Examination of witnesses (Questions 40
- 59)
WEDNESDAY 15 DECEMBER 1999
THE RT
HON CLARE
SHORT and MS
SUE UNSWORTH
40. I was going to ask you that—
(Rt Hon Clare Short) It is a complex country to work
in.
41. Yes. The Bretton Woods Project has researched
this most thoroughly and I think it might be something worth looking
into, because if it is the case that conditionality is not being
applied so severely in China by the World Bank, this might be
something that the UK Government needs to raise?
(Rt Hon Clare Short) I would be happy to look into
it, but I have to say that on the evidence I do have, the meetings
I have had and the projects I have engaged with, I do not believe
it to be the case.
42. Fine. How effective, Secretary of State,
do you believe the World Bank's support to China has been in reducing
poverty?
(Rt Hon Clare Short) Again, I have to say I have not
looked at—you know, obviously there has been a big World
Bank programme and it was all in place before I become the Secretary
of State for International Development, but it is the general
view of people who watched and cared about the opening up of China
and its transition from Communism that the Bank has played a very
important, creative and useful role and engaged early and helped
China with some of the processes of reform, which were very considerable
for them. I mean, it was a very oppressive, statist, totalitarian
system that is in the process of a major transition and the Bank
was in pretty early trying to help with that transition and I
think generally the Bank has done rather a good job in China.
(Ms Unsworth) The World Bank Director made, I thought,
an interesting observation to me last week when we were talking
about the way in which ideas can be very influential in China:
because the decision making process is not always evident, it
is hard to know exactly what sort of discussions and interventions
have ultimately been influential in changing policy and getting
government to adopt new ideas. But certainly the Bank has been
engaging on policy issues in all the areas it has been working
in.
43. May I just return, I think, to this Tibetan
problem you were talking about earlier?
(Rt Hon Clare Short) It is not in Tibet; let us be
clear.
44. No, I know. The Tibet Information Network
have provided the Committee with details[3]
of a £160 million poverty alleviation project which is being
funded by the World Bank which includes a £40 million component
for moving over 60,000 new settlers to—my pronunciation
here is probably very bad—Qinghai in Dulan county, a region
traditionally inhabited by Tibetan pastoralists. Concerns have
been expressed that the Bank is violating its own policies on
environmental assessment and on indigenous people and, as responding
to these concerns, the World Bank has suspended the allocation
of these funds pending a report of an inspection panel. The Tibet
Information Network claim that only two executive directors—the
US and Germany—opposed the project, with the UK supporting
it and our question is, why did the UK support the Qinghai poverty
reduction project if it was violating an environmental assessment?
(Rt Hon Clare Short) I have already addressed this
project and I know the Tibetan Information Network has led a big
campaign to try and stop this project. I therefore personally
looked into it in considerable detail. It is a very, very poor
area. There is some relocation of people planned in it, but with
consent and after consultation, and obviously people who are desperately
poor and might be helped to relocate and improve their lives might
well agree and there is consultation with the community to whom
they are moving. But I decided, even though I thought we would
get political flack for it—especially because the Tibetan
lobby in the United States is very strong, in Hollywood and so
on and very powerful—that it was a good project and that
we should not vote against it just to be popular because there
was a fashionable campaign against it. So I do not accept the
allegations that are made and I think it is wrong that a sort
of fashionable cause can be traduced to make people, for political
reasons rather than the quality of the project and the interests
of the people, force you to vote wrongly. So I personally looked
in considerable detail into this project and I made the judgment
that we should vote as we did. We got some new conditions that
no money would be disbursed until there was another mission and
some more consultation that made sure that no-one was being forcibly
moved or having people moved into their area in a way that was
unacceptable. I think that is not even fully completed yet.
(Ms Unsworth) We approved on the basis that there
would be an inspection panel initially to go in to see whether
the Bank had, in fact, broken its own procedures on environment
and resettlement issues and that mission went in October and the
report is expected to go to the Board in February. So the funds
for the Qinghai component are frozen pending the receipt of that
report and we then got agreement if, in the light of that report,
the project goes ahead, it would be on the basis of further consultation
and piloting and review and report back to the Board. So it would
be very carefully monitored in terms of the wishes both of the
population already in Dulan county and the people moving in and
with safeguards for rights of pastoralists and so on.
