Examination of witnesses (Questions 320
- 339)
TUESDAY 27 JANUARY 1998 (PM)
DR MARJORIE
LISTER, MR
SIMON MAXWELL
and DR CHRIS
STEVENS
Chairman
320. Can I just ask very quickly, is it
acceptable that European Union aid and Lomé aid is not
allocated on a low per capita income basis, which of course has
been one of the World Bank's main criteria on allocation? Is this
acceptable?
(Mr Maxwell) In principle, no. No donor gets it
completely right, but the big distortion in Europe between ACP
and non-ACP countries means that South Asia is under-aided.
Chairman: I was astonished
to see the position of Venezuela, for example. Could I ask Dr
Jenny Tonge to continue the questioning.
Dr Tonge
321. Yes, you can try, Mr Chairman, although
as usual I am having great difficulty in keeping my attention
on what I find is very general language about things, I cannot
focus on particular things. I think you have touched on this but
what kinds of changes in the range and use of EC aid instruments
might be promoted by the Government during Lomé? How could
it be better focused on benefitting poor countries? Will you explain
to me the Stabex thing and how that can be improved? There is
another one, Stabex and Sysmin. If you can illustrate it with
a few examples, with the theory, then examples.
(Mr Maxwell) You
make the assumption that Lomé will continue. If you were
to ask me to start from scratch, I would probably say an aid programme
which did not distinguish between Lomé and non-Lomé
countries, which allocated aid in much the same way as the British
aid programme does, according to a combination of poverty and
ability to use the money. That would make a big difference to
who gets what in the European aid programme. There also needs
to be a radical simplification of the aid instruments. Stabex
and Sysmin should probably go. Further more, one of the problems
of European aid is that the European Parliament keeps inventing
new budget lines and landing administrators with more and more
different programmes to administer. There needs to be one simple
envelope of money, used in the best way in each country. At the
moment, the system is far too complicated as between budget lines
and EDF money, and between all the different instruments that
are available.
322. Can you tell me why it has got so convoluted
and complicated?
(Mr Maxwell) I
think that is exactly the right question. There are two reasons.
One is that people keep adding good ideas into successive rounds
of the Lomé Convention and forgetting to abolish the bad
ideas. Stabex, I think is quite a good example of that. Secondly,
it is to do with the governance of the European Union aid programme.
The Parliament feels powerless. The only way it can impact on
the programme is to create new budget lines, so over there in
Strasbourg and Brussels, there are people creating new budget
lines to make a political point, which then complicate the lives
of the administrators and make it much more difficult.
(Dr Stevens) There is a third reason and that
is part of the aid comes from the normal European Union budget
and that aid goes largely to Asia, Latin America, the Mediterranean,
Eastern Europe and the former Soviet Union and then there is aid
from Lomé which comes out of an extra budgetary package,
the European Development Fund. A long, long time has passed since
it became very foolish to maintain this distinction. It is the
basic reason why we have these anomalies of more aid going to
Venezuela than going to some poor African countries and the main
reason why it continues is because the role of the Member States
in the Council of Ministers and the role of the European Parliament
is different. Unanimity is required for decisions on the size
of the European Development Fund whereas the European budget is
by majority voting. The European Parliament has a much greater
role in relation to expenditure from the budget than from the
European Development Fund. So for reasons which have nothing whatsoever
to do with development but a great deal to do with broader European
policies Member States have not been willing to abolish this artificial
and very damaging distinction.
Chairman
323. Dr Lister, you also in your paper recommended
the abolition of Sysmin.
(Dr Lister) Yes.
324. Do you also apply that to Stabex?
(Dr Lister) I am a little bit on the fence on
Stabex. It certainly has not worked as it stood, it kept running
out of money and it did not address the needs that it was supposed
to address. It did not compensate countries for the loss——
325. Could you give Dr Tonge an example
of that?
