Examination of Witness (Questions 181
TUESDAY 22 JANUARY 2002
Chairman: Thank you very much, both you
and your team, for giving us your time this afternoon, it is very
much appreciated because we know how busy you are. As you know,
we are the Committee of the House of Commons which scrutinises
the work of the International Development Department, and because
such a large part of that Department's budget goes to the European
Union not surprisingly we thought we should come and look at the
institutions of the Union from time to time. We are conscious
you are part-way through a reform process and we are really seeking
to understand as best we can how that reform process is progressing.
I hope you will not mind if my colleagues ask a number of questions,
and through the process of questioning find where we are going.
If I may, I will ask Tony Colman if he will begin.
181. My question is, are the structures which
govern European development assistance working? Is there sufficient
clarity as regards the roles and responsibilities of the various
DGs and EuropeAid? Is the assignment of roles and responsibilities
a sensible one? It has been interesting meeting with the Chef
de Cabinet for the Trade Commissioner, whom we met earlier today.
We note on EuropeAid you have got not only Pascal Lamy but the
Commissioner for Enlargement and the Commissioner for Economic
and Monetary Affairs. Do you think there is, if you like, clarity
around the roles and responsibilities related to European development
in terms of those perhaps five DGs?
(Mr Nielson) If you want a straight answer, it is
no. If you want an honest answer, it is also no.
182. Is it getting better? Do you see a future?
(Mr Nielson) Yes, but we are not yet there. There
would be two layers in responding here. One is that actually fully
implementing what has been agreed and set in motion now will improve
what we have, but then that is not in my view good enough, it
is not clear enough. Basically I think it is quite obvious to
everybody that it was a strange construction when this Commission
took office to have the whole implementation part being put under
the formal responsibility of another commissioner, then the commissioner
responsible for development co-operation. That does not make sense.
183. And then four other commissioners.
(Mr Nielson) Yes, but then we started doing some repair
jobs, creating the board which functions, which effectively means
at least giving me direct access to the show, which was of course
part of why it was also possible to agree on a new division of
labour between the upstream policy part and the downstream implementation
part. That is why I said it will mean, when we get there, and
we are almost there now for AIDCO, that quite a large part of
the activity cycle is organisationally and administratively more
unified than ever before. I still find it a real error in terms
of management and policy responsibility that we have a tension
between the upstream policy part and the "do it" part.
I find it problematic but it is better than it used to be, as
is also the effect of having, actually with the strong support
of Member States and Parliament, gate-crashed into a situation
where we have one overall policy for the whole thing, even if
it is difficult to have it anchored really in the minds of people
in DGs, especially RELEX, which never was under that sort of political
steer on the substance of what development policy is. As I told
the Committee the first time, it is true we are big, so we do
have the critical mass, but when we look into the substance of
what we have in the pipeline, reflecting the legacy, we also have
a critical mess. This is still the case, it takes some years to
have the new programming dominating what we are actually doing,
and this is quite clear, but there has been no hesitation since
we last met on the determination as to where we want to be.
184. You have in a sense answered my second
question, but the question is still there in terms of how you
are relating with trade and with economic and monetary affairs.
(Mr Nielson) The situation used to be, before we did
this reform, that DG Development also handled trade issues for
the ACP countries, but not for the rest of the developing countries.
Now with a more ambitious, for very good reasons, global trade
agenda, this would be outside the reach of DG Development to do
that. It is much better to impregnate DG Trade with a development
orientation, which we did, because we moved the people from here
into Trade, and on policy decisions this may be one of the better
cases of real coherence, of real shared philosophy. If you look
at the way in which Pascal Lamy and I are actually talking about
these issues, we are brothers of progressive globalisation, if
you will, it is a good working relationship, shared with the rest
of the RELEX Commissioners. Although one has to be careful about
giving rosy pictures of these things, in substance, the working
relationship between the group of RELEX Commissioners is much,
much better than the rumour has it, much better; it is quite good.