(Rt Hon Clare Short) I looked into this question of
whether there had been a breach of the environmental procedures
and there was some technical thing; it was about when people were
informed. It was not bad will, it was a fault, so it was not a
breach in spirit, but we asked for these conditions because of
that. Can you remember the details of that; I looked into that
allegation.
(Ms Unsworth) The inspection panel is looking into
that.
(Rt Hon Clare Short) But it was some technical flaw,
it was not a complete failure to do an environmental assessment.
I think the campaign personally is misinformed and then of course
it wants to drive forward its view and they have made a lot of
allegations which, when I looked into them, I did not think were
true, but we have all these safeguards.
Barbara Follett: Thank you for that;
that was helpful.
Chairman: Andrew Robathan?
Mr Robathan
45. I am sure the monitors will do the job to
the best of their ability in this particular case, but it is not
an allegation that Tibet is a country which is illegally occupied—
(Rt Hon Clare Short) Qinghai is not in Tibet.
46. But Dulan county is partially in Tibet,
is it not?
(Rt Hon Clare Short) No. It is people of Tibetan origin
who are living in part of the area where some other people might
move to in order to improve their lives.
47. So it is no part of Tibet?
(Rt Hon Clare Short) No. People reasonably think it
is because the Tibet campaign says so, but it is not in Tibet.
Chairman
48. Secretary of State, China is, as you said,
one of those most statist and totalitarian states, I suppose—
(Rt Hon Clare Short) Was, like all the Communist countries.
49. Yes, and it is well known for being like
all states of that kind, very corrupt. In fact, films made in
China, I understand, spend more on bribes than they do on production
costs. That is what I was told by the people who make films there.
Now this—
(Rt Hon Clare Short) I would not make a film there.
50. No, but the point is you are also trying
to do projects of an economic and social character and what I
want to know is who do you negotiate with? Do you negotiate with
local Party officials, do you negotiate with people who are genuinely
part of the community but not a Party official? How do you get
over this governmental and corrupt regime in order to actually
assist Chinese people.
(Rt Hon Clare Short) Firstly, we work in a lot of
countries where corruption is a very serious problem and in poor
countries where there are lots of State controls and licences
you tend to get great trails of corruption. I mean, that is the
experience of the international system. So it is a serious problem
in China, but it is a serious problem in many other places where
we work and we have very tough procedures for all the disbursement
of our funds because we work in such places and we have to protect
the taxpayers' money and make sure it is not wasted by corruption.
I think we laid out briefly in the memorandum the arrangements
we have in China. I do not know if you want Ms Unsworth to add;
I think we are confident—well you can never absolutely know
that every cent is completely tied down, but over the years we
are good at doing that. We do get occasional problems but not
in massive numbers and we think our procedures are working in
China. Do you want to add?
(Ms Unsworth) We are obviously putting in place the
safeguards for inputs of the kind described in the memorandum,
but we have recruited Chinese speakers, located in an office in
Beijing, to manage the projects which I think is very important,
and they discuss very freely with provincial officials but also
at County level. Increasingly our project design involves—for
example, for the Gansu basic education projects, school committees,
parents, children—and for the state owned enterprise reform
project a whole set of local stakeholders who are dealing with
the implications of reforming state owned enterprises. I think
we have been encouraged at the extent to which we have been able
to really move down the system and involve people at quite grass
roots level. So I think it is a combination of safeguards really.
(Rt Hon Clare Short) And our experience internationally
is that when very local people know about money being disbursed
they get very angry if it is stolen. So it is true, like the education
projects in Andhra Pradesh, same thing. When you have very distant
powerful states, when local people who really need know there
is money there, they get quite ferocious if someone is stealing
it, so the grass root involvement is a very good way of tying
money down and preventing it being mis-used.
51. It is, but I think what you are saying is
that you have to work through the system. You do actually work
through Chinese Government officials and County officials until
you get down to your local people, your teachers, your children,
your parents. So it has to be approved by the Chinese Government
and those are the people—
(Rt Hon Clare Short) Absolutely, but in a way we know
where every cent is.
