Examination of Witnesses (Questions 80
- 99)
MR MYLES
WICKSTEAD, MR
BARRIE IRETON
AND MS
MARGARET CUND
THURSDAY 22 JULY 1999
80. Research is perhaps not the right word.
It is a development programme.
(Mr Ireton) It is analysis, it is helping the developing
countries themselves—the experts are sitting behind us,
I have to say—and increasing the capacity of individual
countries to do their own analysis, to use analysis that is done
for them and to negotiate more effectively in the round as it
proceeds. This is one of several really practical expressions
of the Secretary of State's view that I think she has expressed
to the Committee of the importance of developing countries having
much more impact on the next trade round in the context of the
new WTO structures.
81. There are basically personnel associated
with DFID who are on loan?
(Mr Ireton) No.
82. Who are being used to help developing countries?
How would you express it?
(Mr Wickstead) I think it would be to support the
World Bank's own capacity. There is a team of six or eight people
within the World Bank itself which is looking at trade policy
issues. The DFID funds are intended to support them and, for example,
consultants may be brought in from outside to teach, to exchange
learning experiences with people coming from developing countries.
There is a Department within DFID which has particular expertise
in this area and they will work very closely with the Bank group.
Chairman
83. Will the World Bank itself try to influence
the WTO round?
(Mr Wickstead) Well, I think we all attach importance
to that part of the Bank getting closely involved in it because
it is after all part of the comprehensive framework and the comprehensive
approach. We have encouraged the Bank to put this on the agenda
of the Development Committee in September and indeed if you recall,
Chairman, it was the last item that I mentioned in the list that
I noted at the beginning.
84. Yes.
(Mr Wickstead) That will provide an opportunity, possibly
only in a written form but it will provide an opportunity, for
Ministers in their statements to, we hope, reiterate the importance
they attach to the Bank at least providing advice in this area
as the new trade round gets under way.
85. It seems to me we have got a twin approach,
have we not? First of all, as Mr Ireton has told us and the Secretary
of State told us, we are developing trade policies within the
Department for International Development and assisting poor countries
to negotiate by providing them with expertise and funds properly
on their own behalf in the WTO, and at the same time you are working
these same issues but in a national way I suppose we should say
within the World Bank.
(Mr Ireton) Right.
86. Again, it seems to me both are important.
(Mr Ireton) Absolutely.
87. Both problems need to be promoted, I am
quite certain, because the developing world has been comparatively
silent in the WTO because of their lack of capacity, using that
word in a different way.
(Mr Wickstead) Yes.
Chairman: Thank you. I think we should now hurry
on. Mr Ireton, we have not finished, will you just tell us when
you have go to go. We do not want to lose you. Can we move now
to talk about human rights in World Bank funded programmes, Ann
Clwyd.
Ann Clwyd: We have just had the Foreign Office's
Human Rights Annual Report delivered to us outside the door.
Chairman: Right. That is the most recent volume.
Ann Clwyd
88. Yes. I can remember asking the Chancellor
what our policy was in the World Bank towards human rights and
I particularly asked that question in regard to Indonesia and
asked him why we were bailing out a country which was in fact
one of the worst human rights abusers and in fact was accused
of corruption and a number of other things. Now, what is the policy
of the Bank therefore if you can bail out a country such as Indonesia?
(Mr Wickstead) Let me have a first go at this. I think
the Bank is constrained by its Articles of Agreement in the areas
in which it can become directly involved. Its Articles of Agreement
are, of course, subject to interpretation. I think it is significant
that before 1996 no President of the Bank was permitted by their
legal counsels to mention the word "corruption" for
example. It was only after Jim Wolfensohn made a decision that
this was so important that he really had to come out and speak
about corruption that the whole area of governance and corruption
has been perceived as an economic issue and not just a political
issue. That may extend to the more general issue of rights and
I think the Bank is looking increasingly at how rights have to
be reflected in its own programmes. For example, take the issue
of core labour standards. There are some of those which are clearly
applicable to the Bank. The Bank is bound by adherence to the
core labour standards. Some of them which are rights, the right
of free collective bargaining for example or the right to freedom
of association, it is not entirely evident how this impacts on
Bank projects and programmes and therefore the Bank have simply
put it on one side before. It is now increasingly willing to look
at those issues. There was a very good discussion with the ICFTU—the
International Confederation of Free Trade Unions—about six
months ago and the Bank and the ICFTU agreed to put together a
joint paper on how the Bank would implement that particular set
of core labour standards. The very short answer to your question
is the Bank does not basically take a rights based approach to
development but it is increasingly aware of the importance of
taking rights into account in its activities and increasingly
ready to listen to those issues.
