seen a large growth in efficiency, and significant savings in overheads and administrative costs.

Nearly three-quarters of the EBRD’s commitments last year were in the private sector; it has moved into profit; and it has spread its representation and the reach of its projects.

In short, the EBRD is now doing what it was set up to do. It is playing a large part in helping countries to emerge from the ruins of Communism. The transformation of these economies, as we have always known, will take years to complete. They will not move at a uniform speed. There are a great many obstacles to be overcome. There may be setbacks as well as advances. But there are now many more encouraging signs, much visible evidence of progress.

The EBRD deserves its share of the credit. On the course charted by its President, the Bank will remain in the forefront of our collective effort to extend prosperity and pave the way for Europe’s enlargement.

It has an important role to play that will grow with the years. It deserves our continuing confidence and support.

It will receive that from the UK Government and I hope, in that, I can speak for everyone.