Select Committee on International Development Minutes of Evidence

Examination of Witnesses (Questions 220 - 228)




  220. The only difficulty is this, though: we were told that, to find the money for Afghanistan, every cupboard, every nook and cranny, had been raided, so for any other failed state the cupboard is bare. What I think many of us here, where we now have a development policy which is very poverty-focused, find it difficult to understand is why so much of the EU's funding for development goes to middle income countries in the rest of Europe, and if one worked out the boundaries of the old Roman empire, a very large proportion of EU development aid still seems to be going to the Roman empire rather than huge areas such as Africa, and large numbers of failed states such as Sudan and Somalia and so forth. When do you see the EU development budgets and external support having the same poverty focus that we have here in the UK?
  (Mr Patten) What bedevils this debate is, first of all, that one is very often comparing apples with oranges and, secondly, that everything—and I am putting the point rather more crudely than it deserves—by and large comes off the ODA or DFID budget in terms of European expenditure. Category 4 of our budget which, as you know, is separate from the EDF, a point on which I am sure the Committee has views just as everybody in Brussels has, is not for nothing called External Actions, and some of those external actions have specifically developmental objectives: others may have developmental consequences but have other objectives as well. We have been spending, I guess, about 850 million in the Balkans a year: that has principally been for reasons of the broader security; the belief that we are most likely to underpin the process of political and economic reform which is taking root in south east Europe by providing, as well as access to our market for their goods, assistance as well. In the last two and a half years or so we have spent about 800 million in Kosovo. Now, you are certainly helping some poor people but the purpose is not the same as money we are spending under Cotonou, or under the Asia and Latin America programmes in India or China. Secondly, we are not only looking at security but we are looking at how to ensure that our immediate neighbourhood is not divided from us by too wide a gulf in terms of economic and social development, so we are trying to support reform and development in Russia and the bordering states to the east—Moldova, the Ukraine, the Caucasus—we are also trying to create around the Mediterranean a free-trade area by 2010 which will also have a strong political partnership with us, which will be part of our market. It is perfectly obvious that Europe is more secure politically and economically if our neighbours around the Mediterranean are doing better, so 16 per cent of our overall budget goes to MEDA and the Mediterranean, about 11 per cent to the Balkans, and only about 10 per cent to Asia, but would more money be going to Asia or would more money be going to Africa if we were not doing what we were doing in the Balkans and were not doing what we are doing in Russia and the NIS and around the Mediterranean? I do not believe it would. So what we are doing for reasons of stability in our neighbourhood, what we are doing in order to restore stability in the Balkans, for example, is not in that sense at the expense of helping poor people in other parts of the world. Of course, when you are helping in the Balkans or helping in Russia or helping particularly around the Mediterranean, there can also be a poverty focus for what you are doing, and we try to ensure that the principles of our development policy underpin everything we are doing. As far as comparing oranges with oranges is concerned, as far as comparing development policies pursued by Member States and by the European Commission on behalf of Member States, increasingly we are doing just as much as anybody else in terms of poverty focus and we have set ourselves, as you know, fairly demanding standards for doing more, but one should avoid making the conceptual mistake of believing that External Actions is only covering development policy in the same way as DFID covers it.

