Select Committee on European Communities Minutes of Evidence


Examination of witness (Questions 294 - 310)

WEDNESDAY 1 JULY 1998

MR KRZYSZTOF MICHALAK

Chairman

  294.  Thank you for coming to see us. Perhaps you would begin by telling us something about the Environmental Action Programme Task Force and how it operates. How do you co-ordinate what you do with the other partners who are involved with you?
  (Mr Michalak)  Perhaps I can begin with some history and the big changes that have occurred in Europe in the late `eighties and beginning of the `nineties as a result of the fall of the Berlin Wall and the unification of Europe. Since then environmental issues have become very important. As a result, in 1991 following the initiative of the Minister of the environment of Czechoslovakia, as it was then, environment Ministers from all over Europe were invited to Dobris Castle in the Czech Republic to talk about the environmental restoration of central Europe and what was then the Soviet Union. The idea was to develop an action programme to help countries catch up with environmental policy frameworks and the state of the environment in western Europe. Subsequently, such an environmental action programme was developed with the assistance of the World Bank, OECD and experts from the regions in central Europe. In 1993 in Lucerne, Switzerland, the environmental Ministers met again and endorsed the action programme and established machinery to implement it. The Environmental Action Programme Task Force was established to facilitate work on the institutional aspects of environmental policy. At the same time the Project Preparation Committee was then established to facilitate environmental investments. The EAP Task Force consists of member governments from central and Eastern Europe NIS and western Europe, including the US and Canada. It also includes the European Commission, international financing institutions and international organisations. In addition, our partners were invited to work within the Task Force framework. They are representatives of NGOs, trade unions and industry. The main methods of work are the following. The first is policy dialogue at the Task Force level. Task Force meetings are held twice a year when all the partners come together and discuss the work and priorities that stem from the Environmental Action Programme and the next steps to take to implement them. The second level is action and dialogue. We establish networks of experts within central Europe which are primarily responsible for three main areas. The first involves policymakers from environmental agencies in central Europe NIS. The work is carried out within the network of co-ordinators who are responsible for developing national environmental action programmes The second network that we have been working with and supporting comprises environmental fund managers. The Funds are semi-autonomous or even autonomous institutions dealing with finance to support environmental investment in the region. The third network is concerned with cleaner production centres. Those are institutions that have been helping both the government and industry to promote and implement good environmental management in enterprises. In addition, we have been working on preparing analytical surveys and reports to look at the current situations in countries, for example: on specific aspects of national environmental action programmes like criteria for priority setting, how can priorities be arrived at, what methods are used, what are the revenue-raising mechanisms for environmental funds? On the basis of such analysis we have been developing best practice guides and documents both for our clients in central Europe but also for donors who can provide technical assistance. In this work we have facilitated the dialogue among central Europeans and the NIS and tried to bring them together. In the past those countries have been artificially kept together and forced to co-operate. That was not very much appreciated. After the break of those links the region disintegrated. People began to look very narrowly at their national interests. However, with the move towards harmonisation within western Europe some competition began. There was a race to see who got there first. We tried to get them together on a very informal basis, to provide a framework for exchanging experiences, seeing how something that worked in one country could be applied in another; or if something was not working well we would avoid it elsewhere. The other element on which we have been working is the dialogue between central Europe in the NIS and donors by trying to find priority areas which have the full backing of central Europeans. We work with donors to fill the gaps. Apart from the more formal activities, we have been working with donors on a very informal basis. We have been working with TACIS and consultants on assistance projects' design and implementation.

Lord Ponsonby of Shulbrede

  295.  How has the EAP Task Force been able to resolve differences between the European Union and the recipient countries on priorities and mechanisms for delivering technical assistance?
  (Mr Michalak)  First and foremost, we have tried to shift the priority-setting exercise to the countries. One way of doing this in terms of environmental policy development was to encourage and work with countries in the regions on developing national environmental action programmes—programmes focused on short-term needs and necessary steps to be taken to strengthen the effectiveness of environmental policy instruments and institutions in the country concerned. This was the primary way of trying to determine the country's needs and priorities.

