UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 1672-iii

HOUSE OF COMMONS

ORAL EVIDENCE

TAKEN BEFORE THE

FOREIGN AFFAIRS COMMITTEE

BRITISH FOREIGN POLICY AND THE ‘ARAB SPRING’:

THE TRANSITION TO DEMOCRACY

TUESDAY 31 JANUARY 2012

RT HON LORD MALLOCH-BROWN KCMG PC

USE OF THE TRANSCRIPT

Oral Evidence

Taken before the Foreign Affairs Committee

on Tuesday 31 January 2012

Members present:

Richard Ottaway (Chair)

Mr Bob Ainsworth

Mr John Baron

Sir Menzies Campbell

Ann Clwyd

Mike Gapes

Andrew Rosindell

Mr Frank Roy

Rory Stewart

Examination of Witness

Witness: Rt Hon Lord Malloch-Brown KCMG PC, gave evidence.

Chair: I welcome members of the public to this third evidence session of the Committee’s inquiry into British foreign policy and the Arab Spring. I am very pleased to welcome Lord Mark Malloch-Brown, who is, of course, a former Foreign Office Minister and current chairman of Europe, Middle East and Africa at FTI Consulting. He has also had a distinguished career in a number of posts, very importantly, in the United Nations.

Lord Malloch-Brown, welcome. It is very good to see you here today.

Lord Malloch-Brown: Thank you.

Chair: Is there anything you would like to say by way of an opening remark, or shall I ask you the first question?

Lord Malloch-Brown: Please, let’s go straight to questions.

Q103 Chair: Could you start by giving us your opinion of what happened a year ago? Why did the revolutions happen?

Lord Malloch-Brown: I was lucky enough in 2002, as head of the United Nations Development Programme at the time, to commission and publish the Arab Human Development reports. Those reports have been raised in testimony to you already. As someone steeped in those reports, the one question one is left with is: why did it take so long? The pattern of inequalities-not just economic inequalities, but the marginalisation of women, the lack of secular education and the lack of any kind of adequate political participation-all seemed to amount to a time bomb. But I think, and it is relevant for what happens next, that it is now clear that that pattern of economic inequality had got considerably worse by the time of the Arab Spring, for two reasons.

First, these stultified economies were just not creating enough jobs for the youth boom entering the job market, a youth boom that had disproportionately high access to university education. There were a lot who were not terribly capable; nevertheless, a wide number of places were available, almost universally in the case of Egypt-if you sought them-but you fell off the cliff afterwards because there were no jobs.

The other contribution to that inequality was poorly considered privatisation in the late stages of these regimes. Coming under pressure from international financial institutions and the demand for liberalisation, they engaged in almost a fire sale of state assets. If you do that in a politically closed system where there are a handful of people who control the economic and political power, what nearly always happens is that that privileged elite acquires those assets. This contributed to the sense of deep unfairness and inequality in this society.

My final opening point is that many young Arabs had the opportunity to travel and to see for themselves very different kinds of countries-not just western countries, but Muslim countries such as Turkey, Indonesia or Malaysia. They saw that it did not have to be like this: that there are countries that allow a much higher degree of participation, and that are securing a much higher degree of economic growth. So I think these economic roots of inequality and marginalisation, which had been there for a while, had reached crisis point by the time the revolts broke out.

Q104 Chair: I slightly take issue with that. Certainly, I can see that there was serious poverty in Egypt. In Tunisia, where they are quite a bit better off, corruption seemed to be the main issue. And in Libya, it seemed to be just plain repulsion at the nature of the regime-and they were, indeed, quite well off. What is the ratio of international impacts to economic impacts?

Lord Malloch-Brown: That is a very good question. My thesis clearly does not cover Libya-there is no doubt about that. The African Development Bank is headquartered in Tunis-it should be in Abidjan, but it had to move because of the troubles in Côte d’Ivoire-and I heard its president say last week that one of the great surprises for him, thinking that he was moving to a stable, middle-income country when they evacuated Abidjan, was to see the astonishing level of youth unemployment and inequality in Tunisia. I think we all misread Tunisia. We saw it as authoritarian but stable with a relatively successful economic model, and it is, compared with Egypt; but it still has 30% youth unemployment, and indeed had it over the course of 2011. Perhaps they were less extreme, but still these economic issues were there. I think that is why the tragic story of the street seller who set himself on fire was such an emotive spark. That marginalisation and bullying by the petty officials of the state was very much what people felt in their everyday lives in Tunisia.

Libya was much more, if you like-this is not to diminish an extraordinarily brave revolt-a copycat event. There was a sense that, "If we are ever to do it against this appalling leader, now is the time to gather our courage and do it." I think that al-Jazeera, the social media and all of that, which allowed what was going on in Egypt and Tunisia to be clearly seen by people in Libya, provoked them finally to stand up to an absolutely ruthless leader who chucked anybody who spoke independently, let alone acted independently, in jail. So they needed the electronic solidarity of seeing what was happening in Tahrir Square to gather the courage to come out in these numbers to do it themselves in Libya.

Q105 Sir Menzies Campbell: Would you agree with the thesis that the reason why we misread individual countries was that our policy sought to deal with the Middle East as if it was some kind of integrated whole? We did not distinguish between one country and another, and if we had, perhaps we would have been more conscious of the eventually seismic changes that were taking place.

Lord Malloch-Brown: That is a very good, thoughtful question. It is definitely partly true. We have been guilty, although not as guilty as some, of seeing the Middle East through the lens of several big conflicts: Israel-Israelis, Palestinians-Iraq. It is a great failing in a country that traditionally had the most astute analytical understanding.

Q106 Sir Menzies Campbell: We were the Arabists, were we not?

Lord Malloch-Brown: Yes, we were the Arabists, but we had lost that touch and feel. I did not travel heavily in the region when I was a Foreign Office Minister, not as heavily as I had in my UN days. However, although the British ambassadors I met in the region were still of a very high calibre, they had much smaller political teams per country than in the past. In that sense, it is correct to say that they could not dig down deep enough; and anyway, they had a client in London-Whitehall and No. 10-which, through a series of Governments, was only interested in the big-picture conflicts, not this important nuance at the individual country level.

