Examination of Witness (Questions 162
- 179)
THURSDAY 6 JULY 2000
MR POUL
NIELSON
Chairman
162. Good afternoon, Commissioner.
(Mr Nielson) Let me welcome the members
of the Committee. It is a pleasure to have you here and I look
forward to a good discussion. Not all Member States are doing
the same and the optimists would say "unfortunately"
and the others would say "fortunately". I myself, as
you know, have been the Danish Minister for almost five years
in this field and I have also been working in the Council and
an active member of the group of like-minded countries which has
worked well. To give you the short version here it would be that
in these years the views of that group of like-minded countries
in fact cut across left and right political lines because Germany
and the United Kingdom before the recent governments were there
were part of the group of like-minded countries. We did manage
to change the direction of policy at the Council level, so in
a sense the task in front of me now is also to do it in the real
world. There is fortunately something that looks very close to
being consensus today on what good development policy is. This
is helped by global discussion and by the DAC exercise for the
21st century which has been instrumental in clarifying best practice
between donors. Also the comprehensive development framework discussion
initiated by the World Bank and the better effort to co-ordinate
within the UN system have all meant that the general background,
the framework or yardsticks that we are measuring up against are
better clarified now than ever. The cynic would say that that
is doing less than ever as far as development effort is concerned
quantitatively speaking. Of course we should be able to do it
better, both in the Commission and what we do together. Let me
first say that it is often asked what is the added value of doing
this collectively at all? There are some real added values, one
of them being the scope of it. We are present together as the
EU in a very large number of countries. That global reach is not
credible to deliver by any individual Member State and we definitely
also do see some sort of spread in the distribution of where individual
Member States are doing what. This has importance for the global
representation of Europe and for Europe's presence, influence
and ability to take care of its interests both in a narrow sense
and more ideologically, particularly in terms of the values we
want to project into the world. Also the very merits of doing
it together are nice, representing as such the outcome of a deliberate
effort to co-operate. The co-operative aspect of doing things
like this together out in the world is in itself representing
a message of co-operation as a way to do things in this world.
The fact that we are able to do it together is an added value.
Qualitatively and politically it may not always be so in terms
of operational efficiency but I will come back to that. In some
cases it is because we are able to manage and handle relatively
large activities which for most Member States individually would
not be possible. I also think, which is a point that is not often
given attention, that the fact that we co-operate systematically
in doing this as part of EU co-operation has a positive feedback
to the Member States, at least concerning their ability and willingness
to co-operate with each other. In other words we are a catalyst
that improves the operational co-ordination on the ground and
also the sharing of experiences and discussions and so on. Our
way of comparing notes in relation to World Bank/UN organisations
and so on within the framework that we have here is a real added
value. This is the point I will make before anything else, simply
that there are elements there which are not normally seen as something
in themselves.
I will tell you a little about the people on
our side of the table. We have Bernard Petit who is Director and
who is actually the person who was one of the main personalities
in the negotiations about the new Lome« agreement or the
Cotonu Agreement. We have Tim Clarke, Head of Unit, who is responsible
for our collaboration with the NGOs, and we have Thierry Bichet
and Christian Smith from my Cabinet. If we look at the problems
we have made no secret ourselves in the Commission of the problem
of the backlog of outstanding commitments. This has also been
highly publicised, this 20 billion. All of this is correct. I
think it is important though to note that there are at least three
different components of that backlog. We do not have problems
in the order of 20 billion as such. One part of it is what I would
call the normal time lag between committing money for a programme
that is going to be implemented in some years. This is perfectly
normal. Without that it would be the same as saying that nothing
of what we are doing is planned, so this is quite clear. The second
part of it is a backlog based on very good reasons. The Nigeria/Sudan/Somalia/Congo
problems of this world, where it is highly meaningful that we
have kept back money and not spent because the conditions were
not there, is also part of the backlog we are talking about. The
third part of it, to keep it simple, is the real problem. The
money that we should have been able to spend within a normal time
but where we are simply slower, that is what I would call the
real backlog. The size of that is not easy to determine and it
varies a lot from programme to programme and region to region
in the world. If we look at the ACP countries we are not in as
bad a situation as the Mediterranean programme as far as the general
overall time lag is concerned, and we have to add that in the
ACP countries we have a relatively large representation of failed
states or problems which, for good reason, are not performing
on delivery as seen from our point of view. That adds up to quite
a difference from region to region as to the character of the
problem. We are stressing that it is real that we have quantitative
staff problems. This is not a popular issue to raise. Most people
have a perception that the Commission is a huge organisation.