The same with the ECOFIN area. We have kept political and managerial
control of the development hard-core activities on economic policy
internationally, so we have, if you will, a north-south perspective
globally, so the accent for ECOFIN is on the north and the very
broad global issues, whereas all the other stuff operationally
is within the hands of Development, RELEX and AIDCO in the new
implementation, and that is unproblematic. So those two inter-relationships
that you are mentioning, I would categorise as unproblematic.
185. Can I just follow on from what my colleague
was saying. You are saying the present structure is not perfect,
it is not working as well as a future structure might do, but
what would that future structure be? You are implying it is a
sort of half-way house, you had to abandon the past but you could
not get to the future.
(Mr Nielson) It is like squaring the circle. Let me
clarify that. Any Minister of Foreign Affairs is facing the difficult
task of putting development co-operation into a meaningful framework
with the rest of the Ministry. You can either have it separated
and then you are asking for a war of competences, because different
accents will be put on this or that aspect, giving more prominence
to the purely political or other interests, or more accent on
getting the job done without any fall-out, so there is no obvious
solution. In the Commission there is not a tradition in the culture
of baronies, the DGs, of serving more than one political master,
so it is relating to the political and development politicians
at the top at the same time is simply not embedded in them.
186. Is that saying, if you could be absolutely
sure that the development philosophy was sealed into the foreign
affairs philosophy, the right answer would be a single commissioner?
(Mr Nielson) No. It would be too much work. If you
take development seriously, you have to have politicians working
on that front. It would drown for quantitative reasons. For that
reason it is really necessary. I strongly regret the new Danish
Government having abolished the post of Development Minister,
even considering the investment made even after the reduction
in the budget, which I also regret, but scrapping the portfolio
is really bad. Taking care of the money and the political responsibility
of it, Denmark is in absolute numbers quite a lot bigger than
Italy, for instance.
187. Are you saying in terms of development
at the Commissioner level it is right, but at the underlying structure
level there needs to be change?
(Mr Nielson) I could see a model where we have a Foreign
Affairs Commissioner more generally, and where we can fit a Development
Commissioner into the system, being rooted either in the RELEX
system with some sort of south group servicing the special development
aspects, or still having that up there for the political stuff
but all being positioned simply in what we now call AIDCO, where
most of the real work is. It could be done both ways. We are almost
there because as Chief Executive Officer I have access to AIDCO,
I have an office there and so on. Today a lot of the work on development
policy is still embedded in DG Development, but this is a very
small DG, so if I do not also do it in AIDCO it does not really
work, but it is not well organised, I would say.
188. That leads on to my other question. Apparently
on the DG Development website it is stated that in addition to
helping to formulate development policy, DG Development "directly
manages and co-ordinates Community relationships with the ACP
and the OCT."
(Mr Nielson) Yes.
189. How does that link with EuropeAid?
(Mr Nielson) What many people do not realise is that
we are, for that part of the geography, the external relations
institute in DG Development, because they are the geographical
desk for the ACP countries. So they are servicing Chris Patten
when he, for general political stuff, is relating to our dialogue
with Africa, or what have you, just as I am being served, going
to India next week, responsible for our development work there,
by DG RELEX there, their India desk and, of course, AIDCO being
the main player in getting things done there. What is not understoodand
I clearly see that in some of the material you have been informed
with, or misinformed with, on coming hereis that DG Development
has the general relations to that kind of work. So that is another
aspect which, for good reason, could be discussed. Would it not
be more normal to say the whole general political relation is
in RELEX, but we have either outside or inside RELEX, which is
the choice I talked about before, a strong accent on the development
policy thing but most of it is embedded in the implementing. It
could all of it be there, but then we would again have this overlap
of two Nigeria desks and so on. All countries have to live with
190. We understand the reform process has a
review clause. When in time is that review going to take place
and what form will it be?