Q107 Sir Menzies Campbell: Would part of that be, if not expressly, then at least by implication, a policy that was based on two things: stability and availability of energy resources, particularly oil? Do you think it a legitimate observation that we saw political stability and the free access to oil-free in the sense of available; not costing nothing-as being of such importance that we were willing to subordinate issues of human rights, unemployment, lack of economic opportunity and corruption? Do you think we subordinated these issues, which have come to the fore now, because of the belief that stability and oil were more important?

Lord Malloch-Brown: I think the answer is yes, but with qualifications. Going back to the Arab Human Development reports that I was so involved in, a message of those reports, which had been written by Arab authors, was that when change comes in the region, it must be "at the hands of us Arabs". In that sense I don’t think we should be whipping ourselves too severely for dealing with the regimes that were in place. Where there is a margin of legitimate reflection and self-criticism is: okay, these were the Governments we had to deal with, but could we have done more to stimulate the emergence of the civil society? Could we have done more in our engagement with them to make clear our concerns and objections about their performance on human rights?

As someone who was at the UN at the time, I believe that a critical turning point in all of this was 9/11. The premium we placed on counter-terrorism after 9/11 gave a tremendous licence to Governments in the region to say, "We’re also mainstreaming the fight on terrorism; don’t criticise us on human rights." Sitting at the UN, we saw the west falling away from being a friend of human rights reform and civil society development in the region from 9/11 onwards. Obviously, Iraq was a further step change in that.

The energy point is a reminder that foreign policy is always a combination of values and national interest, and that to this day, the question of the security of energy supplies leads to an ambiguous foreign policy towards the region. There is not as much consistency as many would like between how we treat Saudi Arabia and other Gulf states, and how we have handled Egypt or Tunisia. That is a fact of life that we struggle with all the time in foreign policy, but it would be very unfair to criticise the Foreign Office or the Secretary of State for not having a single gold standard. That is hard to achieve in today’s complex Middle East.

Q108 Sir Menzies Campbell: Can I explore briefly the reference you made to the Middle East peace process, or perhaps more correctly the lack of a Middle East peace process? Egypt and Jordan, of course, were the two countries that signed up to a peace treaty with Israel, and both of them pretty well adhered to the terms of that. Do you think that our attitude towards Egypt may have been conditioned to some extent by the fact that it had entered into that agreement and appeared to be willing to abide by it, when elsewhere in the region, people like Ahmadinejad were talking about how Israel must be destroyed?

Lord Malloch-Brown: I think so. In a sense, to the extent that our foreign policy in the region was also related to that of the United States, the US even more explicitly endorsed Egypt in this way and did it no favours by the massive fixed formula of aid provision, both economic and military, in the years after that peace agreement. That was probably the single subsidy that limited and deferred necessary economic reforms for as long as it did. So, yes, I think Mubarak was broadly seen in Washington and Whitehall as-to remake more politely the Lyndon Johnson phrase-a strong man, but our strong man.

Sir Menzies Campbell: And inside the tent.

Lord Malloch-Brown: And inside the tent. Subsequently, of course, that obviously led to much angst in Washington, particularly about deserting him at the time of Tahrir Square. I think both the US and the UK made absolutely the right decision to switch sides, if you like, to put it crudely. Both did it quite adeptly, even though they have not been able to escape the history of the past. But I think the future advantage for Israel is that while it will have a much bumpier relationship with Egypt, it will be a more honest relationship. Fundamentally, for Israel as a small country in a neighbourhood that still harbours a lot of ill will towards it, honest relationships will be a better long-term strategy than the kind of propped-up relationship that it had with Mubarak.

Q109 Mr Baron: Lord Malloch-Brown, I agree with you that we shouldn’t be whipping ourselves about this, but I think you would agree that the Prime Minister made quite an important speech to the Kuwaiti Parliament in February last year. In effect, he admitted that we had at times got the balance wrong between interests and values. We tended, perhaps, to sacrifice what was right in order to achieve stability, given the interests we had in the region. To what extent did we get the balance wrong? Can I press you on that a little bit more? I sense you are defending the FCO, and one can understand that, but there is no doubt that there are things we did get wrong. I would be interested in your views.

Lord Malloch-Brown: I certainly do not mean to defend them too much.

Sir Menzies Campbell: Self-defence.

Lord Malloch-Brown: Well, I wasn’t the Minister for the Middle East.

I would say two things. Yes, ultimately, the balance was wrong, but my point is that, anyway, the impetus for change was always going to come from within these societies and not from our external pressure. We should self-critique ourselves, in that we could have done better, managed more balanced relationships or pressed for change, but we should not go on from that to say that, if Britain had broken earlier with Mubarak and Tunisia, the regime change would have come sooner. That overstates our influence. For our own health as a democracy wanting a big values component of our foreign policy, we should be self-critical and say, "We could have done better", but my point is slightly separate: even if we had done better, I don’t think it would have brought forward the time when change would have happened.

That said, we did go along with some particularly egregious things, like the EU-Mediterranean strategy, which celebrated Mubarak and others long after that stuff should have been handled much more austerely than it was. So, yes, we were a little bit in love with these authoritarian leaders. As I say, for me, the reasons for that were the closeness of the alignment of our foreign policy with that of Washington, the aftermath of 9/11 and failing to understand that change would come, because we failed to understand the extent of inequality. There was a complacency and a lack of self-questioning in the policy, which meant that it was less than it should have been. I’m sorry, but I want to be clear about that.

Q110 Mr Baron: One further question, if I may. Without getting too righteous about this, do you still think that we are committing errors now? If you look at our inconsistency-you referred briefly to there still being an inconsistency in our approach-such as intervening in Libya but not in Yemen or Bahrain, where similar atrocities were being committed, it seems as though interests are taking pole position rather than values, but correct me if I am wrong.

Lord Malloch-Brown: I think that is right. Once you do it in Libya, you certainly expose yourself in the region to the charge of double standards. That discussion is very alive in the region, both from those who oppose Libya and those who think, "You did Libya, do Syria as well." The answer of the Prime Minister and this Government, which is an answer that Tony Blair also used to use and was in his Chicago speech, is that, if there are conditions for intervention because of the abuse of people and the risk they are at at the hands of their own Government, the final condition for intervention must be, "Can we realistically do it?" and "Are we willing to do it?" In other words, at a certain point there has got to be convergence of the national interest and the values.

