Examination of Witness (Questions 180
- 199)
THURSDAY 6 JULY 2000
MR POUL
NIELSON
Ann Clwyd
180. In the 1991 Council Resolution under the
heading of Human Rights Democracy and Development the Commission
is supposed to give an annual report. I understand that not one
has been given since 1995. A person who wrote in to us said that
he found it particularly ironic in a field that purports to promote
good governance and democratisation in other countries that the
Commission omitted to do that. Is there an explanation?
(Mr Nielson) I am not able to answer for the years
before recently, but for last year an explanation may be parallel
to the very embarrassing case where we were unable to pay last
year the fabulously well organised and successful agricultural
research network co-ordinated by the World Bank, the so-called
CGIAR, the CIGAR as we used to call it in Danish, because the
dossier was moved from one Directorate-General to another and
the patient did not survive that transfer. It may be the same
case here where human rights now is in Mr Patten's area. It has
been specified and people have been moved from this place to DG
RELEX. But it may have been the case that they forgot what it
was they were doing; I do not know. This year that may be a part
of the reason why the reporting has not been followed. The years
before I cannot account for. I really think that the reason why
they have not done it now is that they stopped doing it some years
ago. I do not know.
181. I wonder if somebody could find out.
(Mr Nielson) Sure.[6]
We are taking notes on our side also. The proliferation of things
we are supposed to do to serve the Council is quite phenomenal.
If we take a matter like coherence, I am supposed to report and
report and report on it, and we do not have new problems the whole
time so it has the energy to be a discussion that starts all over
from zero every year. Hopefully this will change now because we
have done more serious work now than ever but it is a little difficult
to satisfy everything. There may be expectations out there that
we should do a report comparable to what the US Congress gets
every year or what Amnesty International is doing, things like
that.
182. The United Kingdom also does one.
(Mr Nielson) We have said that this we are not able
to do. This is far beyond the limit of our capacity. This is a
small organisation although there are relatively more people—
183. I wondered why the Council was not on your
tail then because it is a Council Resolution and presumably if
Council Resolutions are meaningless then presumably the Council
should either withdraw the resolution or challenge you.
(Mr Nielson) I think they should ask Solana to do
it. I do not think I am speaking on behalf of Chris Patten here
but I do not think we have the resources to do something that
is better than what is already available. That would be my feeling.
184. What steps are you taking to rationalise
the proliferation of projects that face you? You talked about
proliferation and said that certain projects have proliferated.
(Mr Nielson) There was a decision to concentrate on
six major areas. I will present them for you if you wish.
Chairman
185. We have them here: Trade and Development,
Regional Integration,—
(Mr Nielson) Exactly. They are the six. It is a little
more complicated than that because of the cross-cutting aspect
of gender, environment and human rights and so on, and it is not
possible to do it just like that. Everybody knows that. Still,
the coast is clear; we want to do it, so we are preparing for
the battle to get out of the tourism and what-have-you in many
places, and we are also preparing for the battle of reducing the
developing countries in order to concentrate more on Africa, sub-Sahara
and all the rest of the LDCs and so on. All this is the battle
plan so we will see that. We had to do what we had promised so
far. One big operation which is changing the composition of what
we do is of course HIPC because that will shift one billion to
what is poverty right to do. We are shifting a billion so we are
definitely doing something about that trend and the re-allocation
money from the remaining seventh and eighth EDFs is 1.5 billion.
That we are looking on with fresh eyes later this year when we
have finalised the mid term reviews and so we will start with
that money. The ACP countries have accepted that in spite of the
fact that the funds have been allocated. They are seeing all that
money. We will be able to look at that. That is going to accelerate
the transformation process so we are starting ahead of the new
Cotonu Agreement system and the priorities of our policy paper.
We are having this jump-start by means of unspent money being
re-allocated. We are coming to the Member States in a very big
operation in the autumn and winter doing this. That will help
clarify the priorities in reality.
186. Will you rank these elements so that there
is an attempt to rank these things with priorities?
(Mr Nielson) The six?