  221. From our point of view the difficulty is this: I have no doubt that much of the work you are doing in the Mediterranean, in Russia and the Balkans is all good stuff, but could you perhaps send the invoice for that to the Foreign Office rather than to DFID because our difficulty is all that good work comes off the DFID contribution and is top sliced from the DFID budget, so all that money for the UK contribution is money we cannot use elsewhere on bilateral programmes, and perhaps that is money which ought to come from the Foreign Office's budget rather than DFID's. I am not sure that is an internal machinery government issue for the UK government, but it just does seem rather unfair when you look at where you are taking the subscription from, so to speak?
  (Mr Patten) I think the Permanent Secretaries of the Treasury and the Foreign Office would be able to contribute best to that discussion! It is entirely a matter for the British government and not for us in the Commission, but can I just add a point which refers to your initial argument about Afghanistan? Yes, it is true that we have managed to find the money for Afghanistan by digging extremely deep in our pockets and by proposing to use a good deal of what is left in the margin—that is, money for a rainy day in our budgets year by year, but one of my main concerns since I have been in this job is, to use a cliché from modern politics, to be more transparent about what we are doing in order to oblige ministers and national bureaucracies to face up to the relationship between our political rhetoric and what we are able to do. We have started, for example, which had never happened before in the General Affairs Council, having discussions periodically on the relationship between what we spend and what the conclusions of Council meetings say. In Afghanistan, you read what Europe said month after month in the autumn about taking up a large share of responsibility for the reconstruction of Afghanistan: now we in the Commission are trying to put that into practice but there are consequences. The consequence is that, if you spend about the same amount as I think has been justified in previous substantial interventions, if you spend a large amount in Afghanistan on reconstruction, then the money will not be available for other things. Sooner or later, without busting the ceilings which were set down in Berlin and are chiselled into flint, not just stone, I think that the Parliament and others will have to look at the arguments for a flexibility instrument which enables us to deal with crises. Let me give you another example: since the beginning of 2000, we have spent about

400 million in the Palestinian territories. The money that we provided to the Palestinian Authority is all carefully watched over by the International Monetary Fund but, by and large, that has been to sustain some sort of services—educational, health and so on—in the Palestinian territories. Now I have to find that amount of money, by and large, out of the MEDA budget, out of about a billion that we spend in the Mediterranean, and if it is being spent in the Palestinian territories then it cannot be spent in other places.

Mr Robathan

  222. Could I say that I thought your explanation of the External Actions department priorities was absolutely right and it is a pity it is not more open sometimes because we have had the discussion here, as the Chairman has revealed, about why there is not such poverty reduction being focused on in EU aid. Going beyond that, if you go to the poor countries of south east Asia where there are EU programmes—not enormous ones but we have seen some of them quite recently—you were very disparaging about the programmes in the past. What is it, do you think, that having a separate EU programme in poor countries adds in terms of value to the existing national programmes that Britain, for instance, has?
  (Mr Patten) Can I , first of all, say on Asia that we have been spending about

400 million per year and will probably be spending in 2002 and future years about 450 million: that will be about 10 per cent of what we spend worldwide. We spend in Poland, an enlargement candidate, every year more than we spend in Asia and Latin America put together, and there are obviously strong arguments for that, but there is a political purpose for that which I think is unarguable. I do not think that there is necessarily a European value-added unless the purpose of the assistance has the objective of sustaining an identifiable European dimensions policy, or unless it attracts to an area or a country, because of some European connection, more than Member States might be prepared to provide themselves. Let me give you an example of the latter and then an example of the former. An example of the latter is East Timor. I doubt whether Europe's contributions in aggregate to East Timor would have been as great if there had not been a Commission, a Europe-wide, dimension to our assistance policies, because only one or two Member States would have felt as strong and as close political and economic ties. I think what we have done in East Timor, where we have committed about 116 million, off the top of my head—something like that—which has been about the biggest contribution anybody has made and I think it has been very important in the success of UNTAET[1] and very important in the success of building some sort of governance in a part of the world which was even poorer in per capita GNP terms than Irian Jaya. Looking elsewhere in Asia, at China, one of our biggest programmes in China is to help China, first of all, meet the obligations it has taken on as a member of the WTO and, secondly, address some of the obligations which it will have to face sooner or later as it and other developing countries are drawn into the whole Kyoto protocol process. The trade aspect of that work, I believe, is absolutely imperative, in both cases you are sustaining an identifiably European objective and a policy which is argued and discussed at the European level. So I think there are very often substantial justifications for European assistance on both grounds of increasing what would otherwise be available and also for sustaining Europe-wide policies or policies which are represented and reflected by Europe rather than by Member States. What would be the consequences of re-nationalising all our development assistance? The consequences would be to create a lot of confusion and difficulty in fields like trade. For example, I was talking earlier about our attempt to create a free-trade area around the Mediterranean, and most of the money that we put into MEDA is attempting to sustain that objective.

