Examination of Witnesses (Questions 60
- 67)
TUESDAY 7 NOVEMBER 2000
THE RT
HON CLARE
SHORT MP, MR
TONY FAINT,
AND MS
MARGARET CUND
Ms King
60. We already know that pro-poor growth is
one of many buzz words. I just wondered if you can give us your
definition of what pro-poor growth is. We understand it to mean,
firstly, that governments are willing to distribute what they
have more fairly, and, secondly, that growth should be concentrated
in certain areas. Can you tell use what your understanding of
it is?
(Clare Short) Pro-poor growth being a buzz word, I
think that is not the way to look at it, and I think a lot of
the NGOs' criticisms of commitment to growth are just horrendously
against the interests of the poor in the world. If you look at
the countries where poverty has grown in Africa, its population
growth was faster than economic growth. That means the invincible
and inevitable rise in poverty. For those to say, "We are
interested in growth, we are only interested in distribution in
this desperately poor country", I think is the most irresponsible
and disgraceful kind of demand, but that said, if you simply promote
growth, it might be coming into your total GDP figures, but not
reaching many people. So it can be a one sector, one region of
the country—the mining industry might be going well—and
you have to have growth, but you have to look at who is getting
the benefit, not just in social policies terms, but also in improved
livelihood terms. In some of the bad days of neo-liberal ideas
being strong, there is not only the phrase that we used in our
country—it was growth at any price, regardless of the distributive
effect. It is right that you must have growth, but look at the
distributive effect. If you look at the poorest of the world,
some people say globalisation is hurting. Globalisation is not
touching them, they do not even have rural roads, they have no
connections to markets, they cannot get any credit of any kind.
So, an economy needs to grow, but then you need to look at who
is connected to that growth and getting opportunities from it.
For example, rural credit and rural roads are key to rural communities
being able to grow a bit more crop, get the things to market,
borrow a little to enhance their livelihood, start to be part.
So, pro-poor growth is growth, and then it is who is included
economically. It is not just the social question of distribution,
although, obviously, that is important and it is fundamental.
The confused argument about are we in favour of distribution or
not is nonsense. Anyone who has been doing it should stop immediately,
because if they have any influence—and that is what they
love you for—they are sentencing people to growing poverty
if they will not support the call for policies that will grow
the economy and that include everyone in the benefit of that growth.
61. So you are more or less happy with the World
Development Report 2000 which some people say has prioritised
growth over redistribution?
(Clare Short) We contributed to that in the push on
the participating poverty assessments, which you know about, and
we were commissioned for that. I think the representation of the
arguments about the report has been untrue. You just have to read
it. It is not concerned with the distribution and is just a falsity.
I think that was an example of that headline-catching propaganda
work that gets your name in the paper.
62. Although Ravi Kanbur did resign, did he
not?
(Clare Short) Indeed he did, and lots of people regret
it and tried to persuade him not to. I do not know him personally.
It is our very serious judgment that it is a good report. The
truth really matters and it is just false that it is reactionary
and not in favour of growth.
Ms King: I have a question on comprehensive
development frameworks, but I do not think it is as important
as Nigel's question on strategic compact. Are we going to manage
to get through everything?
Chairman
63. I do not know. What is your timescale?
(Clare Short) Well, let us go quickly, and I say that
to myself.
Ms King: Perhaps we can list them. You
will know that the comprehensive development framework put forward
by the World Bank represents a change in its policy. What do you
think the main conclusions of the pilot phase of CDF have been?
What difficulties have been encountered and what plans are there
to extend the coverage of CDF? That is my question.
Mr Jones: My question is about the strategic
compact which James Wolfensohn agreed to when he became the World
Bank President in 1997, a three-year programme. What inadequacies
was the strategic compact seeking to redress? Are there any plans
to assess the impact of the strategic compact reform programme,
and to what extent has James Wolfensohn been able significantly
to transform the World Bank at an operational level?
Chairman: What are the Secretary of State's
views on the global gateway?
Mr Colman
64. What is the Government's decision on improving
the voice of developing countries at the World Bank and IMF? I
was hearing Mr Koehler and Mr Wolfensohn saying there is a blocking
mechanism for developing countries, but, frankly, what are the
proposals so that we perhaps move closer to the WTO, one country,
one vote, rather than at the moment where it is dominated by the
Americans and the European Union?
(Clare Short) The comprehensive development framework
was Jim Wolfensohn's attempt to bring together all the things
that need to change to get sustainable development that brings
benefits to everybody, right through economic social policy, democracy
and respect for human rights, to try and draw everything together.
He did it as a matrix on a piece of paper, but I do not think
that matters. It was meant to be long-term development drawing
everything together. Then 12 countries were asked to volunteer
to be pilots. I think that was unwise, in that countries just
volunteered. Ethiopia and Eritrea volunteered and then went and
had a war. There were a number of other countries that you would
not think were good pilots for good development. Then along came
the poverty reduction strategy papers, which really are a sort
of immediate encapsulation, short-term perspective of the CDF.