187. Yes, the six that I am talking about, and
how they contribute to poverty alleviation and how they relate
to each other.
(Mr Nielson) They are all supposed to contribute to,
and will be contributing to, poverty alleviation. That is a matter
of how we do things. We have explicitly avoided ranking those
six. They are all quite crucial. One of them is quite different
from what is normally given such a heavy role in bilateral donor
policies and that is regional co-operation. Also the one on trade
and development is not usually that. We have the competence on
trade and the relationship there, knowing that we have to do more
not only for access into our markets but certainly the whole enabling
environment behind it, making it possible, creating confidence
for investors, all this to change the existing situation. The
real factors determining whether some economic take-off has changed
or not is where we are going to give heavy emphasis. One thing
that we have not specified there is that one part of the new Cotonou
agreement is in fact the 2.2 billion euro investment facility
which will stimulate the creation of joint ventures on an equity
risk capital basis administered by the European Investment Bank,
not here. This is a new fantastic thing. It will not start until
a year and a half from now because we know this takes careful
preparation.
Mr Colman: You can send us papers on
that.[7]
Chairman
188. You had better watch the European Investment
Bank. They are pretty slow and pretty inefficient and they are
used to dealing with big infra structure programmes.
(Mr Nielson) That is why we have said, "We want
you to take two years because we do not want this to be done in
the same manner as you have been doing things so far".
Mr Rowe
189. There is no doubt at all: we all want you
to succeed, but we have heard the EU full of good intentions before.
Not very long ago I went to your office in Delhi where you were
smarting from the fact that you had lost every single euro or
ecu in a poultry project in Bihar. The consequence of that was
partly to lay another two or three layers of accounting procedure
here in Brussels so in effect the under-staffed Delhi office was
being further strangled. Do you see that your reforms will actually
improve the delivery of projects in India and, secondly, will
you be going down the path that DFID has gone down, of only co-operating
with those states that have a reasonable level of governance?
Bihar is notorious, even in India, of probably being the most
corrupt state in India, and to have committed oneself to a relation
of the Chief Minister's poultry project seems bizarre as well
as Bihar, one might say.
(Mr Nielson) It is a special Asian version of the
concept of family values. On controls, the view is that more ex-ante
control is not interesting, also because the errors we learned
from that type of control are not interesting enough. The feedback
value of errors from ex-post control is interesting. We are suffocating
the whole system in more and more "cover-me" type of
ex-ante control in Brussels. It moves around. That is why I have
got this picture in my head of Los Angeles. It moves around. It
is, as I said before, the absence of a credible ownership and
hierarchy that actually decides and is willing to decide, given
a right to decide upon this problem. In the Kinnock track, the
big reform process, we have the RELEX reform and we have the general
reform. We are depending on the general reform also because, the
way we spend money we have to have Member States accepting the
financial regulation and that is a unanimity type of decision
with Parliament, but it is coming from that and the way we have
organised it that we have this enormous layer of ex-ante controls.
Every single one can stop the whole thing. People are scared.
The reaction was especially bad because of the drama of the forced
resignation of the Santer Commission a year ago. I am quite happy
that myself and my colleagues have not been paralysed by that
and reacted to this, and the new Commission of course will have
more of that. We have reacted the other way round in saying that
it is the inadequacy, the lack of transparency, the lack of responsibility
and ownership in the way it is organised now that is the problem.
We are in fact reorganising financial control. This has been proposed
by the Commission and this is the central core of the big Kinnock
track effort. We are those who need it most because of the backlog
of and the paralysis of things. I just had our head of delegation
from Nicaragua visiting me to report to me on why we are not performing
on the Mitch disaster activity. It took a year in DG RELEX to
find out how to administer it in the corrupt environment of Nicaragua
in a way that we could accept, that we would have to enlarge our
delegation in Menagua with seven people who would run it and administer
it and do the contracting and so on. We are moving as an experiment
(which is nice) quite a lot of the administrative work to the
delegation to do it independently for the Mitch follow-up. But
it took a year to decide those seven people. Chris Patten signed
it, he said, a little less than a month ago. That tells me that
it should be possible to manage what we have with less people
than maybe some people think. On the corruption issue, where things
get out of control, we react. In the ACP agreement we have this
provision for non-execution that can be activated and we have
a growing number of cases where we are actually using that provision.
