No. ÃÂ 19 3 Date 30 November 1986

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WORLD BANK LOAN FOR CHILE

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PARLIAMENTARY LIBRARY  C. I. S.

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The Minister for Foreign A f f a i r s , Mr Hayden, today denied  reports that Australia's vote for a World Bank loan to

Chile was made against his advice and that of his d e p a r t m e n t .

The Executive Board of the Bank approved a $250 million  Structural Adjustment Loan (SAL) to Chile at its meeting  in Washington on 20 November.

In casting his vote, the Australian Executive Director made  a strong statement on behalf of both the Australian and New

Zealand authorities to record that support for the loan did  not imply any lessening in concern about the human rights  situation in Chile.

Mr Hayden rejected suggestions that Australia should have  voted against the loan or abstained from support as a form

of protest against Chile's human rights policies.

An important principle is at stake in the operation of the

B a n k , Mr Hayden said.

Section 10 of Article IV of the Bank's articles of agreement  states t h a t :

"The Bank and its officers shall not interfere  in the political affairs of any m e m b e r ;  nor shall

they be influenced in their decisions by the political  character of the member or members concerned. Only  economic considerations shall be relevant to their  decisions, and these considerations shall be weighed  impartially..."

Australia has in the past strongly supported this principle  and has not done anything to prejudice the principle when  reque s ted.

"In my own area of foreign affairs I have steadfastly rejected  suggestions that for instance Israel or South Africa should be  expelled from multi-lateral bodies like the International Atomic  Energy Agency.

"Once we go down the track of expelling bodies from m u l t i Â­ lateral forums because we don't like their political ideologies  or practices then we go down a very dangerous path.

"That course opens up a process of competitive expulsions  being moved with increasing earnestness by East and West.

"We have to remember that the liberal democracies of the world  are relatively few in number and that regrettably authoritarianÂ­ ism is much more common.

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"To expel is to exclude from the processes of international  dialogue and pressure which multi-lateral forums provide.

"That course means the ultimate dissolution of the U.N., the  supreme multi-lateral body where all independent nations are  entitled to participate.

"The crumbling and dissolution of the U.N., as an extreme case  to illustrate a point, would be a great loss for countries  like Australia.

"It would impoverish the world by denying it a mechanism which allows  so many troublesome problems to be sorted o u t ,  or modified, between  nations before they get worse."

Australia votes in the World Bank as part of a constituency

holding 3.36% of the Bank's voting rights. Other members of

our constituency are New Zealand, Papua New G u i n e a ,Re p u b 1 ic  of K o r e a ,  Solomon Islands, Vanuatu, Western Samoa and Kiribati. Our vote reflected opposition within the constituency to the  intrusion of political considerations into the Bank's processes

which by its charter should be determined exclusively on technical  economic grounds free of political consideration. It was in  agreement with the view of virtually all the developing countries  of the Bank and many other developed countries that Chile  appeared to meet all the relevant criteria in order to receive  the loan in question.

The Government believes that the situation in Chile is only  likely to improve decisively with a return to democratic  traditions and it is becoming increasingly clear that the  Chilean Government must restore these traditions fully and  without delay if further suffering is to be averted. In

particular the regime must ensure that there is an early  resumption of proper democratic p r a c t i c e s .