Mr Khabra

  223. Can I ask you a question with regard to how and when political objectives would take precedence over developmental objectives? How do you decide?
  (Mr Patten) Conceptually I find that quite a difficult question to address because I begin by believing that development assistance well-used not only meets a moral obligation and performs a development role but also a political role, and is also expedient. Helping a poor country to develop is likely to increase its political stability and is likely in due course to mean there is a larger market for our goods, so I think all these objectives come quite closely together, but I mentioned earlier that some of the things we do are plainly designed with a greater political than developmental purpose—for instance, what we are doing in the Balkans, even though that helps to develop countries, some of which are wretchedly poor. It is not development policy in the same sense that what we are doing in Uganda or Tanzania or Ghana is development policy. We do try to meet increasingly pretty tough benchmarks for our assistance. We are trying, as you know, in DAC 1 countries to meet a benchmark of spending at least 35 per cent of what we are doing on education and health: I think Poul Nielson gave you the figures for the number of countries which are LDCs which are among our largest beneficiaries of assistance. I hope that, as we improve the statistical information that we collect, we will be able to set ourselves even more rigorous and identifiable developmental targets and meet them, but we will not be meeting them in the programmes that we run in Russia or the Ukraine in the same way that we are meeting them with the EDF under the Cotonou agreement.


  224. But if you have got the Berlin ceilings which effectively are going to restrict the total amount of future money to be spent on development aid and you have the demands—understandable in some instances—in countries such as Poland and the Balkans for broader political reasons, what do you as a former minister with responsibility for ODA and now External Affairs Commissioner, see as being able to do collectively to help Africa because it seems to me that the needs of Africa are enormous: there is quite a lot of talk about helping Africa but there does not seem to be any sense, either from the UK, Europe, the United States or anywhere else, of any further resources being forthcoming for Africa. Do we help Africa the other way, by speeding up their access to agricultural markets in Europe? If someone said to you, "Look, here is a new millennium, and the one continent in the world which seems to be getting further and further away from the 2015 targets is Africa," what more can EU do to help Africa? What would it be?
  (Mr Patten) I have got no doubt that the biggest developmental challenges are in sub-Saharan Africa. Having spent five years of my life in Asia, returning to Africa where I spent quite a bit of time when I was a development minister is not wildly encouraging. When I was writing a book on Asia, I got interested in comparisons between developmental performance in Asia and in Africa, and to compare, for example, per capita GNP in the Congo and South Korea, over a period of 30 or 40 years is not to see a triumph for development economics in Africa—there in a country which has far more resources naturally than South Korea. There are all sorts of factors which come into account. Of course, Africa has to have more access to our markets: I think I am right in saying that exports from the whole of sub-Saharan Africa are smaller than exports each year from Malaysia, and the population differences are, of course, absolutely immense. Do I think that rich countries should give more to poor countries in general and Africa in particular? Yes, I do, provided it is to sustain good policies rather than bad. I do not think development assistance to support poor policies has anything to be said for it but I do think it is a paradox that, as we have lectured and hectored poor countries more and more about what they should be doing to improve governance, at the same time we have been reducing the amount of development assistance we provide them with which has fallen I think in terms of percentage GNP from about 0.48 when Lester Pearson wrote his report to about 0.22 on average today. There is a financing conference, as you know, which the UN have called for in Monterrey in March which will be part of the build-up to the conference in Johannesburg on sustainable development, and I hope that that conference will mark a step change in the rich world's view on the appropriate amount of development assistance for poor countries. I thought that the Chancellor of the Exchequer's speech in New York a few months ago was an extremely welcome one. I do think one needs the same sort of spirit that motivated martial aid after the war seen in relation to Africa. Whether that should be done by an increase in the Community's budget, the European Union's budget or whether it should be done by Member States increasing their contributions, I do not feel particularly strongly about. A problem, as you know, which affects what we can do in terms of allocating resources is that you cannot switch from the budget to the EDF because the EDF is not budgetised, and the reason why it is not budgetised is, I suspect, partly because some countries would not like to see that sort of switch in resources. Can I make two other points about which I feel strongly? First of all, I think it is terribly important that somebody in my sort of position is realistic. The European Commission is not a 16th Member State; we do not have our own taxpayers. We depend on what is provided by the taxpayers of fifteen Member States, and I have to be pretty realistic about what those Member States are going to provide for our budget. There is no point in me railing against what was decided in Berlin at the beginning of this financial period; that is the amount of money we have, which brings me to my second point. I think my responsibility is to see that it is spent as well as possible, and I do not think it was being spent as well as it could have been when we started in 1999, and I do think it will be spent a lot better by the end of 2004—indeed, I think it is spent a lot better today. But I think there is quite enough for me to do, for Poul Nielson to do and for others, in focusing on improving our performance rather than on arguing that we should have more. Given the amount we have, we have to rub political noses in what can be done with that and what cannot be.