52. NGOs could not work there, could they?
(Rt Hon Clare Short) I think it is very difficult
for NGOs to work in China because it is in transition from the
kind of country it is. There are Indians working in Tibet, as
we have said.
(Ms Unsworth) And in fact, the project the Secretary
of State has just approved for working with HIV/AIDS has a component
that is for NGOs to pilot new approaches to dealing with high
risk groups. So there is some NGO involvement. Obviously Chinese
NGOs do not really exist in the sense that we understand it, so
that way of operating is much, much more limited in China.
53. It is very closely government controlled,
is it not? I mean, that is the truth of the matter. Now, if we
could move to Pakistan, what is the Government's current assessment
of the human rights situation in Pakistan? You made mention of
this in your introduction, Secretary of State, under military
rule; have they got worse or have they possibly got better, because
as we know the military Government is not all bad, in fact, and
has produced order where there was disorder? What measures will
be required on the part of Pakistan to ensure the resumption of
government to government assistance?
(Rt Hon Clare Short) Well, you are right, Chairman.
One of the stunning things about this coup in Pakistan is that
it was widely welcomed right across the society because people
were so fed up with governments, both the previous Government
and this Government that they had voted for and given a considerable
majority. They were fed up with the corruption and the economic
mis-management and the oppression of people, particularly poor
people, so I think—I mean, obviously the new military Government
has made all sorts of commitment to reform and has taken action
to freeze bank accounts of politicians, but it is early days and
what we are trying to do is tie down a series of very specific
commitments and time band commitments to driving through reforms.
We have this mission going soon—it has not gone yet, I think
—
(Ms Unsworth) Yes, it is there.
(Rt Hon Clare Short)—to have this discussion
and we have tried to get agreement with the IMF to do that, and
we need milestones, not just a wish list, but this ought to be
done by then and it is right across, starting with local government
elections, but it is not back to the old democracy; it really
was not much of a democracy. It does not mean a coup is all right,
but the old systems were not good. Also, economic management,
dealing with corruption, more respect for the rights of women,
etcetera. Could you take us through this?
(Ms Unsworth) We are having a set of discussions now,
this week, in Islamabad with the Government of Pakistan, but also
with G7 members in Washington and with the IMF about the kind
of programme that we should be looking for if the IMF were to
go back. There are a set of immediate reform measures that are,
as it were, left over from the earlier programme, but which are
important in terms of showing that Pakistan really means action.
They are things like settling the dispute with the independent
power producers, taking action on general sales tax, on petroleum
prices and so on. So there is a set of very short term prior actions
that they are talking about, but we are also talking about strengthening
the whole IMF reform programme by introducing into it a stronger
poverty focus, looking at reallocation of public expenditure,
looking at action on corruption, looking at Civil Service reform.
So a set of measures that would be embedded in the programme longer
term and which would be quite important benchmarks both on the
economic and on the governance agenda. Then obviously on the political
set there are a set of discussions going forward about a whole
set of political benchmarks where action is also moving.
(Rt Hon Clare Short) We have tried to distil this
into a paper that has been widely circulated to try and get agreement
across the IMF so that we get the international community going
together, because that is the chance then. We have got general
commitment to reform if we can tie it down and make it time bound
and carry forward the reforms and I think I can let the Committee
have a copy of this.[4].
We have not made it available before, but I think it does not
say `confidential' on it.
54. It would be very useful to us to know exactly
what benchmarks, milestones—
(Rt Hon Clare Short) I mean, it is a summary of that.
It is a round which discusses what will take place.
55. It seems to me that there is the possibility
that in fact Pakistan governance can be better under military
rule and our capacity to help the poor could be improved?
(Rt Hon Clare Short) I think it is true that things
were so bad that while there is no such thing as a good coup,
but the crisis means, if it gives us a new chance to engage with
absolute commitments to reform that is tied down and carried through,
that out of this crisis Pakistan could come forward in a way that
it was not going forward before.
56. So what you are saying, I think, in answer
to my question is that if they meet these milestones, benchmarks
that you going to set out in certain fora, then government to
government assistance will resume in collaboration with the international
organisations and other bilateral donors? Is that right?