It is somewhat smaller than the US Department of Agriculture.
We do some agriculture in Europe also, but that is part of the
whole Commission. You may have had the figures already but we
have increased dramatically over the last 10 years or so the total
level of activity in terms of money by a factor of 2.3. Staff
have risen only 1.8. We compare ourselves with Member States and
the World Bank. For every 10 million euros in turnover or dollars
we have 2.9 officials. The average Member State and World Bank
move around from four to nine officials. This is a real problem.
We also have lots of other problems. I will say something about
that also, but it is real. This is the explanation why different
methods of overcoming that problem have been tried during the
years. The more principal political part of reforming in a sense
should be easier than the management. Saying the right thing is
easier than solving all these many different problems. Still,
it is interesting that in order to do it (and it is quite a relief
for me that Member States gave such an enthusiastic reception
to our overall policy statement at the meeting in the Development
Council in May) we are now positioning ourselves in a mainstream
fashion. We are giving emphasis to the same priorities as what
I call the elite donors are doing, giving prominence to poverty
reduction. We are trying to narrow the spread of sectors in which
we engage. This is not always easy and it takes a very good understanding
in the partner countries to allow this to happen because it is
often convenient for the finance minister in a developing country
or whatever to find it more interesting to have the road built
in his constituency than where it may be most needed, or to do
something totally different from what we would like to do. Also,
in order to improve donor co-ordination and to make sure that
we do what we know most about and where we can actually offer
some added value to the activity, all this has meant that the
priorities as we have presented them in the policy document are
being expressed. This is of very big importance even if it takes
time to get there because at least we have now stated the priorities
and the main areas of focus. This is something one should be careful
not to do too often because then it all adds up to confusion.
We are always on the way to something else so we have always said
the right thing but never taken time to do it. This is real. We
will have this as a clear perspective for the coming years. As
far as working method is concerned, we will go through the transformation
from a very classical, old-fashioned, project based working philosophy
towards a sector programme philosophy. This is something that
will take quite some work internally here and in our partner countries
to really adapt to, and I know from my experience in Denmark that
it takes some years and we have to be pragmatic. It is not something
one decides and then changes from one day or one year to another.
We had to do it as it was possible sector by sector and country
by country. I will not preach much about the value and beauty
of sector programmes but the most important part of it is that
this stimulates the emergence of a deeper, more committed, more
serious dialogue between the two partners and it forces the recipient
country, the partner country, to make their priorities clear.
We in turn get out of a situation of more or less arbitrarily
and more or less relevantly adding conditionalities to individual
projects and instead we have a more meaningful discussion about
the political basis and the things that have to be changed in
a given policy for a sector in a country in order to make things
work well together. On our side the donor stamina in this is crucial.
We have to be able to deliver on a more long term basis than jumping
from project to project. This again means that the priorities
will be real and finally it enhances the reality of donor co-ordination.
It should be noted here on donor co-ordination that we are agreeing
with Member States (some of them we are agreeing more with than
others) that this donor co-ordination is to include more than
the 15 Member States and the Commission. It should be universal.
In other words, it would be a mistake to see co-ordination as
an instrument which should be used in order to promote European
integration as such as a goal in this relationship. European integration
is fine and the Commission is definitely not against it, but development
co-operation should not be seen as a tool for that purpose. We
will in fact be stimulating it simply by success on the ground
and by more intimate and easy discussion between the 15 Member
States for the present, but including the World Bank, UN, Norway
and Canada and Japan, to mention the biggest. All this is important
and we should relate to them in a natural, relaxed and normal
manner. This sounds quite normal but it was not always like that.
In order not to go through the whole discussion on my side alone
and in order to say what I am going to say about the reform effort
we are in the middle of more as a specific reaction to the questions
you may have, I will stop here and once again welcome you and
hope that we will have a clear exchange. You will not miss my
remarks about the reform effort but I think it is better to have
something that looks and sounds like a dialogue. Today is a big
day not only because you are here but also because it is the day
before tomorrow. You may say this is always the case but tomorrow
is actually the day when I am signing the transfer and the definite
act concerning the one billion European contribution to HIPC.
During that we will be celebrating the biggest show of south-south
solidarity we have seen in a long time and that is what it is
because, as you know, the G7 countries did not themselves come
up with additional funding of any serious kind for the HIPC Mark
II. It was done by re-allocating EDF money which needed explicit
and formal acceptance by ACP states, which they gave in the middle
of our tough negotiations on the new agreement in the beginning
of December last year. This we are going to sign tomorrow. Once
again, welcome and let us have the discussion.