The existing agreement relates to democratisation, rule of law,
but that is where corruption in a way comes in, and human rights.
But in the new Cotonou Agreement we have on the table a new provision
relating to corruption and it is written "corruption".
We started out with good governance as a new element, which is
the euphemism normally used because it is a little too embarrassing
to talk about corruption between gentlemen and well behaved human
beings. But I insisted and we got acceptance from the ACP states
to separate those two things, so we have governance as the fundamental
value that we are working on. We took out corruption and we have
now in serious cases of corruption a procedure parallel to the
366A non-execution procedure which we had in the old agreement.
We have a separate track for corruption and we want of course
to do something on capacity building, strengthening the state
of offices and all this as the nice part of it but it is now clarified.
190. What do you do if there is corruption?
Do you simply stop the flow of money?
(Mr Nielson) Yes. And in the Ivory Coast case where
we found out that for budget support, money, structural adjustment
funds, which they should have spent in the health sector, there
was a clear case of corruption, our auditors found out and it
took some time to have it verified. After some time they agreed
to participate in a real joint audit and we clarified 28 million
euro and they paid it back. Even in the military coup they had
in December last year, they first said something about this being
questionable. We sent them another letter and they hurried to
confirm, "We will pay back", and they did it before
the date in January. We have to do this in a much more clear fashion
because otherwise we are losing public support and also for reasons
of decency which still count.
Ann Clwyd
191. How much money is being spent in the wake
of Hurricane Mitch?
(Mr Nielson) Two hundred and fifty million and nothing
has been spent so far.
Tess Kingham
192. Can I just come back on that?
(Mr Nielson) Let me tell you. I just have the whole
thing in my head, but the plans and programmes are clear.
Chairman
193. You have plans but no spending?
(Mr Nielson) We will do health and education and stay
there building new schools and health clinics and all this. That
is what we do in all the countries.
Tess Kingham
194. Does that include the Atlantic Coast area
which was the EU funded programme before that?
(Mr Nielson) Around blue fields?
195. Yes, because you said about corruption:
that was never a particular problem in that area.
(Mr Nielson) No. I do not have the map of where we
are doing this and that.
196. Can I request further information[8]
because I specifically operated on that programme so I am quite
surprised if dispersals have not happened.
(Mr Nielson) No, but it is not because
of corruption. It is not because of problems in Nicaragua. It
is Brussels problems.
197. No. You said in the corrupt environment
in that country it was difficult to operate.
(Mr Nielson) Yes, but that is why we want from the
first part to do our own management.
198. Because, as you know, it was an incredibly
successful programme. It was a great tragedy it was devastated
and now it is a shame that it has not picked up again.
(Mr Nielson) Sure. It will get rolling in the next
month, but it is quite embarrassing, I agree.
Mr Khabra
199. In view of the Patten communication do
you agree that political considerations do influence the policy
you adopt and the decisions you make in the distribution of financial
resources to different regions?
(Mr Nielson) Yes. It is not a mechanical operation
to do this. We do have a spectrum of interest to take into consideration
and this has been reflected in the enormous growth of engagements
that we have taken up. If you look at the regions of the world,
if you look at the need for doing more on environment, that cuts
across the clear poverty line of it. In a sense we do tropical
forest management and protection in Brazil which is poverty wrong
but environment right. It is not that easy. There are many considerations.
Certainly if we look at Europe's more immediate surroundings and
our interest in stability and prosperity in the Mediterranean
area and the Middle East and the Balkans and all this, these are
realities. The good result so far is that we have managed to keep
the absolute level of activity for Africa and the developing countries
proper at the level they are at without being reduced in spite
of the involvement in the Balkans and these other parts.
6 See Evidence p. 46. Back
7
Not printed. A copy has been placed in the Library. Back
8
Not printed. A copy, in French, has been placed in the Library. Back
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