I find that a difficult balance to accept, ultimately. The multilateralist in me believes that the doctrine of responsibility to protect must be a legally bound doctrine and it is not on the menu to choose it or not. You buy into the menu, that the responsibility to protect requires the protection of civilians from atrocities by their own Governments if they are on a large enough scale, or you don’t. I am troubled by the double standards.

Again, where I give Whitehall and this Government a little bit of an out, is that I am not at all sure that British military intervention, through NATO or the UN Security Council, in Bahrain, let alone Syria, would help solve the problem. There are huge practical and political difficulties to doing it, particularly in Syria.

Q111 Mike Gapes: Can I take you back to your remarks about Israel and Egypt? The Muslim Brotherhood political platform and statements made imply that they are going to hold a referendum to put the Israel-Egypt treaty to the public. Do you share my concerns that that might actually lead to a serious unravelling of that agreement and there are other issues about potential migration of people into Sinai as well, which could lead to a breakdown of the cold peace that we have had for those decades?

Lord Malloch-Brown: All tactics are on the table. I can certainly see such a referendum happening. I hope they won’t distract themselves from the much more important business of rebuilding Egypt. It is not completely outside the realms of possibility. What I am putting my faith in is the fundamental need for an Egyptian Government devoted to creating jobs, development and growth for its own citizens, recognising that destabilising its relationship with Israel would hurt itself as much as Israel. I think it was reflected in Tahrir Square, where there was almost no talk of Israel at all. This was about domestic inequality and poverty. As long as the new Government respects that that is what it has been elected to achieve, it will chew away at the Israel relationship and will not be as easy a partner as the last Government, the Mubarak regime, but I don’t think it will throw away the whole peace.

Q112 Mike Gapes: But the Tahrir Square demonstrations were then. Since then the dynamics in Egypt have very much changed. The Muslim Brotherhood were not in the lead in that but now they are the dominant force in the new Parliament, so clearly things have moved in the last year. All revolutions have a process and the people at the end of the French revolution were very different from the people who started it.

Lord Malloch-Brown: You are completely right. The attack on the Israeli embassy and the dramatic evacuation of the ambassador and his staff shows that the trend is not good at the moment. The point is where does it end up? Does it end up with some anti-Israeli rhetoric, some pressure on Israel to complete a peace agreement with the Palestinians, or does it go the whole hog to completely dismantling any kind of peaceful co-existence with Israel? I just think that a Government that gave in to its hotheads and went that last step would condemn itself and its people to economic disruption, no growth, more unemployment, more internal instability at home. I think Israel will find itself with a much more uncomfortable neighbour that will press for peace, but not a neighbour that will hurtle itself and Israel over the edge into new conflict.

Q113 Mr Ainsworth: Mark, I want to take you back to the emphasis you made at the beginning about jobs, inequality and the economy. If that was the overriding fundamental, what chance is there? What is the hope to look forward to? The world’s economy is in a pretty appalling state at the moment. Is there any chance for successful transition to democracy and what role will democracy play in these countries?

Lord Malloch-Brown: Thank you very much for bringing us back to that, Bob. If my analysis is right or partly right that there was this strong economic root to it, then it would be good sense to keep an eye on that and to do all you could to assuage it and address it. For several reasons that is really not happening. I ran into a colleague of all of ours in the underground as I was coming out of Westminster and told him what I was doing and he said, "Have you seen the ads for Egyptian tourism are back up? I bet you can get great cut-price holidays at the moment." Tourism is such an important sector; it has been dead, really. The investment scene is completely flat, but most critically the large amounts of international public assistance promised in the early days have frankly not gotten there. There are several reasons for that. The one that we are most aware of is that western countries are really kind of tight for funds at the moment.

The west, in this perverse situation, is not providing the one thing it should-money-and is providing a lot of what it shouldn’t, which is free advice and what is interpreted in the region as-

Mr Ainsworth: Meddling.

Lord Malloch-Brown: Yes, meddling.

I think the DFID fund has been very good: the £110 million partnership fund sounds as though it has done very well. The British Council is clearly having a good Arab Spring by all accounts, but the big players are really disappointing. The EU is disappointing, because it is quite unable to assert itself as the real strategic partner of economic and political change in the way it did in central and eastern Europe. The combination of major funds with the big carrot of, "If you guys reform you can join the European Union", is completely missing. The one big funding source we have as Europeans is missing in action in any sort of evident way.

The World Bank and the IMF have difficulties of their own. There is a massive backlash against both because of their involvement with the last regimes, particularly in Egypt. I think I am correct in saying that, until this point, there is no World Bank lending: it has been rejected despite being offered and that is probably not helped by a very senior former Egyptian Minister being one of the top three deputies at the World Bank now. I think this has really furthered the sense that the World Bank was completely in bed with the previous regime. It is doing a bit better in Tunisia, obviously.

The IMF, which was initially also rejected in Egypt is, as at so many times at the moment, showing a much savvier political touch than its sister across 19th street in Washington, and it is now in negotiations at the invitation of Egypt for a major loan-cum-standby facility, which will give Egypt some relief and is very important. What has been missing in all this is international lenders, including suggestions like the European Bank for Reconstruction and Development, who have been assiduous in trying to work up a programme in these countries, coming together under the kind of neutral chairmanship that says, "Fixing the economies of these regions is the key to their long-term democracy and political stability". It needs a massive effort, which is the turning of the page and the chapter from the past, a new funding arrangement, accountable and responsible to the demands and priorities of the new leaders of these countries-a fresh start, in other words.