Hugh Bayley

  225. It does seem to me, though, that, far from being held back by Member States as far as poverty focus and more support for Africa is concerned, the EU is lagging behind Member States. We are being given evidence that in 1989 70 per cent of EU aid was spent in low income countries and that by 1999 it had fallen to 51 per cent and the trend is still downwards. Given that the EU last year adopted a poverty focus as a key goal of EU development assistance, which everybody around this table would welcome, are you able to give us any indication of what the proportion might be by 2004 of EU aid spent in low income countries? Will it have increased? Can I also, in the short time available, ask you to say a little bit about activity-based budgeting and whether that will give us and other Member States the ability to see what proportion goes on spending?
  (Mr Patten) Yes, it will, and what I hope it will do, returning to my greengrocer analogy, is I hope it will enable us to better compare apples with apples rather than other fruit. The figures which you have given, I suspect, are accounted for principally by the fact that the proportion of what we spend externally has shifted substantially over that period. At the beginning what we spend under Lomé in, principally, African, Caribbean and Pacific countries was a very sizeable part of our overall external actions: in recent years we have taken on other responsibilities, not just around the Mediterranean but in Russia and the NIS and in the Balkans which have other than solely developmental purposes and have, therefore, shifted that balance.

  226. But over the next few years?
  (Mr Patten) Over the next few years what we are doing to meet specific policy alleviation objectives will be infinitely clearer because, for the first time, we will be collecting DAC compatible statistics and making them public and having to meet certain targets and objectives in order to persuade the Parliament to release funds to us. I think that is not the least important of the changes that we will be making, because until now we have not been able to identify clearly what is going to education, what is going to health, what is going to other things. If you look at our annual report, the first one we produced, it is pretty clear how much we still have to do.

  227. I agree, collecting DAC compatible statistics is the single most important thing you have to do but, if you look ahead to four years' time, do you think the proportion of EU spending on development assistance going to help poor people in poor countries will increase?
  (Mr Patten) Yes, unless the European Union takes on even larger responsibilities in relation to some of its middle-income neighbours. Let me explain though, statistically, why unless things change fundamentally over a run of years the figures should shift very substantially in favour of those—and I do not mean this in a pejorative sense—old-fashioned development objectives. What we spend in south east Europe under what is called the CARDS programme, if it is successful which I hope it is being, is bound to reduce very substantially. The CARDS programme should run out of justification as the countries that it covers become accession candidates for the European Union. They may then need the same sort of support that enlargement candidates have had in the last few years but that programme will, as it were, work itself out of business. That should be one of the objectives of programmes with our neighbours, though I have to say there is still rather further to go in countries like Moldova and the Ukraine than one might like.


  228. You have been very generous with your time and I think we will all have to see whether Monterrey is the step change that we all hope for. Thank you for explaining much more clearly the interrelationship between your Directorate General and others within the European Union structures, and thank you for giving us so much of your time this morning.
  (Mr Patten) Thank you.

1   United Nations Transitional Administration in East Timor. Back

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