(Rt Hon Clare Short) Yes. Obviously they cannot do
it all over night and the country is a mess and no-one is capable
of putting all this right immediately. But if they commit to it,
start the process of reform, commit to, by a certain time, things
being achieved then I would be willing to re-engage our government
programmes and we are taking the same view with the IMF re-engaging.
Chairman: Right. Good. Mr Grant?
Mr Grant
57. How does this sit with the policy of the
Commonwealth, that Pakistan's membership is suspended?
(Rt Hon Clare Short) Let me see. Pakistan was not
invited to the Commonwealth Heads of Government meeting, but is
not fully suspended.
(Ms Unsworth) It has been suspended from the Councils
of the Commonwealth.
(Rt Hon Clare Short) Not expelled?
(Ms Unsworth) Not expelled.
(Rt Hon Clare Short) But the process of discussion
with the Commonwealth—I mean, obviously the Commonwealth
Mission and everyone who cares about the people of Pakistan who
have suffered some terrible government over the years, the desire
is not to marginalise Pakistan from the international community,
but pull the country back into respect for the norms of democracy
and good government. That is the object of us as a Government,
of the Commonwealth, of the IMF we hope, which is the most powerful
lever the international community has because the state of the
economy is so bad. So we will stay engaged with the Commonwealth
in those discussions. If we can get commitment out of the Government
to time bound reforms, the whole international community will
share those objectives with each other.
58. But is it not a bid odd that the Commonwealth
Heads of Government felt that Pakistan had transgressed to such
an extent that its membership should be suspended on the one hand,
and on the other hand your engaging is as if you are acting against
yourselves because of course Britain was a party to that discussion
with Heads of Government and agreed with that suspension?
(Rt Hon Clare Short) Absolutely not. Equally we have
suspended all our development programmes that engaged the Government
of Pakistan, but we have not done this because we want permanently
to marginalise them. The state of life for poor people in Pakistan
is very hard and has been getting worse, so we do not want to
marginalise it and things get even worse. Without some help from
the international community to reform its economy things will
get worse in Pakistan. We have suspended our programmes in order
to get a commitment to reforms, in order to get Pakistan to re-engage
with reform and a return—well, not a return to democracy—movement
to genuine democracy. So that is the view of the Commonwealth
and of our Government and of all other sensible Governments, I
would submit.
Mr Khabra
59. It does appear that perhaps you are prepared
to compromise the biggest principle which is adopted as far as
aid is concerned for other countries, such as good government,
okay, this is a military Government. It appears it is a good Government
that is fighting against corruption, but with a short period of
time I think it is a shortsighted approach, because the past history
of Pakistan is that even military regimes deteriorated so much
that the corruption was still there, but the restoration of a
democracy, it seems that you appear to separate good government
from the principle of democracy for the people to have a government
of the people, elected by the people? That is a big issue, actually.
It appears that perhaps you are prepared to compromise?
(Rt Hon Clare Short) As I have already made clear,
I think the approach to these matters where people are busy trying
to posture and have clean hands is not the right approach. I think
our duty is to try and advance the human rights and better governance
and improvement in the life of the people in the world, and most
particularly the poor of the world who are the most oppressed.
So that we have suspended our engagement with the Government of
Pakistan because there has been a coup. The IMF programme had
already lapsed the previous Government had not complied with it.
The question is where do we go from here? As I said, the previous
democratic Government was not very democratic; it was deeply corrupt
and it was running an appalling economic policy that was getting
Pakistan into more and more trouble and worsening and worsening
the lives of the people. So the coup having happened, and the
people of Pakistan—sort of shockingly in a way—having,
it seems, welcomed it, even though they had elected with a very
big majority the previous Government not that long before, our
job now is to see if we can engage in getting a commitment to
a process of reform that includes democracy starting with local
government and building on to have a proper democracy in Pakistan,
but it also includes proper focus on the needs of the poor, action
on corruption, better economic management, all these things need
to be rolled forward together and we are not compromising on that
at all. I am not in favour of posturing and marginalising some
of the most oppressed and badly governed people in the world.
If by engaging we can help to draw forward reform in Pakistan,
then those are the principles for which we work and they are,
I am sure, the right principles. We do not have agreement yet,
but I hope we will get it and I am sure that is the right and
principled position.
3 Not printed. Copy placed in the Library. Back
4
See Evidence pp 23-5. Back
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