We have just not seen that kind of political energy. We have seen each institution try and re-jig its old programme for new leaders, but we have not seen-I always hate to use this term, because it is as inaccurate as it is an accurate parallel-a kind of Marshall Plan for the region, which has real local leadership to it, which we need. It can be largely loan in character, because these are not, with the exceptions of Yemen and, in a way, Egypt, poor countries. It can be a loan-based approach, and it can focus around the issues that are such a priority, which are small and medium-sized enterprise development, improving infrastructure and supporting the removal of subsidies from critical issues like bread and fuel. This can be a very modern, forward-looking, market-oriented, economic programme, but it is missing, and without it you have to wonder about the sustainable future of the democratic movement in these countries.

Q114 Mr Ainsworth: Let us pursue that, because it is important. How realistic is it to start talking about a Marshall Plan? We know that there are current problems, and even without them, we cannot suggest that the European Union could be the sort of magnet for the Arab Middle East that it was for the east European countries, to which we were offering full membership and brotherhood. We have turned our back on Turkey. We are hardly going to accept Egypt. No matter how wonderful that might be, which is wishful thinking, do we not need to put our rhetoric where our actions are, and just accept that many of the solutions will have to come from within the region because we simply do not have the will?

Lord Malloch-Brown: In a way, that’s why I reluctantly used the term "Marshall plan". It was so much an American-driven thing for war-destroyed allies in Europe. Whatever this is, it must be primarily locally owned and driven. It needs the Saudis and the Gulf countries to be not just add-ons, but to take the leadership in driving it. The funds that they have committed have not gone in either, as I should have made clear before, nor did I mean that the solution available to Europe after 1989 of promising membership is a carrot that is available now. It is evidently not. It would be absurd, and would be rejected anyway. Young Egyptians did not do what they did to become part of Europe, so you are perfectly right, Bob. But you must construct an alternative set of investments and incentives that appeal to them, and where Europe recognises this is its immediate neighbourhood. This is meant to be all the things that Europe claims it is supposed to be good at. Its own neighbourhood, and soft power, not military power projection, is what is needed, but is missing in action.

What I see is Arab leaders, Europe, EBRD, all of them backed by the World Bank and the IMF, but the latter not in a leadership role, coming up with a regional initiative that has all the bells and whistles on it as the economic plan to underwrite this region. The key thing about it is that even in an age of global recession and austerity, these will be loans not grants. There are ways of doing it that, particularly because there are the big stakeholders of the Gulf countries and Saudi Arabia, can make it affordable: this is not huge cheque-writing for western Governments. This is a matter of economic statesmanship and vision, and finding leaders in the region who will lead on this.

Q115 Mr Ainsworth: You said that the mindset post-9/11 and the relationship with America restricted our thinking with regard to some of these regimes, which probably added to the problems, but you also said that we had made the economic situation worse and that the international positions had made the situation worse in many of these countries. We were champions of globalisation, and that had political consensus in this country. Was that not every bit as big as the mindset post-9/11? What role do you think that played?

Lord Malloch-Brown: As someone who remains, as an individual, a champion of globalisation it perhaps won’t surprise you when I say that I think that the copycat effect that we talked about vis-à-vis Libya-a key secondary reason for the Arab spring-was indeed the sense of a region just stuck in the past, stagnating economically, politically and culturally, and not part of this exciting vibrant world that young Arab postgrads going abroad to study saw. I still believe that globalisation is not owned just by bankers and the Davos elite, and that it can be a hugely powerful force for change and triggering global citizenship and solidarity. The problem is that we have allowed it to be captured by financial elites, if you like, and that is seen in the Arab streets. If you were to ask people, "Are you supporters of globalisation?", I am sure they would give it a big thumbs down, even though in some ways, not only has it given them access to a world beyond their own shores, but the social media and other tools of revolt that they used are all creatures of globalisation in a very real way.

Unbalanced globalisation is a huge contributor today to global inequality. Inequality in the Arab world was long-term, structural and local, rather than driven by global change. This was a revolt about their failure to be integrated into the global economy, rather than the consequences of being integrated.

Q116 Ann Clwyd: You are now chair of a very large country group, FTI Consulting-I don’t know what FTI stands for, do you?

Lord Malloch-Brown: No, I’m not sure I do either, but I could tell you-

Q117 Ann Clwyd: If we can go back to predictions, I just wondered whether the analysts there were any better at predicting the Arab revolutions than the Foreign Office.

Lord Malloch-Brown: I’ve been busy hiring some ex-colleagues from the Foreign Office and other parts of the Government to see whether we can improve our predictive powers in future. I still think that they are not bad, but where I have built a team at my new company, it includes ex-Government people together with ex-investigative journalists and ex-NGO people. I think that all three perspectives are critical to building the right predictive insights and models of what is going on.

Whereas the world of Whitehall was fairly blind to the imminence of change, if you talked to civil society types in Egypt in 2010, they were telling you that things were getting close to blowing point, and it was the same with good, astute investigative journalists. The latter are important because one point that was raised earlier in this Committee, but goes wider than this particular issue, is corruption. I believe that corruption is particularly focused on in countries that have high levels of inequality because it becomes for people a particularly evocative expression of the unfairness of the society. In truth, however, corruption is ripping across the world at rates that we have not seen in quite a long time. There has been a sort of benign view that there was corruption in the communist system, and that when that system ended the state economic links began to be sundered. Then, in the development world, as countries get to be middle income and have broader middle classes and more pluralistic decision making, and roll back stupid Government regulations that are excuses for bribes, the sense is that the world is somehow growing out of corruption.

One and a half years into my new private sector life, I must come back to my former colleagues and say: "not true." Corruption is everywhere and is linked to the enormous strategic importance that resources at their broadest have in this modern global economy. It is not just about energy and mining, but even things such as commercial land in the booming new cities of the non-western world-Moscow, for example, but equally cities in Africa or south Asia and China. We are entering an age where there is corruption that has been below the radar screen and not picked up as thoroughly as it should have been by Governments, or even by many of the NGOs in the anti-corruption sector. I think to the extent that corruption was a feature in revolts in the Arab Spring, we are going to see it be a feature in revolts in many more countries over the coming years.

Q118 Ann Clwyd: Would you say that any other states have done better than the FCO in establishing good relations with the new regimes? Are there any that are doing particularly well compared to us?

