Though Cowards Flinch

A number of people have provided good coverage of the ‘objection’ action on Friday 12 March by Tory MP Christopher Chope, in cahoots with two Tory whips, which derailed the ‘Vulture Fund’ bill.  Not least there’s Andrew Gwynne himself, the initiator of the private member’s bill.

The main focus over the next few days will be on the way in which these three MPs behaved, in derailing a bill which had cross-party support, and what Cameron’s frontbench really knew about it.  I hope some of this will come out at the bill’s next ‘appearance’ in the Commons on Friday 19 March.

But there may be a big silver lining to this cloud.

The very derailing of the bill, and the possibility that it – or a variant on it – might now gain government sponsorship – may give it greater media prominence than even Andrew Gwynne’s and his colleague Sally Keeble’s worthy efforts have been able to secure it to date.  In this event, the press is likely to pick up not just on Chope’s behaviour in shouting ‘objection’ in the way he did, but in his reasons for objecting to the bill in the first place.

It is important to separate out these two issues.  

The manner in which the bill was derailed was disgracefully underhand, and Chope and his colleagues should be ashamed of themselves in this respect.  More importantly, perhaps, the Conservative frontbench needs to be questioned closely on why, if its backbenchers had concerns about the bill large enough to warrant this late shout of ‘objection’, that same frontbench was happy to profess general cross-party support.

But there is undeniable substance to Chope’s individual reasoning, and this should not be taken lightly just because he is a Tory.

Judging from his speech at the second reading on 26 February, he has two main areas of objection.

First, he fears that the reputation of English Law and the British courts will be damaged.

It is also potentially the most inimical to the British system of justice, because the following is bound to happen: whereas at present many of these international contracts are drawn up in accordance with the provisions of English law and then are justiciable in the British courts, if we are unable in future to demonstrate some consistency in how we organise our legal affairs in this country, potential creditors will engage in forum shopping and make sure that the contracts are drawn up in law other than English law and that the forum where they are determined are courts other than the British courts.

This objection, I think, we can dismiss.  While I understand the logic, it boils down to Chope suggesting that English law’s most important function is as an export market rather than the implementation of law passed by MPs like himself, and delegated to do so by an electorate.

But his second reason is less easy to dismiss. 

Essentially, he fears that developing countries will have more trouble finding loans at anywhere near affordable rates if there is thought to be any likelihood of default via ‘vulture fund’ bill mechanism.

I do not think that the Minister has adequately addressed the concerns expressed by investment managers about the Bill’s impact on the ability of countries suffering from substantial indebtedness to be able to obtain commercial support in the form of loans in future.

However unlikely such a default route might be in practice, there is substance to the argument if we acknowledge that loan providers may either become more risk averse because of their fear – however irrational – of its use, or because they will use the very existence of the legislation as an excuse pump up the rates they charge developing countries.

Chope refers to these as the possible ‘unintended consequences’ of the ‘well-intentioned’ bill.   

Whether we like it or not, he has a point.

This whole issue is important to get out in the public sphere because, just as the bond markets are able to a great extent to hold our government hostage over deficit management with the threat of higher rates, so developing countries’ often nascent democracies are totally at the beck and call of those who hold their historic debt (often linked to corrupt past governments installed/maintained by Western governments for their geo-political reasons).

In essence, widened and highlighted debate about whether the bill might have unintended negative consequences for the very populations it seeks to defend might just bring into relief the wider injustices in the world economy. 

This is a world economy where democracies in poor countries have little real power over their national budgets, and where this powerlessness to effect change for their population continues to create the conditions for mass corruption – the very conditions which continue to militate against sustainable loan arrangements, and the creation of a vicious circle of corruption-poor loan arrangements-aid dependency.

Wouldn’t it be good if Chope’s actions created the impetus for a movement with the Commons and elsewhere for a wider solution to endemic debt than the current bill – laudable but still limited in its aims?

Ironically perhaps, such a development would be in keeping with Chope’s own (now dropped) private member’s bill the Sovereignty Of Parliament (European Communities) Bill, which sought to guarantee the sovereignty of his own parliament in the face of external pressures. 

If only the same luxury were afforded to Zambia, or Liberia.