  296.  Have conclusions been reached by the Task Force particularly in relation to Russia and Ukraine?
  (Mr Michalak)  We have just finalised a report which assesses the development and implementation of national environmental action programmes in central and eastern Europe and the NIS. From that evaluation, it appears that several countries have developed such documents and processes. We have been trying to look at both sides: the formal commitment and also the sustainability of that commitment. Several countries have developed those programmes and they have been used as a mechanism for prioritisation.

Chairman

  297.  Will that report be in the public domain?
  (Mr Michalak)  It is available in the folder with other documents prepared by the EAP Task Force for the Ministerial Conference in AÐrhus. As to these two particular countries, we have found that progress has not been what we expected four years ago. As you see from the report, our evaluation shows that countries of the former Soviet Union can be divided into two groups: one comprises Russia and Ukraine and Belarus; the other comprises Moldova, the countries of the Caucasusus region, and the countries of central Asia. The difference is that Russia, Ukraine and Belarus have inherited quite significant infrastructure from the Soviet Union. The planning exercise was widely used there. To some extent, the same methods were used even after the transition, whereas countries in the Caucuses and central Asia have not developed the capacity in the past and so have had to build the whole environmental policy institutions from scratch. They were therefore very keen to adopt modern approaches to environmental policy and implementation. Therefore, in Russia, Ukraine and Belarus there has been an incremental approach, injecting certain elements of priority-setting. Other countries adopted a comprehensive approach given that they have had to build the system from scratch. They have been able to use the experience of central Europe and western countries fairly easily.

  298.  It is paradoxical that those countries that had some degree of planning and concern for the environment have made less progress than others?
  (Mr Michalak)  Yes.

Lord Middleton

  299.  Your paper tells us that the TACIS environmental awareness-raising project is judged to have been successful. Have there been other TACIS environmental programmes in which OECD has been involved and which have been successful and effective? If so, which ones?
  (Mr Michalak)  It may be a little premature to judge the effectiveness of certain programmes. Those in which we have been involved are at the beginning or in the middle of the process. We have not been involved in many projects that have reached the final stage. One project that has been looked at in the beginning of this year is BECARC. That project focuses on developing capacity for project identification and preparation for external assistance. It was fairly modest in size; it was not a big project. It provided direct and longer-term assistance to people in the Ministry of Environment in Ukraine. It looked at how projects could be taken from the level of a rough idea to a level where it could be accepted by financing institutions. It has been fairly successful although it is a small scale project.

  300.  I did not catch the name of the project. Is it an acronym?
  (Mr Michalak)  It is, BECARC.

Chairman

  301.  Based on that, do you think that small projects rather than very large ambitious projects on the whole tend to work better, or is that unfair?
  (Mr Michalak)  It is much easier to manage small projects between the supply and the demand side. From my experience, it is also important to say that what counts are the big projects. The effectiveness and the progress achieved by TACIS is judged very much on the basis of big projects. It is important to some extent to have flagship projects which can be very beneficial to TACIS and the countries concerned, if they are properly managed. I am referring in particular to projects that have been supported by interstate programmes. To an extent, the effectiveness of big projects can be very greatly affected by the fact that, say, the Russian language can be used across the region. That can save a lot of money in terms of translation services and the use of consultants who can provide direct support. Those projects help also to bring people together across borders.