Chairman
163. Thank you very much indeed, Mr Nielson.
We have all been looking forward to meeting you. We have not had
a conversation since your appointment and since the beginning
of the reforms which your appointment and that of Commissioner
Patten have heralded. The purpose of the Committee is to update
our report on the European Development Budget and the EDF which
is now something like 18 months old. We wanted to see what changes
were being made and how effective they are likely to be. We want
also to look at this not just from an administration point of
view (although it is absolutely vital that the administration
is improved) but also to make certain that the quality of the
work that the European Development Community is doing is effective
on the ground. Where we have visited several countries we have
found and heard and seen some very bad examples of European development
and we would like to see those mistakes put behind us and make
certain that the quality we are going to deliver in collaboration
with the developing countries leads to the poverty focus which
certainly we have endorsed in this Committee and which of course
is not a feature of the European Community's development push
although you have made some changes in that direction recently.
The first thing we would like to tackle with you is the effect
of the reorganisation and also this constant complaint on the
part of the European Commission that they do not have enough people
to administer these programmes properly. We have heard from Commissioner
Patten how he is going to try and get round that situation by
closing down TAOs and bringing people into the Commission to work
directly for the Commission. We are not certain that this is not
just a political way round a difficult situation which we are
not convinced will work. What we would like to ask you first of
all is whether you are satisfied, because we are not satisfied,
that the reorganisation that has been taking place is the right
one and that it is going to get the right result. We recommended
that there should be one commissioner for development. We have
now got at least two with a few subsidiaries like Mr Lamy and
others in trade and other little departments around the place.
You are now the Chief Executive of this great organisation as
well as being the Commissioner, and we wonder whether those two
roles are compatible for a start, where you are only, as we understand
it, responsible for the Cotonu group of countries as we must now
call them, EDF, whereas the rest of the world is under the control
of Chris Patten, and what kind of administrative nonsense that
is likely to produce. I wonder whether you could tell us what
is your experience of the reorganised Commission and in particular
what you feel about having the non-ACP or EDF developing countries
remaining outside your Development Commission.
(Mr Nielson) This is an issue that continually gives
rise to confusion, probably for good reason. Let me first tell
you about the performance of it, how well we are doing things.
We have a spread of things. You may have been able to see something
that actually works also. I have already seen a few things myself.
I was very pleased and surprised with what I saw in Bangladesh.
I made a point of visiting a non-ACP/LDC country as my first regular
bilateral country field visit.
164. We have also been to Bangladesh.
(Mr Nielson) In doing that I am also stating the point
that this is my country also; it is my responsibility also. I
am responsible for global development co-operation. Even if the
relations with some of these countries outside the ACP group are
geographically managed—
165. This is the sort of thing that you European
Commissioners get used to but it gives us a headache. It seems
to be complete nonsense and yet you feel that it is perfectly
all right.
(Mr Nielson) There you are saying too much. I do not
think perfection is the most representative aspect of what we
are doing.
166. What did you see in Bangladesh that was
good?
(Mr Nielson) We were much more poverty oriented and
grass roots fixed than I had expected. There is this big NGO that
runs quite massive informal primary education. That NGO gets about
50 per cent of its budget from the Commission, BRAC and PROSHIKA.
That is another of these food for work road construction activities,
women's employment, micro-credit scheme, better nutrition habits
and all these things, very much like the way this is supposed
to be as best practice in poverty fighting. We have an enormous
communication gap. We do not have an annual report presenting
the totality of what we do.
167. You are going to have one though, are you
not?
(Mr Nielson) Yes. This has been one of my very clear
number one priorities. It will take time to do it because of the
fragmented character of the administration which has more to it
than having RELEX and ACP countries in two different Directorates-General.
There is more to it than that because the individual programmes
for the Mediterranean, Asia and Latin America, the former Soviet
states and all that, have their own systems, their own administrative
legacy. They do not have a unified set of rules for archives,
for instance. I call them the baronies. That is what it is. We
are not always able to do things exactly the way we might have
wanted. There is one project where I look forward to being hopefully
part of the company going there to inaugurate it. It is the Pitcairn
Island Road project.
168. I thought they were all leaving actually.
So you have a road with no people?
(Mr Nielson) No. There are 48 people out there. This
road is 500 metres going down to the landing and up to the village
where they live. There are no cars but it is difficult enough
to get up and down and now it is going to be rehabilitated and
improved.
Mr Rowe
169. The United Kingdom Government has just
cut off the subsidy to the ships calling on it, so they think
there will not be any more.