(Dr Lister) Almost every year since Lomé
II it ran out of money about half way through. It could not compensate
them in time. So if they lost a crop of bananas or cotton or whatever
it took a year before they got the money. It was not solving their
problem of quick cash in many cases. It was supposed to be an
automatic re-insurance system but it did not work like that. The
Commission negotiated and said "we do not have quite enough
money to pay you but will you accept 50 per cent?" It did
not quite work. In a way that is a shame because it was in a way
a good idea in its time, that it was supposed to help commodity
producing countries who could not just by producing these commodities
avoid the problems of the weather and fluctuating prices and so
on that they had. It seems that everybody agrees that it did not
work but the question might be whether they could make it work
or not. To make it work would certainly cost more money and it
would take a degree of imagination to fit into it and make it
work. It is easier, certainly, to abolish it than to get it to
work. Again, it is perhaps out of keeping with the current ideas
of the World Trade Organisation and liberalising trade and having
competition.
326. Also it is safeguarding them from taking
into account market forces.
(Dr Lister) Yes.
327. And therefore not adjusting their cost
structure.
(Dr Lister) Yes.
328. And thus inhibiting development of
such initiatives?
(Dr Lister) That is in theory possible but in
practice most people felt that it did not have that effect because
there was not enough money in it to have that effect. It might
have had that effect.
Chairman: Certainly
it did in bananas, I can tell you.
Mrs Kingham: Could
it realistically have distorted the market?
Chairman: It meant
that they could continue producing bananas in exactly the same
way as they did last year even though the price was half.
Mrs Kingham
329. I mean if the compensation was coming
in so late presumably it was not a very effective way of doing
that anyway. I just wanted to ask what would you replace it with
because if you just scrap the Stabex and Sysmin and leave people
with no compensatory payments——
(Mr Maxwell) I can tell you what the Commission
is proposing, which is to have a much more flexible financial
envelope, which will make money available for other things as
well in a much less structured way.
330. Can you give a bit more detail? I do
not understand what you mean by that.
(Mr Maxwell) They are going to put the money that
was available to Stabex into general programme aid money so that
it will just be a pot of money that can be used.
331. It will have to be applied for as projects,
specific projects, rather than compensating people for loss of
crops?
(Mr Maxwell) Well, programme aid is usually balance
of payment support, so you just get one large cheque. The big
problem with Stabex that the Commission ran into was again that
they found themselves, because of the automaticity of it, giving
money to tyrants. They wanted to avoid that and they wanted to
avoid the kind of problem that you have mentioned, Chairman, and
make sure the money was used well. They therefore introduced a
whole review procedure which hugely delayed the programmes. When
we looked at this in Ethiopia we found a complete conflict between
the short term compensation objectives, for example when the coffee
price fell in Ethiopia, and the objective of making sure the money
was used well. What always happened was just as the coffee price
had got to its peak again, and when the balance of payments was
relatively healthy, then the cheque would arrive.
Chairman: They got
the money.
Dr Tonge
332. Has the Lomé Convention taken
due account of gender issues in the past and what do you think
it could do about it in the future?
(Dr Lister) Yes, I am relatively optimistic about
where this issue is going. I think in the past, no, it did not
take into account gender. Gender appears in Lomé, for women
maybe, in the context of equity, that women should get a fair
share of development, not really recognising women as producers
or actors but seeing them more as recipients of development aid.
In Lomé their role, for example, in environmental conservation
is not specifically mentioned or their role in terms of food security,
so there is some recognition but not a full recognition of what
women can contribute in development. The Commission is moving
forward on this issue. In 1991 and 1993 guidelines were brought
into projects so that gender should be incorporated, gender appraisal,
into all projects. This was brought in, however it was brought
in as a kind of add-on and there were still projects which were
approved without having gender in them. They were moving in the
right direction but it was not main-streamed completely in to
development aid. Also, again, we have heard before, administratively
gender was on a bit of a back burner or marginalised. There was
a women in development desk in both DGVIII and DGI but each one
had only one full time person so they could not do a lot. In DGVIII
I think the budget was just two million ecus so again not much
staff and not much money.
Chairman
333. It sounds like window dressing to me.
(Dr Lister) Yes. But I think in the latest guidelines
the way they are talking about gender here is more positive, they
have recognised more of the role of women. Whether there will
be more staff and more money remains to be seen.