Lord Malloch-Brown: Gloriously, the FCO’s civil society involvement, or more informal involvement, in Egypt came around its different programmes to support moderate Islamic development, if I can put it that way, which did give the FCO, by promoting academics and scholarship, access into university campuses in Egypt, and certain other groups, which I have no doubt have been a spearhead of re-engagement after the revolt; but I think Britain, frankly, suffers from its perceived closeness in the middle east to the US policies. I think its position on the Palestinian statehood request will have been widely noticed in the region.

I think the UK long since ceased the sort of Arab camel train UK foreign policy. To the extent that it has been seen as very closely linked to that of the US in the region there are many who are in a much better strategic position than the UK, at this stage-not just France, which is a very close ally and tends to act as one with us in that world now, but Nordic countries. Obviously Turkey is the absolute favoured country of the region, despite its own colonial past there. I think there are plenty of countries, which have had less history with the old regimes and therefore have been able to turn the page more effectively than we have.

Q119 Ann Clwyd: Do you think that the Foreign Office needs to re-evaluate its whole approach to the region?

Lord Malloch-Brown: Look, the Foreign Office-I think from testimony you have received you will have seen its version of this-in a way which is a remarkable thing about it as an institution, scrambled to broaden its team. Some astonishing number of the whole of the Foreign Office were working on the Arab spring at one point, so it was very adept in a Whitehall mandarin way at pulling people together to address this, but in terms of the strategy going forward, yes, it has not escaped its past in the region. It is doing bits and pieces to re-engage. It has played a pretty deft tactical hand over the past year, but there is a need for a back-to-basics strategic review of how we write our policy for the future.

Q120 Ann Clwyd: You are critical of the EU. What should the EU be doing?

Lord Malloch-Brown: I think the EU needs to do something similar. I think the EU problem is, first, that this isn’t eastern Europe, so obviously it does not have the same carrots to offer; but, secondly, if ever there was somewhere where the EU could line up the 27 members behind a coherent approach, surely it is this. In my view there is not much evidence that it has, and that it is therefore able to show leadership. The blame for that is partly the Brussels system and the external affairs apparatus; but it is also the member states. As an old UN man I am always first to point the finger at the member state for failures on these occasions.

Q121 Rory Stewart: Mark, you have very convincingly argued that we could have done more to have a full strategy for the middle east-could have had more detailed, nuanced political information on the ground. Presumably, a lot of the challenge is institutional. We live in a world where the Foreign Office has to do much more multilateral English-language-medium work, and where the emphasis in Whitehall is much more on management skills and those sorts of competencies. Less and less of diplomats’ time and less and less of their careers are orientated around that kind of political reporting. Is there anything you can see in terms of institutional reform that would put the Foreign Office in a better position in the future to provide the kinds of things that you are looking for?

Lord Malloch-Brown: Rory, thank you. That is a rich area to reflect on. As I said earlier, I think a series of Prime Ministers who have reduced foreign policy to a fief of No. 10 has in a sense vulgarised and simplified the width of foreign policy analysis that the Foreign Office engages in. It is not peculiar to the British system; this has been happening across a lot of Governments. If you were to ask in Washington, people would say that you have seen a steady consolidation. Sarkozy-whether you work at the State Department, the Quai d’Orsay or the FCO, this sense that a combination of modern communications and celebrity diplomacy makes the Head of Government the principal conduit, together with CNN, for modern diplomacy, has had this marginalising effect on officials. It evidently dumbs down the agenda to what the Prime Minister wants to focus on. In the middle east that was Iraq, terrorism and Israel-Palestine, but it was not these other things. I think it starts at the top, and the National Security Council is a welcome innovation to-I hope-address that. Having a very strong Foreign Secretary is also very good news, although there were lots of very strong Foreign Secretaries under the Prime Ministers with whom this tendency happened.

The second issue is the nature of modern diplomacy. If you have a vision that political and social change in countries is no longer the old business of coups within elites-it is either democracy and what is bubbling up down there, or it is the street pressing for democracy-that means that the answers to where change is going to come from no longer lie in diplomatic cocktail parties or your counterparts in foreign Ministries. There is a huge need for our diplomats to get out and about. One of the most impressive young diplomats I know spent a year or so on the Congo border in the Kivus for the Foreign Office. We now have diplomats down in South Sudan, as it is now a country. The more we can get people to those places and get them to understand that their analytical points of entry are not just fellow Government types but this broader array of actors who are so key to change, the more we will start seeing them doing better.

The third point is that increasingly foreign policy, even at the governmental level, is not just the preserve of the Foreign Office. DFID is hugely important, MOD is hugely important and BIS is hugely important. You look at a modern embassy and sometimes the Foreign Office people are the minority in it. Somehow, in a cross-Whitehall way we are capturing the analytical understanding, and that is important. To the extent that a lot of it is economics, what the BIS or Treasury people think about what is happening in the private sector of Egypt would have been critical to reporting on how that country was going to do. Similarly with what DFID thought about what it was seeing at the grass-roots levels of its projects. There has got to be a much more coherent breaking down of the boundaries between different Departments.

Accepting all of that, there are two major worries. One is languages. Whatever they tell you, Foreign Office languages are in crisis. The kind of diplomacy that I am talking about needs more, not fewer, languages. You are talking to people who do not have English as a language. If you are out in the Kivus or elsewhere, those languages are not there. Even with a mainstream language such as Arabic, the cutbacks that have occurred are key. This strange decision of the Foreign Office, which I view as highly politically correct, to make languages not a requirement for recruitment any more is a flipdown; Oxbridge and other universities have cut the language requirement as they do not want to discriminate against schools where those languages are not available. That has accumulated upwards to a Foreign Office without enough languages. Instead, it now tests for language skills, but that means that people have to take long periods off to acquire those languages, particularly the more difficult ones. That is not always consistent with a career track that is increasingly about Brussels, Washington, New York, and not about going and earning your spurs through being an Arab language expert in the Middle East region. We have the incentives and the recruitment wrong, and that was exposed by what happened in the Arab Spring, or our failure to see it.