(Mr Nielson) They have serious problems. They certainly
asked the Commission to supply and we are paying 300,000 euros
as part of the two million. It is very expensive per metre when
you calculate that road. I did not get much specification as to
the poverty aspect of it but we did not want to create a problem
with the United Kingdom Government.
Tess Kingham
170. Where is this again?
(Mr Nielson) Pitcairn Island. That is where the people
from The Bounty live.
Chairman
171. One of the questions we wanted to ask you
was, do you consider that the statement on development policy
which you have just made is sufficiently robust on the issue of
poverty alleviation?
(Mr Nielson) No, definitely not. No statement is ever
robust enough. The Member States are here to stay, and doing things
as the Commission would like it and as I would like to do depends
on the willingness of Member States to accept it. They are taking
a very close part in the decision making. As far as the EDF money
is concerned they are in the EDF Committee looking at each and
every decision very carefully. For the rest of the world we have
similar committees overseeing the whole process of approving projects.
172. That is one of the things that worries
us, all this micro-managing by the states of Europe. How are we
going to get rid of that?
(Mr Nielson) We are discussing it these days as far
as the EDF money is concerned and the implementation of the new
Cotonu Agreement. We are right now discussing with a deadline
of 1 August with Member States the so-called internal agreement
about the rules for the Committee to process and handle the flow
of activities, programmes, projects. We want to have a higher
threshold in order to have more speed and flexibility and to discuss
programmes more than projects with Member States and policies.
They are not all very progressive about letting us do it. This
is the reality of it. Let me also relate to the other things you
said. On these technical assistance offices you said you are not
convinced that what we are suggesting will work. One reason why
it may not work would certainly be if Member States do not accept
the construction of using a limited percentage of the activity
budget to get things done, the operational part. If Member States
say no to that solution, which is a more regular front door solution
than the kitchen door solution of these TAOs, it is definitely
a self-fulfilling negative prophecy that it will not work. Otherwise
it does not present any problem technically or legally. On the
contrary, it is closer to a normal regular way of organising administration
than over here.
Mr Colman
173. We were discussing it earlier today. First
of all I am surprised that you talk about the kitchen door being
the way that TAOs operate because most business and government
organisations are outsourcing all that they can, saying that this
gives them much more flexibility, much more accountability, and
is much more cost effective, so if the TAO system did not work
it appears to be more to do with, if you like, the allegations
of corruption which have haunted the Commission and the Parliament
over the last two years. Is this a situation where you are throwing
the baby out with the bath water? Is this merely to get round
the fact that you cannot get the Member States to increase the
budget for directly employed people to work within your DG? I
am concerned that what appears to be a good idea, which is to
outsource all that you can, working with expert outside consultancies,
is going to be lost through this wish to improve the numbers you
are employing in-house? Are you sure this is going to be the right
way forward?
(Mr Nielson) I think there are a number of categories
here and problems that are coming together maybe not totally systematically.
On outsourcing we will in no case be missing the input and inspiration
from using external experts, consultancies and so on. The problem
is if we are forced to call it a project and put it outside there
because we are not allowed to carry out the administrative costs
of doing the real administration. That is what has created suspicion
and lack of clarity in the system. As far as the risk of corruption
is concerned, I think whether or not you use these external elements
in getting things done or not does not create much difference.
174. Commissioner, we were told this is being
driven by an MEP, a M Bourlange, who has been pushing this on
to you as it were as a way forward because of the corruption that
was identified in some TAOs last year.
(Mr Nielson) Yes. If it is a principal or technical
or abstract discussion my view would be that the risk of corruption
is bigger through that construction than through having civil
servants proper being able to do the job. It is not the same as
saying if we do it like that it will be corrupt. That is not the
case. Also, the big problem has not been corruption as such. The
big problem has been inadequacy, sclerosis, whatever you call
it, paralysis. The reason why some say that TAOs did not work
is because they were facing the problem of having to relate to
the same crazy complicated system as everybody else, so they came
here as effective consultancies from the outside and should relate
to this system. How did they do that? Of course they did it like
this so they ended up as banging their heads on all the rules.
The root cause of the problems has to do with the fact that this
machine was never constructed to deliver development co-operation.
It was constructed to produce directives, regulations, conduct
trade negotiations and facilitate the European process. All that
it does quite well. It was never constructed for the purpose that
I am using it for. That is the core of it. Whether we do it one
way or another we have both a quantitative and a qualitative problem
but we also have inadequacy problems. We are not well organised.