Countess of Mar

  302.  Your memorandum refers to the frustration of participation in the process of setting up the new regional environmental centres. I understand that progress is very slow. What changes do you think are needed to the programme to make it more acceptable and relevant to the needs and circumstances in the newly-independent states?
  (Mr Michalak)  That is a very difficult question to answer. We have not been as much involved in the new REC establishment. At an earlier stage when the attempt was to take the good examples in central Europe and follow them in the NIS. Over time the activities of the REC in CEE have changed from working purely with NGOs to becoming more intergovernmental bodies for central Europe, taking account of the challenges that countries face in the process of harmonisation of legislation and enlargement of the European Union. The people from the former Soviet Union saw that change and that stimulated a very different approach to the initial idea of the new REC becoming centres for the support of NGOs. In different countries the process is going in different directions. From what I have seen, the one in Moscow is supposed to be very much a think tank to support the dialogue between the environment ministry and the ministry of finance and economy. In the Ukraine or Moldova it is to provide support to NGOs. Certainly, there are different methods. At this stage it is very difficult for donors country to prejudge the final shape of those centres. I think that the dialogue and discussions about the future shape of the centres must take place at an international level with the involvement of several donors but also at national level with stakeholders.

  303.  One of the impressions we have received is that it is a mistake to try to impose preconceived western ideas on newly-independent states and that there must be a flexible approach. Compared with western Europe, what are the main cultural differences that need to be taken into account when working in Russia and the Ukraine? What is the best way of overcoming these problems?
  (Mr Michalak)  I want to pick up a few factors which from my perspective are very important. They also influence our work as an organisation that deals with people from the newly-independent states. The first problem is secrecy. There is still the past burden of very strict control over the flow of information. People are still afraid to share or to be exposed to information. They feel that it may impose a commitment or obligation on them. In some of the NIS that is a great obstacle. There is also a lack of horizontal communication. Secrecy allows for vertical communication but prevents horizontal communication. For example, in our work on the development of national environmental action programmes in central Europe structures at several levels have been set up to discuss matters and prepare analytical material for political blessing and implementation. This has happened in Hungary, Poland and the Baltic countries. Several working groups have been established at expert level dealing with biodiversity, water management, industry and energy with the participation of experts from various stakeholders, including ministries, NGOs and independent experts. Another important element is the establishment of groups to supervise and provide strategic direction for that work. Often invitations are extended to people like deputy ministers of agriculture and members of parliament. Another element is the secretariat. There are people in ministries of the environment who have drawn up documentation and made sure that the next steps are followed. It is interesting that countries in central Asia and the Caucuses have adopted that approach whereas in Russia and Ukraine it has not happened. The environmental policies have been developed by individuals in ministries of the environment with very limited consultation and expertise.

Chairman

  304.  And with limited power?
  (Mr Michalak)  Yes. The other issue is technical versus management skills in the NIS. This was also the case in central Europe eight years ago. Those countries possess pretty extensive technical and engineering skills, but the managerial skills are lacking.

Lord Hughes of Woodside

  305.  It has been put to us by several witnesses including the NIS representatives that the central and eastern European experts can provide better value for money and more relevant experience than consultants from EU countries. Do you share that view?
  (Mr Michalak)  I share it to some extent. I used to work for the Polish ministry of the environment for a couple of years. I then moved to Paris to work for OECD on programmes involving central Europe and the NIS. To be aware of the social situation and the environment and have very close historic links and relations between countries in the region was also very helpful in establishing direct personal links. Many people in central Europe know Russian and Russian is the language that is used for communication within the NIS. Knowing the institutional framework and the reactions that might arise within the government for myself and my colleagues is sometimes easy to predict. For example, in the area of planning one can make several assumptions about what will materialise. The people of the NIS have remained very much remote from contact with the west and western Europe, whereas it has been much easier for Poles, Hungarians or even people from Baltic countries to have access to contact and links with western Europe and its institutions. I think that we can provide a bridge by explaining several rules.

  306.  How do we redress the balance or imbalance between the use of western consultants and central and eastern European consultants?
  (Mr Michalak)  I do not think that there should be a big shift from the use of western consultants to central European consultants. The issue is one of promoting twinning—to use western knowledge and twin it with central European knowledge. We have been doing this in our projects. Several of the central Europeans with whom we have been working are now working for the TACIS projects to develop common environmental policies for the widening of the EAPs.