Q122 Rory Stewart: The structural change that you propose is a very exciting one, but it is a very difficult one because it is something that we have failed to do over more than a decade. In order to achieve it, you would need to change the core competency criteria for promotion and the way that diplomats were posted. You would need to take away the diplomat’s choice of which postings they bid for. You would need to invest much more in embassies in the Middle East and north Africa. You would need to increase the political representation. Why has that not happened and what would one need to do to make sure that that happened in the future?

Chair: May I interrupt? Tempting as that may be, we are on the Arab Spring here, so could you answer that question in context?

Lord Malloch-Brown: Thank you. Chairman. I apologise for the courage of this typical insurgent, Rory, for going off on a sideline. In a way, the Arab Spring, if you accept the economic component of what I have described, is a perfect laboratory and testing ground for a cross-government approach. If you could make it work there, it should be a huge example of best practice which you could then import into the rest of government. This is something that politicians have to make work. Just as I saw in my UN career, I saw it equally strongly during my time as a Minister here. Civil servants are wonderful in so many ways, but telling them to merge their activities with the tribe next door is an almost impossible thing and they will not do it left to themselves. We saw it with the Afghan operation. There has to be political leadership of a really hands-on kind if you want to build that new integrated service.

Q123 Sir Menzies Campbell: In the coalition, we have some experience of the efforts to merge political tribes together, which has not always been straightforward. You used a very interesting word a little earlier. You talked about foreign policy being vulgarised. I guess that you were using that the original term rather than the colloquial term. By that, I understand that what you say is that foreign policy is less a result of analysis, reasoning and conclusion, and more about-I think that you used the illustration of CNN-the headline. With that in the back of your mind, can you think of any possible advantage that the United Kingdom derived from its attitude towards United Nations’ limited membership for Palestine?

Lord Malloch-Brown: Of any advantage?

Q124 Sir Menzies Campbell: Yes, can you think of any advantage which accrued as a result of that? Indeed, you referred to some disadvantages, too.

Lord Malloch-Brown: Well, look, I think first it is not in the interest of the world, the Arab region or the UK that the peace process is stalled in the way it is and the clearest shot in the arm to revive it was, in my view, that Palestinian vote, strangely. It wasn’t a policy that you’d have chosen ideally and it had, like everything that happens in that region, its cons as well as its pros. But here was the moderate side of the Palestinian political system, saying, "In order to put pressure on Israel and to reinforce our position as moderates who believe in negotiation versus hard-line confrontation, this is what we believe it takes to kind of right that balance." I think it was correct. I think the extent to which the UK is attached to what is now an utterly becalmed US foreign policy on this is very disappointing.

If I add a criticism of my own time in government-as I say, I was not Middle East Minister but would have loved to have been-I felt that for Britain then, in the tail-end of one American Administration before a new President was elected, there was a space where we could have been much more active in the Middle East, and as a consequence repositioned ourselves as a more balanced partner to both sides-to Israel and to the Palestinians and their allies. We missed that opportunity. The events around the September vote on Palestinian membership and the activism, not just of our Government but of Tony Blair as Quartet envoy, contributed to a view that the UK was on one side only of this argument.

Q125 Sir Menzies Campbell: Do I take it, then, that you would adhere to the conventional wisdom that, in the period of an American presidential election-this is an issue that no one is willing to approach-from the point of view of moving on the peace process, the becalming that you described is likely to subsist for some time?

Lord Malloch-Brown: Well, the problem with conventional wisdom as to when American presidents can deal with the Middle East or not is that we’re rapidly discovering that there’s no time, because the old theory was you got to it late in your presidential term when you’d been re-elected for the last time and had the capital to do it, à la Clinton or Carter, and then the view was, no, under Obama, you got to it early-I should add Bush Junior to that list who got to it late-as Bush Senior had tried to. He gets it handed to him and it’s now a problem for him in his re-election.

I’ve arrived at a slightly different position, Ming, which is that actually I’m not sure there’s ever a right moment for America to lead on this. America is critical to a final agreement and, you know, must be involved in whatever happens, but again I would look to Europe in partnership with moderate regimes in the region to be much more forthcoming about leading on this rather than say an American election is a period when in close co-ordination with the Americans we do nothing to embarrass the Administration. We should be laying the groundwork for a new go at this, and that is not happening.

Q126 Mr Roy: Can I turn this subject to economic and political assistance? It’s a hard time for everyone and everyone has to spend their money wisely, but the money that we intend to spend in these Arab countries-where best should it be spent in relation to political reform?

Lord Malloch-Brown: On the political reform side, western NGOs and democracy-building groups had a rough ride, particularly in Egypt. Most notably, the American ones are somehow seen as instruments of an American effort to subvert the course of the revolt. That is an extremely unfair characterisation, but given the history, you can understand why there is this level of suspicion about these groups. It has led the new Government to crack down on NGOs, their registration and their independence much more than happened under President Mubarak, which is a reflection of this sensitivity.

My view is that the best we can do is to steer away from overtly political education toward much more in the way of civil society development activities, which are viewed as less contentious, less political and less meddling. We should also recognise that a successful economic strategy of the kind I have described has a huge knock-on effect on the politics, because it starts to create jobs and a little bit of spending power in people’s pockets, and therefore totally transforms the political context from one of despair and anger to-dare one say it?-some first green shoots of optimism about the future.

Q127 Mr Roy: Are you therefore saying that it is really a monetary gift, as opposed to a gift in kind?

Lord Malloch-Brown: I am. Groups such as the Westminster Foundation for Democracy should do what they can, but their support is viewed with great suspicion and caution and therefore has limited impact, whereas the British Council, and support through DFID for building economic and social institutions in civil society, steers away from the highly political and therefore seems much more acceptable to people in the region.

Q128 Mike Gapes: I would like to take you a bit further on that point. I understand that the FCO is planning to spend only £10 million in 2012, which is absolute peanuts compared with what the Americans spend, or compared with the money spent through the European Neighbourhood Policy-we are talking about billions of euros-in the Middle East and North Africa. In a sense, isn’t there a much more fundamental question here? We might be making ourselves look good by saying that we are helping with the Arab Spring and political and social development, but the reality is that what we are doing bilaterally is limited, and the most important thing is what is done by the EU-you touched on that earlier-and the international institutions.

Lord Malloch-Brown: Just one query on the number: is that FCO, or FCO plus DFID?

