Select Committee on International Development Minutes of Evidence

Examination of Witness (Questions 181 - 199)



  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.

Tony Colman

  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.

Tony Worthington

  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 understood—and I clearly see that in some of the material you have been informed with, or misinformed with, on coming here—is 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 this.


  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.

Mr Khabra

  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 resources—which seem to be not much to Asia, lots to the near-abroad—consistent 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 States—more from some than others—but 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-term—if there is such a thing as long-term humanitarian assistance—but 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 Airlines—in December. We do not have something on the budget, so we have to squeeze something from other parts of Asia—and I do not like to reduce part of this—because 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.

Tony Worthington

  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.[2]


  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 now.

  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 elements—food aid, food security, standards—which 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.

Mr Battle

  198. I am intrigued by your table[3] 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 31.8—I am in the middle of the table—and 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 that question?
  (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 care—they do not care what the Bank is saying but they have to do, so they do it, and that is it—but 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 actors—because municipalities are also given a role—in 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

3   Ev 76. Back

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