334. We are guilty of always asking women
about gender issues, do either Simon or Chris have some views
on this?
(Mr Maxwell) No, except we are in favour of it!
335. So am I!
(Mr Maxwell) I have not studied the issue. What
Dr Lister says sounds entirely plausible. They are probably no
worse at gender than they are at lots of other things.
(Dr Stevens) I think they were worse at gender.
I have less faith in what they promise to do in the future than
Dr Lister does.
336. This is a very important point which
we have got to bear in mind when we consider the whole programme
because the gender issue is crucial, it seems to me, to focusing
on the poorest of the poor because the poorest of the poor are
the women. Unless you do that you cannot actually improve the
situation for the poorest of the poor.
(Mr Maxwell) I do not like to make publicity for
another place these days, but my former institute, the IDS, has
just published a very good special issue of its quarterly bulletin
on gender and poverty. There are many dangers in categorising
all women as poor or all the poor as women. It is very important
to disaggregate and to understand the causes in more detail.
Chairman: Absolutely.
I am going to move on now. Andrew?
Mr Rowe
337. Our witnesses have already said that
the centralisation in the European Community is very noticeable
and HMG supports greater decentralisation of staff and decision
making during the Lomé negotiations. Is it the Member States
themselves actually who have been one of the obstacles in creating
this so far?
(Dr Lister) Yes, I think there is certainly a
case for decentralisation. Having been a few times in the EDF
Committee or the Committee in Brussels where a project was approved
there seemed to be a degree of trading off. The French would come
up with a very nice project and then the Germans would add a very
nice project: "you approve our project and we will approve
yours". That all took a lot of time. In a way looking at
projects very carefully in Brussels sounds good but just takes
up too much time and effort. I think decentralisation has to be
the way forward.
(Mr Maxwell) In the course of the Ethiopia evaluation
that we carried out, we organised a series of focus group discussions
with government officials and aid officials about the EU and other
aid programmes. This issue of top heavy Napoleonic procedures
is one that came out more often than any other. I have some data
from the Ethiopia studies that I would be happy to pass on to
the Committee about, for example, the number of staff in the offices,
and the level of delegated authority that the EU has compared
to others.[7]
It is terribly centralised. If you are running a European Delegation
in a big country you might be spending £20 million or £30
million a year but you cannot approve anything more than 60,000
ecu, which is less than £50,000, and even then it has to
go back to Brussels to be approved after you have done it. That
is a huge difference to other donors. The procedures are extremely
centralised. The really important question to ask is why that
is. I think you put your finger on it in your question, which
is that the Member States will not let go. They do not trust the
European Commission to administer the aid programmes and that
is why they insist on everything coming back to committees that
they control in Brussels, the EDF Committee, the Food Aid Committee
and so on.
338. In the European Union office in Delhi
I met a woman who said that she had dealt with 530 NGOs or something
and they were lamenting the fact that they had just been ripped
off something chronic and with a massive new programme it would
be hard not to deliver a single chicken. Therefore, what had happened
was that the EU had then said "we have to be able to appoint
our own auditors". Is it not actually the case that what
has happened in India happens elsewhere, that the EU goes spare
about having auditing facilities and so on and is grossly under-staffed?
Is there any point in delegating to offices that actually have
such a small staff that they cannot monitor what they are doing?
(Mr Maxwell) The NGO programme is a bit different
because it is administered largely from Brussels. The general
point I think is quite right. What the British Government will
say is "of course we cannot allow the EU to delegate down
to the field, because they have not got the resources and they
cannot do it". The European Commission will say "give
us the resources and we will do it". It is which comes first,
the chicken or the egg.
339. There it is neither.
(Mr Maxwell) What I would like to see happen is
this: take a few countries and say to the Commission "We
want you to delegate and to decentralise, tell us what you need,
we will provide it. We will watch you like hawks, and if you do
not do a proper job on this, then we will cut off the possibility
for the future".
7 See Evidence, pp. 141-144. Back
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