Mike Gapes: It’s the FCO saying that that’s the contribution to the Arab Partnership Fund.

Lord Malloch-Brown: That’s its contribution?

Mike Gapes: Yes.

Lord Malloch-Brown: DFID is, I think, putting in significantly more. For the accuracy of the record, the DFID fund as a whole is, I think, £110 million, although I don’t know what the spending period is. However, that in no way takes away from your point, Mike, which is surely completely correct, that the bilateral money is very modest. Even DFID characterises most of these countries as middle-income countries, or not the countries where it concentrates its resources. We need to focus on using our leadership and leverage of EU, World Bank, IMF and EBRD funds. The barrier to much of that is lack of strategy and acceptability, because they haven’t been put in a new, dynamically Arab-led framework. That is just the kind of thing that British multilateral diplomats are very good at conjuring up, and they would do well to work the corridors of Brussels, Washington and New York to create such a fund. They would probably do more there than with their modest amounts of money on the ground in Cairo.

Q129 Mike Gapes: The previous European Neighbourhood Policy, which was launched to assist the region, was initially going to be €11.5 billion for the 2007-13 period. Then it was relaunched last year, and it was said that a further €1.24 billion would be put in. You were critical earlier, but you’re not the only critic of the way in which this policy works. Even the Prime Minister made some very critical remarks about a year ago about the way in which European funds had been spent, and insisted at that point that there should be greater conditionality. May I put it to you, the Prime Minister and all the other critics that it seems a bit perverse that we adopt a non-conditional policy towards autocratic, authoritarian, repressive regimes, but as soon as there is a transition to a political process with more pluralism, things start becoming much more conditional?

Lord Malloch-Brown: I would not be on the track of more conditionality; I would be more strategic. European funds have grown into a huge amount by volume. They are right up there as one of the global big feet of the development scene, yet, because of all sorts of historical problems-the fact there are 27 cooks in the kitchen and goodness knows what-they have not had the quality of management, strategy and evaluation of results that you would see in, say, a DFID, a World Bank or a UNDP. They have somehow escaped that kind of scrutiny and internal capacity building. I’m talking about a really able cadre of experienced development people to manage the funds of the kind that you have at the World Bank.

Q130 Mike Gapes: Can I be clear? You’re saying that the European Union’s decision-taken last year, when it relaunched these programmes-to have much greater conditionality is wrong.

Lord Malloch-Brown: Yes-well, let me correct that. I would perhaps like to come back to you, having read about the conditionality, to make sure that we’re thinking of the same thing. To me, the issue is much more about this: EU funds are pulled out by 27 countries, which all have their own priorities and things they think should be done in a region such as this, and they are so conservative with a small c about disbursement, for fear of the kind of audit difficulties they have had in the past. This massive amount of money could have a huge strategic impact and change the whole direction of the region, if applied right and used to mobilise money from the Gulf and other sources. Instead, it is the sum of 1,000 little projects, dribbling out in small amounts, which does not have the change impact that a fund of this size could have.

Q131 Mike Gapes: You have UN experience of many years in dealing with those kinds of areas. How can we make the G8 institutions, the EU institutions, the UN and all the international programmes work more effectively, avoiding unnecessary duplication or bureaucracy? There is a real dilemma in the way we deal with these programmes. Given your experience, how can we take that forward?

Lord Malloch-Brown: The short answer-in deference to the Chairman and the topic of the Arab Spring-is that the G20 is an attempt to do things better than the G8, through its inclusiveness. It’s starting to get more into the development area. The forthcoming Mexican chair is trying to do a lot in this space. Within the old G8, there are countries such as the US and the UK particularly that are learning how to co-ordinate their activities more effectively. I was in a meeting last week with both Andrew Mitchell and his American counterpart to talk about the food security initiative that the Americans want to launch at the G8 summit. There is a lot more work on this than in the past, but there is always a sense that they are addressing yesterday’s problem. There just is not the modernity and flexibility of coalition building that, whether you’re talking about the Arab Spring or global food security, gets the right private, not-for-profit and civil society players at the table, as well as the old G8 types in their pinstripe suits. We are not very good at modern coalition building and putting the right people in the room who can really effect change.

Q132 Ann Clwyd: Listening to Egyptian women in particular recently, who played a very important role in the revolution, they already feel frustrated and marginalised. Would you agree that that is happening and how can we assist them in getting their rightful place in the future of Egypt?

Lord Malloch-Brown: It sounds as though it is happening. I have had more one-on-one conversations with women journalists and others in recent weeks and months who have come out. It is a real problem. We had almost begun to take for granted that, even if it was slower than we anticipated, the rights of women were being addressed-from Afghanistan to Egypt to the Congo. This is another one of those compasses that seems to have suddenly come to a halt. We are running up against deep barriers and resistances in societies. We have to renew our efforts and our commitment to those values, but equally realise that the only way we will ultimately prevail is when conservative, religious-driven groups accept the rights of the women in their midst. That is not an easy battle to win.

Chair: We are trying to finish the session by 12, if that is a help to you.

Q133 Mr Roy: On the economy, what actions would have the most immediate, positive impact on the economies of Libya, Egypt and Tunisia, in your opinion?

Lord Malloch-Brown: Both are tourism economies, so if there was the stability for tourism to genuinely restart, that would be hugely significant. Both countries need an economic stimulus to get economic activity going again. This is not a time for fiscal austerity, if I can put it that way, in either economy. There is a huge absent demand in those economies at the moment. That needs to be addressed. In the case of Egypt, the planned IMF package is almost certainly the single most important thing on the horizon at the moment.

Q134 Mr Roy: Do you think, taking you on about that, that a worsening economic position could derail the politicisation of that area?

Lord Malloch-Brown: Yes, I do.

Q135 Mr Roy: In any state in particular?

Lord Malloch-Brown: Well, I think Egypt is the most vulnerable. Yemen, as well-there is a very difficult transition there-is vulnerable to the terrible condition of the economy. There is always a risk of a dip to a more populist, fundamentalist outcome, just because of people’s frustration with their daily lives.