It is possible to get there but it is not possible to do it without
resources. In any case, even without resources it is my view that
the room for improvement is so phenomenal that we will present
changeable progress.
175. We thought TAOs gave a better way of involving
local recipient country consultancies.
(Mr Nielson) There is no difference whatsoever, no.
As to that, what we want to do now is to open up for hiring many
more people at country level. That is exactly what we are doing.
It is simply more direct and we do not want to have the extra
layer of management managing the TAOs and paying for that also.
We want them to be part of the organisation. We know we will not
be allowed to get them as permanent staff so we will invent this
other category, but basically we want to keep the uniform character
of the implementing organisation.
176. Have you done a paper on this that we could
take away?
(Mr Nielson) What we have in the reform paper is definitely
covering this and you are more than welcome to have it.[5]
It was the scandal of last year and some of the specific cases
that have been the cloud over our heads and I warn against too
far-reaching conclusions as to the architecture of solutions to
our problems coming out of that experience. With regard to one
Commissioner for Development Co-operation, coming back to the
Chairman's question, and whether the CEO role is compatible with
being Commissioner: I see myself as Dr Jekyll and Mr Jekyll.
Chairman
177. No Mr Hyde?
(Mr Nielson) With the focus on my portfolio, even
if it is geographically the whole thing, being, how am I going
to do it given the distribution of baronies? I will try to tell
you how. On the upstream side the formulation of country strategies,
overall policy, we have done already. Please note that the overall
policy paper covers the whole thing and we are agreed on it. We
have just got it. There is no slack or lack of clarity at all.
On the upstream side, DG Development, DG RELEX, they are going
to do the country strategies and the programmes including sector
programmes as such for the countries all over. We are creating
(this has been decided) a quality support group which will cover
the whole thing and which will have its secretariat in this house,
in fact on this floor, which is my idea.
178. And it will be separate from the implementation,
the SCR?
(Mr Nielson) Yes. I will go through how I see this
system ahead of us. The role of this quality support group, which
will have representation from DG RELEX, DG Development and the
SCR, which is the recipient of that product, is to make sure that
we have consistency in policy coherence with the policy paper
and the principles and priorities there and quality control as
to the quality of it. These agreements will be handled by the
board which is the group of RELEX Commissioners. We in any case
have to agree on the lines we are following (I will come to them)
and have them taking part in giving the green light so that the
priorities and things we are doing are something that the RELEX
Commissioners agree on. This is also a way of handling the problem
where I, as Development Commissioner, am going to take my responsibilities
seriously (and also operationally) as to the upstream formulation
of what we do in countries outside ACP. This is why my hand will
be on the handle, on the upstream formulation on that in RELEX.
179. In terms of both implementation and quality
throughout?
(Mr Nielson) Yes. Then on implementation if you will,
the downstream, the handover to the SCR (we still call it that
for clarity reasons), is crucial. After having the green or blue
or whatever stamp we will use on the quality of the input, the
next phase of identifying we have called project identification.
That is an old-fashioned thing. If we take it for granted that
we do formulate sector programmes I would prefer to have another
name for that, so I would like to call them elements or components
in the sector programmes. That would be what they do, but until
we get there with meaningful credible sector programmes we will
still have a lot of projects, classical stuff, in the pipeline,
and we have it in any case for the next two years and we have
to pump it through, so we will have a multi-phase challenge to
manage which those of you who know about the oil industry know
is not that easy to manage. In the SCR the role of the Chief Executive
Officer is to make sure that it works directly also on a specific
country desk geographical basis, that it works with the upstream
Directorate-Generals so that they share the same view and knowledge
of what we are doing and are supposed to do in that country and
making it possible for our delegation there to have a meaningful
dialogue with someone in the process. Everybody talks about the
whole Commission being centralised. I think it is a wrong picture.
There is no more centre as to having decisions being made here
than there is of a centre in Los Angeles. You drive around the
whole day trying in vain to find where the centre is, and it is
the same here. It is the absence of credible hierarchy that is
the problem. These separate structures each have their aspect
of what to do and how to do it. When the SCR now gets the implementation
programmes or projects fed in from the other Directorates-General
the first thing is to try to find a hair in the soup, and so the
CEO will have a very important job in amalgamating this and making
it smoother, and in general being able to give political presence
and decision making with a willingness (hopefully also ability)
to create arbitration and decisions where things are being sent
but are not moving. This has not been there before. I have already
had the first two meetings with the management of the SCR and
they seem to welcome a firm hand from my label. It is compatible;
it is necessary. I think this answers your questions.
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