(Mr Nielson) In these coming months. In fact, our
internal auditing services have already pointed out that some
changes could be a good idea. It was claimed, when we started
this, to have this taking place in the first part of 2002. So
there is good reason to look at it with fresh eyes. We have done
more things in these two years than normally is carried out and
we are totally determined on carrying on with this so-called deconcentration
(which is the wrong word, it is decentralisation; we are delegating
to the delegations and strengthening the delegations.) To do that,
and counting backwards from where we know we want to be in a few
years on that exercise, what we have in process could be more
rational. There is also a lot of classic rationalisation to be
gained, not having the number of information or informatics IT
staff, and there is a lot of classic rationalisation in it but
basically we have come a long way. Please keep in mind that the
history of the enormous growth in this activity has been dominated
by adding another piece of the geography of the world to what
we are doing, and this is how it started to be such a diverse
operation, and things were done like that, jumping into manifestations
driven for good, good, good political reasons but leading to totally
different machines. Mind you, where we are is still dominated
by the crazy effect that the archive systems for these different
activities are not compatible. So retrieving data, reporting to
DAC and to Parliament, telling how much we do in education or
health and so on globally, or on environment, to present our portfolio
now which is relevant for Johannesburg is an incredible task;
it is archaeology. These different regulations have their own
different administrative systems and decision-making processes
but also different archives. I can tell you of a real drama in
bringing people together in April this year has been whether they
could actually bring their files with them or not, emptying the
upstream entities in RELEX and Development for knowledge, and
emptying them for history and expertise on this or that country,
because the files had to be physically brought along. So to have
systems working well together in the amalgamation into AIDCO has
been, and still is, quite difficult. All this is much more of
a big event than we like to present it.
191. Do you think the European development policy
is consistent with other European policies, particularly in the
sphere of external relations? Is it a policy which is successful
throughout the mainstream EC policy? That is one question. The
other is, the Committee criticised the allocation of European
development assistance, which has been known to many people. Are
the geographical and sectoral allocations of resourceswhich
seem to be not much to Asia, lots to the near-abroadconsistent
with the poverty reduction goals of European development policy?
(Mr Nielson) As to the consistency with other external
policies, the big issue on coherence is more to do with our internal
policies, but agriculture is the main and heaviest single case.
This is a general, global trade negotiation issue, I would say.
It was there with or without development policy. I think we are
better positioned now, with more authority to what our development
policy is, than we were two years ago; much better. There is today
such a thing as EC development policy. It never existed before.
So we have something to measure up against; we have a yardstick.
Before we had a lot of accents here and there. If you look at
the mandate on which the EU set Lamy to Doha, we never had such
a priroty in a mandate for development interests before. This
is a result of the type of working relationship I described before,
and it came from the Commission with good support from a number
of Member Statesmore from some than othersbut it
is part of this Commission's thrust. On the agricultural policy,
not to go into a long discussion about it, the unfairness of this
discussion globally is that where we do the most bad thing is
on subsidising our exports, whereas the United States and Japan
are worse sinners at keeping others out on the access issue, especially
Japan, and the whole level of subsidy for agriculture is bigger
in the US than where we are now. We have in fact been reducing;
if you take the total envelope of subsidising agriculture, we
are in the process of reducing it by 55 per cent in Europe and
are almost there. But it is the export subsidy which is the big
criticised element in Doha, and for good reason. We are the stupid
criminal, in the sense that what we do is the most visible wrong-doing
compared to the others, but we are ahead of them on access. The
many things we do and historically have done helping the ACP countries
is still such a relatively good thing for them compared to any
other show on earth that they hang on to avoiding changes, which
is impossible because we cannot liberalise globally without re-aligning
the general situation. That is what the new Cotonou-embedded and
WTO-compatible next discussion is all about on agriculture. On
the priorities and this near-abroad thing, again this change of
emphasis reflects the same reaction to the political needs of
Europe as history has developed. I have some material I want to
share with you in this respect on these priorities, who gets most
and so on. The short version is that what we did in the Balkans
and what we did before that, and still are having difficulty in
actually doing in the MEDA context of the Barcelona process, was
additional and is additional. So it is true that in terms of percentage
distribution it looks as if Africa and the traditional developing
countries get less, but it is less of a strongly increased total
envelope, so there has been no reduction. This was even true for
the humanitarian work in the peak of activity in the Balkans.