Q136 Mike Gapes: May I take you back to an answer you gave a long time ago? You referred to the resistance by the new regimes to having the IMF or the World Bank or international institutions come in with assistance. It is still fluid. As far as I understand it, there are still discussions in Egypt between the new authorities and the IMF. Do you expect that they will change their attitude or, given the way that international institutions have behaved in the past towards countries in Latin America, for example, or the way that the German Government seem to be making remarks about running Greece, there will be a sense that it is their country and their revolution and they will not be told how to do it?

Lord Malloch-Brown: That was what led to both institutions’ initial overtures being rejected out of hand. I think a combination of necessity and the extreme suave astuteness of the IMF has meant that they have come back into negotiation. Egypt needs the money to keep going, to keep economic fuel in the tanks, so to speak. It is a $3 billion-plus package. The IMF director for this region is an ex-No. 2 at DFID. I invited him as a guest to a session at Chatham House on the economies of the Arab spring late last year. He was saying all the right things in front of an Arab audience about the IMF not putting in a budget commissioner to run the Egyptian economy and being highly respectful of their objectives. This is not an unnoticed change-the IMF, which a few years ago looked as if it was almost on the butcher’s block, has in many ways come back. Under its last two managing directors it has introduced a political savviness into how it deals with countries that strangely has made it more acceptable than its sister institution, the World Bank, which traditionally has always been seen as more the friend of the poor and of developing countries.

Q137 Mike Gapes: Christine Lagarde has made some quite strong self-critical remarks recently about failures to look at youth unemployment in particular. Will that be anything more than a mea culpa statement? Will it lead to a change in approach, given the austerity drive in so many Governments around the world at the moment?

Lord Malloch-Brown: I think the IMF realises-and for a long time has been internalising-the lesson of 1997 and the Asian financial crisis when it behaved as if it was trying to put a budget commissioner in every country. The result was that the Asians almost set up their own Asian IMF, they were so offended by it. It has been a long time since there has been a major IMF programme in that region because even though they did not set it up, they all built up huge financial self-sufficiency so they would never again be humiliated by the IMF. The IMF has realised that while it will always be an agent of adjustment, which usually means austerity because it is brought in when there is a crisis in a country to help right the boat, if it does not come in as the guest of that country with a programme that is collaborative, where it is working with the Government and not coming in as the paymaster in heavy boots, it will not succeed. It thinks its near death experience in the early years of this century was because it had come to be seen as the western budget commissioner.

Q138 Mike Gapes: Finally, would you take the same view regarding Tunisia as about Egypt, or do you think the Tunisians will be more willing to receive international assistance?

Lord Malloch-Brown: They are a bit more willing. The same factors are in play but they are for different reasons, less aggravated and extreme.

Q139 Mr Baron: Lord Malloch-Brown, you mentioned in passing the importance of what we would call soft or smart power. There is a lot to be said for the view that what will be important going forward is the winning of the story as much as the winning of the conflict. Looking at our track record as a country in the region, and particularly the announcement of recent cuts, although we as a Committee have played a rearguard action in trying to reverse some of those and with some success, what is your view on whether we should be doing more in this regard?

Lord Malloch-Brown: We should be doing more is the simple answer, but we live within our means and limits, and I understand that. That is why I think that it is important that we use the multilateral institutions that we are part of to be our agents in this, rather than believing that there is a huge amount we can do ourselves.

Q140 Mr Baron: Can I push you slightly? The extent of the cuts and the moneys we are saving, given total Government expenditure, are so relatively miniscule, it seems to be a very false economy. Can I press you on that?

Lord Malloch-Brown: Yes, you can, I am welcome to be pressed, and immediately say that I said it as an ex-Minister under the previous Government, and I am happy to say it now. If Britain’s vision of itself is as a country which, through its projection of soft power and its position in the global economy, is still one of the great trading nations of the world, and if it is to be consistent with that vision, the cuts it has made in the Foreign Office are utterly self-defeating. That is true of both Governments, who both made such cuts, and I even praise William Hague for having contained the cuts and stopping them being worse-he played the Whitehall game quite skilfully-but the fact is that we are now completely undersized in our diplomatic establishment for the role and ambitions we have in the world.

Q141 Mr Baron: Fine. I accept that, and I think that is absolutely right, but can I ask you to analyse in a little more detail the causes of this? Is it just bureaucrats bean counting, or does it reflect a larger malaise and perhaps a loss of confidence in this country, or a combination of both? It is such an obvious statement to make, we are saving such small sums of money and we have a good hit rate on the international stage-if you look at the potential for our reach when it comes to soft power, Britain is up there with France and one or two others, beating the States even-so why are we not doing more?

Lord Malloch-Brown: I think one can list several factors. First, under the previous Government, of whom I was a member, the strangest model of cost-cutting was introduced, which was that you expand programme and investment but cut headcounts and buildings, basically. This fell astonishingly disproportionately on the Foreign Office, which is all people and some rather grand buildings. The whole model of Treasury-driven cuts over the previous Government cut into the bone of the Foreign Office. Bob could retire a plane, and protect his headcount if he so chose, but there were no planes or weapons systems-

Mr Ainsworth: A point you used to make at the time, as I recall.

Lord Malloch-Brown: There were no weapons systems or development programmes to retire for the Foreign Office: there were people. I think it was a huge mistake. The cuts were also driven by a view that settled on the British political class that we were slipping into the second tier, that we could cover Africa with development and not embassies, that we did not have interests any more in Latin America, or large parts of it, and that we were a subordinate actor in the framework of Brussels, Washington and New York, so we should just put our people there and run our foreign policy in that way, with Afghanistan, Iraq and other key priorities. I do not think that we understood that while some of the economic decline is right it is not nearly as rapid as people believe, and it does not get away from the fact that our interests are global and we are in both military and diplomatic terms one of a minute handful of countries that can project power-hard and soft power-globally. You give away that extraordinary asset at real cost. There has been some self-fulfilling analysis in cutting our diplomatic footprint; it is as though we have been wishing ourselves into a second-tier status that we are not ready for yet and can resist for a lot longer.

Chair: On that cheerful note, thank you very much, Lord Malloch-Brown; it is much appreciated.