89. I understand the Chancellor's argument at
that time was that the bail out was providing some sort of Social
Safety Net. I know the Safety Net programmes have been heavily
criticised in not reaching the intended beneficiaries and failing
to dispose of the resources quickly enough. In fact, in Indonesia
the NGOs have actually asked the Bank to stop disbursing money.
How do you react to that?
(Mr Wickstead) I naturally defer to your huge experience
of Indonesia which I know you have always taken a tremendous interest
in. I was there a couple of weeks ago; they occasionally let us
out on the board to go on these trips from time to time. A couple
of points. First, none of the resources under the Social Safety
Net programme have actually been disbursed, Chairman, because
the Government has not met the conditions under which the SSN
should be disbursed. I think the NGOs were happy that had not
happened. The NGOs take a slightly ambivalent approach to some
of this. Clearly they want the poor not to be disadvantaged by
the crisis that has hit Indonesia and have become very involved
in programmes like the Community Recovery Programme where they
have a role in monitoring expenditure so that they can ensure
that the funds are going to where they should go. I think they
are doing an excellent job, some of them, in participating in
that. They recognise the political progress that is being made
but at the same time they feel that they do not want to give support
to the existing regime and this has presented a rather difficult
problem to them in the context of the upcoming Consultative Group
on Indonesia for next week, which is whether they should accept
the invitation to discuss precisely this sort of issue with the
donor community in advance, and most of them have taken the view
that they should not become involved, they would feel compromised.
90. Would the Bank therefore consider some kind
of external evaluation of its Social Safety Net programme so that
people outside the Bank can evaluate whether it has been a good
thing or not, not just in Indonesia but elsewhere?
(Mr Wickstead) These programmes will all be evaluated
as a matter of course by the Operations Evaluation Department
at the Bank which is an independent part. It reports directly
to the President and reports directly to the board. Those reports
are made available as a matter of course. I think the answer to
your question is yes.
91. Have there been any critical reports?
(Mr Wickstead) No, because on this particular one,
the Indonesia one, no resources have yet been disbursed.
92. I am not just thinking of Indonesia but
of Thailand, Korea, Brazil, where the Bank has been involved also.
(Mr Wickstead) As far as I am aware there have been
no evaluation reports done to date on any of the Social Safety
Net expenditures which have taken place in any of these countries
in terms of the recent crisis.
93. Then the taxpayer will have to foot the
bill if the whole thing goes wrong.
(Mr Wickstead) Yes.
94. Would it not be sensible to have external
evaluations as a matter of course for programmes of this kind
where you are effectively bailing out?
(Mr Wickstead) I think that in no country has the
full resource yet been spent. The time has not yet come to evaluate
the programmes. In Brazil, for example, which is another country
you mentioned, a first round of expenditure under the Social Safety
Net programme has taken place but there are still substantial
sums, I think, of second and possibly third tranches of that expenditure
yet to take place. Once that has taken place that is the time,
I think, to evaluate.
95. You are telling me the evaluation unit,
although it is part of the Bank, is independent of the Bank?
(Mr Wickstead) Yes.
96. How do you demonstrate that independence,
apart form the fact that it reports to the President of the Bank?
(Mr Wickstead) We see a lot of them. I chair a sub-committee
of something called the Committee on Development Effectiveness
and actually work extremely closely with the Operations Evaluation
Department, particularly its Director-General, who occasionally
makes himself quite unpopular with the President, I think, precisely
because he is extremely independent.
Chairman
97. Who is this fellow?
(Mr Wickstead) It is somebody called Bob Piccioto.
He is an Italian.
Chairman: Could be an American.
Ann Clwyd
98. What would the Bank's response be to the
NGOs' objection to bailing out because they consider it is actually
contributing to the growing debt of whatever country it may happen
to be?
(Mr Wickstead) I think the Bank's response would be
that first of all they are putting extremely tight conditions
in place before any expenditure happens. I think that is certainly
the case in Indonesia where, as I say, none of that has been spent.
The second point—
99. Can I just pick up on that. How can you
claim that with Indonesia's human rights record?
(Mr Wickstead) No, all I am saying is that no expenditure
has taken place yet under the Social Safety Net programme.
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