That is looking comprehensively at the economic performance, all
the revenues, social priorities, opening it up. That is really,
I think, the same idea as the CDF, I think, the PRSPs and the
CDF in action for real in an emergency. People looking at the
CDF are saying they can still be complementary. Jim Wolfensohn
was deeply attached to the CDF and I personally think it helped
to give birth to the PRSPs, so he is getting it anyway. People
are saying CDFs are more long-term. I actually think the PRSPs'
role should be long-term, because if you really want to transform
a country's opportunities you cannot do it in two years, you need
the capacity to have a long-term perspective. I think the evaluation
of the CDF has been patchy and there is now some agreement to
do an evaluation. Really my answer is, the PRSPs are it. Jim Wolfensohn
is going to do an evaluation of them. A lot of people are saying
CDFs are more long-term, but my own personal view is that we want
PRSPs to include both the long-term and the short-term. I think
the PRSPs are the victory of the CDF, but Jim, whom I really get
on with, will not like what I am saying. As to strategic compact,
that was all in place before I took over the Department. Jim was
very much a fan, dealing with corruption, focussing on poverty,
getting more people out of the golden cage of Washington and getting
them into countries, all the sorts of reforms that we would all
applaud, but like all change hard to manage, so it was getting
some money up-front to help to manage the change, and that was
agreed. I would like to hand over to Tony who was there at the
beginning of all that and used to be out there as one of our executive
directors.
(Mr Faint) I think we should ask Margaret, because
she has been very closely involved with the arrangements of this
project.
(Ms Cund) This came about in 1997. President Wolfensohn
was very keen that the Bank should become closer to its borrowers,
not just geographically, but understanding better what their needs
were and helping them to cope with poverty reduction. We are very
pleased to see that now 24 out of the 51 country offices are actually
in the field; we have encouraged decentralisation, because we
think it is very important as a way to help develop country ownership
and help the World Bank to speak closely to the governments of
these countries. What we are finding is that there is a strengthened
and focus on poverty reduction, and higher quality country assistance
strategies seem to be coming out of it. The general quality of
projects has improved during the past three years. The compact
now come to an end and it is about to be evaluated. There will
be a first meeting in the middle of December between the board
and the managing directors to talk about it and how they should
carry it forward. It has done a great deal. It has made the Bank
look at its whole training of staff, its skills mix and all the
different aspects. It has been a thorough look at the Bank's management
and organisation.
(Clare Short) We think there has been a lot of improvement.
You never get perfection in this life and there is more to come,
but there has been genuinely a change of ethos in the Bank, more
focus on poverty, more decentralised, more respectful of countries.
Chairman
65. James Wolfensohn will like you for that.
Can we go on to the global development gateway?
(Clare Short) This is a sort of run by the World Bank
gateway to information on development, linking-up, like it would
link-up our website, all the information that is available in
the world and on the Internet to do with development, and providing
guidance of ways through to make the information accessible to
people. It could be very important. It could be very, very expensive.
There are a lot of academics and NGOs who are worried if the World
Bank are going to tell people the way through and which is the
good material, which is a legitimate concern. So we are cautious,
we want to know more about the detail, whether this is a project
for the Bank at all. I have my doubts myself. It is effectively
sensible to have a gateway that links all the information that
is available, but whether there should be a mega Bank project,
I am not sure. We have asked for far more detail. Nothing is going
to happen in implementation terms until we have more detail of
what is proposed and whether we are contributing. Some of the
Scandinavians have said they will contribute.
66. And the reform of the IMF and the World
Bank?
(Clare Short) I think the World Bank cannot get to
one country, one vote, because it is a bank, it lends money that
is contributed by countries. People have to face this, it is a
bank. As I said, Jim Wolfensohn was the inspirer of this idea
and I think it is a good idea. People will not put money in and
replenish if there is a majority of countries that are not putting
any money in and who are constantly taking different policies.
I think it endangers the future. If you went to a WTO, one country,
one voice it is desirable if that is in democratic terms. All
countries are represented and they are all in constituencies.
Not many countries like us have a seat of their own and this sort
of rotating interest. There are a couple of African seats. One
of the new African representatives has been in touch with the
Department for the kind of back-up and support that could really
increase the effectiveness of his representation—just back-up,
information, training, training back in country, which I think
we should really get on with. There are questions about how many
people can be in a team for developing countries. There is always
a danger that developing countries lose all their best financial
people to international institutions; they need to keep some of
them at home as well. My own broad answer is WTO, one member,
one vote, would wreck the Bank, it would cease to be a bank, but
there is lots of room for more micro reforms that would fantastically
improve the access to information, knowledge of commitment, enough
staffing and back-up for developing country representatives to
be much more effective and have a stronger voice. There are rarely
votes in the board. So although it is true that the US is the
biggest single contributor—
(Mr Faint) 17 per cent.
(Clare Short) It is not done by votes. Similarly the
EU tend not to move together always, because that is a bigger
voice. No doubt that is there. In the culture of some of the countries
concerned, they feel that they are entitled to tell everyone else
what to do, as you know, because it is true that the WTO too,
in theory, is one country, one vote, but lots of the countries
do not have people there or are not backed up enough to have their
voice. I think the micro route to reform that really strengthens
the voice of developing countries is the real route. I think we
can make a lot of gains there, whereas if everyone just wants
to balance everything, it will never be agreed, countries would
not replenish the money and the Bank would start collapsing if
you went to an extreme point of one country, one vote, because
it is a bank.
67. Secretary of State, thank you very much
indeed for covering such a lot of ground. You have brought us
up to date on a lot of these things which you have been dealing
with, and we are very grateful to you for spending so much time
here. I think we got into great depth in some of these issues
which are terribly important for us to understand, and, indeed,
for the wider world to understand, so thank you very much indeed
on behalf of the Committee. (Clare Short) Can I just thank
you. I think so much is changing in development, and the agenda
is becoming so complicated because it straddles the whole of the
political and economic agenda of the world, that there is a danger
that we make less progress than is possible just because there
are not enough people out there who see the best that is possible.
I enormously value the work of the Select Committee. I mean this
genuinely. It is not so that we should agree, it is that more
and more people would engage in what is a positive agenda. I am
happy to spend time being scrutinised by you because you in turn
are spreading analysis that needs to be more widely understood
if we are to make more rapid progress.
Chairman: I think we have your goal objective
there. Thank you very much.
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