ECHO's budget was inflated to more than 900 million compared to
the normal level of roughly 500 million when we did most in Bosnia
and Kosovo, and now it is down again. This is, by the way, why
Ruud Lubbers is complaining that we are doing less with UNHCR
than we used to, because he compares it with the years of the
Balkans crisis. These are the fluctuations. I may mention that
as part of the briefing you have been receiving, which has been
repeated by many of the NGOs, and it is also in the Parliament
here, and has been swallowed uncritically, no least developed
country figures among the ten biggest receivers of EC aid. But
even if EU candidate countries, which is another big near-abroad
issue or it could be called European solidarity, are included
on the top ten list, Uganda makes it as number eight on that list.
If candidate countries are not included in this top ten list,
we have Uganda as number four, Tanzania as number six, Zambia
as number seven, Mozambique number nine and Kenya as number ten.
These are the figures we have given to DAC on the volume of what
we are doing for the year 2000 commitments. So there is a mystery,
and I am going to send this material to Parliament also because
they seem worried, for good reason, because if this was true we
would be performing very badly. So this is the story about these
proposals and there are certain things Europe has to do. We have
a squeeze now with Afghanistan, which Chris and I have been working
on very directly with Member States and Parliament. My own formula
has been that without additionality there is no credibility, because
we did not do any development work in Afghanistan, for good or
bad reasons, we never got to that, we only did humanitarian work,
on a large scale and long-termif there is such a thing
as long-term humanitarian assistancebut this is unfortunately
what we were constrained to do in Afghanistan, working up good
channels of delivery by 29 NGOs that we had been funding for years
inside Afghanistan. They were actually the ones I was on my way
to visit on 11 September, when I only made it to Heathrow, and
saw some terrible TV programmes in the lounge, and got my luggage
out of British Airways, which was the last flight in fact to Islamabad.
Next time, when I made it there, I went by Pakistan Airlinesin
December. We do not have something on the budget, so we have to
squeeze something from other parts of Asiaand I do not
like to reduce part of thisbecause of the new things we
have to do in Afghanistan. We have found anything we could find
in quite broad circles, but for 2003 and on we need new decisions
from Member States and Parliament. That is where we are.
192. Those figures about none of the least developed
countries counting in the top ten are so important, would it be
possible to have your list of how it is calculated?
(Mr Nielson) It is coming round.
193. Just on that process of additionality,
do you put in a bid to Member States and to the Parliament for
what you want in the next round? How does that process work?
(Mr Nielson) It is the project for 2003 and that discussion
is on now.
194. The budget for 2003?
(Mr Nielson) Yes, and that discussion is starting
195. I was going to say, is not the difficulty
that that budget, because it is within limits, is a sort of nil
sum gain? If development is going to get extra money, people somewhere
else within the budget have to be persuaded to take less.
(Mr Nielson) Yes, exactly. There are neighbour elementsfood
aid, food security, standardswhich are being attacked on
the margin as part of this kind of exercise, and that is very
near, I would say. The whole Category 4 has been vacuum-cleaned
and worked over on a number of occasions, but we have got some
money in a similar exercise this year. We did get some money from
agriculture and we did it for the Global Health Fund. We did get
money from fisheries because the agreement on Morocco did not
materialise and in fact some of that money which was then not
used for the fisheries agreement in Morocco was used for the Global
Health Fund. So we do have some evidence of some ability to go
into areas outside the narrow scope.
196. But the larder is bare, there is no more
money if you have another Afghanistan? You have no more money?
(Mr Nielson) No.