  307.  Perhaps you would be a little more explicit. The argument you make is that far too much of TACIS money is spent on private European consultants. They bid for the contracts and get the money. Most of the money is spent not in the recipient country but on the private consultants. It has been said that expertise is available in the NIS which is not being used. Is the technical expertise available in the NIS to match what can be provided by western consultants? The argument we have heard is that the money could be better spent by employing local people rather than big conglomerates in Brussels, Amsterdam, London or wherever?
  (Mr Michalak)  From my perspective, this is an issue for regulation within TACIS. I do not know how it can be changed. I can provide an example of a project on which we have been working with PHARE on supporting a network of environmental fund managers. The PHARE contract was awarded to a western consultancy firm but the EAP Task Force is involved very much in terms of how the work programme was to be designed, who would be invited to particpate from the recipient side and what was involved. We have been working very closely with that firm and to some extent also negotiating with them about the share of resources being put into their machinery and the resources being put into projects at local level. I do not think that I have a ready answer to it. It is very difficult.

  308.  In your paper you comment that further improvements are possible in the co-ordination of TACIS activities with those of other donors, especially if technical assistance can be followed by specific and well-focused investments supported by TACIS and other donors. How can you make the improvements that you believe are necessary?
  (Mr Michalak)  To some extent, the EAP Task Force and Project Preparation Committee is such that the donors can make better use of the money that is available and link the analytical process and feasibility studies followed closely by hardware or actual investment. A couple of years ago the main criticism was that several studies had been made by western consultants which had not been followed up by investment. Over time, the Project Preparation Committee and Task Force have facilitated the linkage between policy, technical assistance and investment. The other institutions are then very much ready to respond at any moment to emerging needs and to follow up with loans or even private resources. That is the machinery that can be used. I am not sure that TACIS has been using this sufficiently. I looked at the inception report on a programme called Widening of the EAP. That project is very much focused on project preparation and links it to investments. We have been involved in the design of that project. That project is well designed to match the technical assistance with follow-up. We have great hopes for that project, but it is too early to say how effective it will be.

Lord Middleton

  309.  I start with a comment and then put a question. My comment is that in paragraph 6 of your very interesting paper you speak about the main obstacles for effective co-operation between TACIS and the NIS. You list what has been identified by the Task Force as those obstacles. In paragraph 7 you set out where your organisation considers the shortcomings have been in the TACIS organisation. Everything that you say in those two paragraphs come very close indeed to what we have found in the progress of this inquiry. That being so, what particular recommendations do you think we should make to the European Commission whom we intend to see tomorrow?
  (Mr Michalak)  The EAP Task Force and Project Preparation Committee is an international process which TACIS is welcome to use for the benefit of that programme and the recipient countries. This process gathered momentum at the ministerial conference last week in Arhus where the declaration adopted by Ministers mandated the EAP Task Force and the PPC to put greater emphasis on the work with the newly-independent states. We have had a commitment from a pretty high level, so this is a good place in which to follow up the commitment and use the capacities and potential available in TACIS.

Chairman

  310.  We were told by the witness from the Commission that it had an informal meeting every quarter with other donors which was believed to be sufficient co-ordination. It seems to me that something more formal is required.
  (Mr Michalak)  We have been exchanging information, but from outside we feel that it is not really sufficient. The exchange of information is important. It is not enough to look at the design of a project. Very often we have tried to get feedback from recipient countries on a very "soft" basis. We have not seen much influence on that from outside. But what TACIS lacks to some extent is a strong feedback from recipient countries. That should allow for the building of trust on both sides so that the design of strategic directions of the TACIS programme can be taken to the level where there are several interest groups involved. If one creates trust one can have the synergies between the various actors present in that region.

  Chairman:  We are very grateful to you for that very interesting information. We also thank you for your extremely useful paper.


 
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