197. End of story.
(Mr Nielson) No. Of course it is meaningful to keep
humanity reminded of the fact that the Berlin Decision could not,
for good reason, take into account all kinds of disasters in the
world which could happen, and this is why we need to discuss it.
198. I am intrigued by your table
and perhaps I could ask you a question on it. It seems to me from
the second half of the table, which is comparing the financial
years, that LLDCs received a reduction from 50.1 to 31.8I
am in the middle of the tableand if you go down to the
table below, sub-Saharan Africa has taken quite a reduction as
well. In the context of the Country Strategy Papers, how do the
Country Strategy papers relate to the poverty reduction papers
of the World Bank and others? Are the programmes being really
tailored? Are you driving them or are they driving you? Some say
that sometimes the Country Strategy Papers here are ghosted in
Washington to tie up with the World Bank. What is your view on
(Mr Nielson) First, when we look at the Country Strategy
Papers being produced now and their link to the country allocations
for the Ninth EDF, this is one component in the next round of
development money for the ACPs, which we will access when all
European Member States have ratified. Either way, this is where
you come into the picture. Please get it done now, this spring.
So far it is not a real problem but in Parliament, in the EU-ACP
Joint Parliamentary Assembly, we hear more and more noise and
also some deliberate misuse of the non-ratification or slow ratification
in EU Member States of the Cotonou Agreement. So those who want
to throw sand in the machine use this as justification, "You
are not doing your job. Can we believe you?" and so on. The
squeeze will be real if it does not happen now, because in the
autumn, when we should start using this money, we cannot. We have
started everything else in the Cotonou Agreement except the money
part; the money part will start when ratification is done. So
we have been relaxed until now but from now on we cannot relax.
This is more than a parenthesis, so I am glad you came here directly
and hope you will take it back with you in a serious manner. We
are applying the principle of poverty-focusing quite vigorously
in the way we are allocating the money in the Ninth EDF compared
to the allocation of previous European Development Funds, so it
is one entry more. The poverty reduction strategy and our process
of programming are linked in the sense that we take the analysis
as if it were our own, our own Member States are strong players
and partners in the Bank. It is true we are not a member, we are
not a shareholder, but we are seen as a main stakeholder in the
Bank, for good reason. As I keep reminding Jim Wolfensohn in the
Bank, "It is true you are a grand donor, but please do not
forget I am a grant donor", and without that sort of money
as part of the equation the whole macro-economic support being
linked to the HIPC effort would not work. We are invited in. Sometimes,
in some cases, we are used and seen by the host country as a sort
of advocate on their part in the discussion on PRSP. In some cases
they do not carethey do not care what the Bank is saying
but they have to do, so they do it, and that is itbut in
other cases we are gate-crashing because they do not want us in
because we have been too critical, or the Bank locally in that
country has not taken it seriously enough that we are supposed
to be part of that process. So I pick up the phone, or somebody
else in the system does it, and then, "Okay, we are sorry,
we have instructed our man in wherever now." So we are in
it. Things are quite different today with the Bank. I have repeatedly
told the NGOs that some of them need to up-date their enemy picture.
It is not perfect but it is absolutely a much healthier picture
than it used to be. Also we are comparing notes on another score
with the Bank in this. The inclusion of the invitation of civil
society, as we call it, non-state actorsbecause municipalities
are also given a rolein the PRSP process is repeated in
our Cotonou framework process of writing Country Strategies with
the inclusion of civil society, followed up by our ability to
fund civil non-state actors afterwards, which is a very nice facility
to be able to offer. We are comparing notes as to the reality
of all this.
199. In Nicaragua, the World Bank is having
conversations around debt, HIPC, they could not find all the resources
to put together their poverty reduction strategy paper so they
have been assisted in that process by staff from DFID in the UK
as part of our development work, and that was welcomed. Do you
resource the drawing-up of the Country Strategy Papers from the
recipient country end as well?
(Mr Nielson) Yes.
2 Ev 76. Back
Ev 76. Back