Select Committee on International Development Minutes of Evidence

Examination of Witness (Questions 300 - 319)




  300. Is that a feature of referendums?
  (Mr Malloch Brown) Yes and of elections—broke open because very determined democratic leaders decided even if the playing field was tilted against them that they would work within them to broaden democracy. I come at it very much from that personal experience. What I have done, which I do not think previous administrators did, was I stopped our co-operation in the Zimbabwe election and in the Cote D'Ivoire election and pulled out UNDP in both cases and as we were providing in both cases the logistical support for the EU, I had to take all the UN decals off all our vehicles so we could continue to deploy the EU observers while no longer attaching UN support to the elections. Because I am having this wonderful pulpit of development agency of developing countries, I do not think I am doing them any favours by going along with false election exercises.

  Mr Colman: I agree.

  Mr Worthington: I think you have answered the question I have been given, so can I ask my own which follows on from what Tess was saying. It is this business of if democracy is to be strong has it always got to be the same style of democracy everywhere? In developing countries I am struck by a number of things: one, the number of rich man's parties where the party is owned by a particular industrialist, it is his party, there is no fundraising for that party, there is no ownership of the party. You read all the manifestos and they are all the same, promising goodness, health, beauty. An enormous amount is paid for. You pay for people to attend the polling stations. You even distribute goods, bread, whatever it is.

  Chairman: Or rum!

Mr Worthington

  301. I bow to your West Indian experience. There is no ideology and what you have got as well is usually strong religious ties or geographical ties or ethnic ties and so on. When people are saying "vote for me" and people are saying "why vote for you?" the answer tends to come back, "I will do this personally for you if you do it." Where do you see the healthy roots of democracy coming so that when you are saying "vote for me" it is a vote for some kind of belief or ideology or something respectable rather than what is in it for me.
  (Mr Malloch Brown) I think that is a very good question. If I can just borrow for a moment from my consulting years, I felt like that George Bernard Shaw maxim "If you can, do; if you cannot, teach." Never having joined you on that side of the table as a Member of this Parliament I went off to sell my wares around the world. I was very struck as a consultant by the sheer democratic vigour of countries in their first post-authoritarian elections. I worked in every country of Latin America bar Mexico. I have worked for them all, these first champions of democracy, and all of us, not just the cynical foreign consultants with pollsters and focus groups and all the rest of it, including people listening to us in the rallies felt that this was about big ideas and change. And I think that is still the case in a lot of elections. Vincente Fox in Mexico was about big ideas that he won, or President Cardoso in Brazil. They are over-laying a strong agenda of reform on top of a creaking party structure which is not fully modernised but nevertheless they are injecting into it a level of ambition for change that you rarely hear in United Kingdom or US or European elections. You do not, thank goodness, have all this technocratic trying to reach for the middle ground and pretending you are better managers than the other people. It is still very much more about big ideas but, you are correct, the other side of it is this terribly old 19th century "election of brewers" and you have still got that element of big financiers, big money interests behind parties. I think that is an evolutionary issue. I have seen a shift during the time I have been involved in this, from politicians in developing countries resting initially on organisation and not understanding that their electorate has doubled in size and moved from the countryside to the cities and therefore an old landowner-based approach did not work, to a much more modern, message-based style of campaigning. It had some terrible consequences for Fujimori and Chavez where the old parties failed to adapt to message-based politics and also failed to deliver results in terms of poverty reduction and make the space for the worst kinds of populist message-based movements, but at its best I think we are seeing a very healthy evolution towards a more modern political system. A number of countries have now been talking about wanting to introduce corruption legislation specifically dealing with campaign contributions.

  Chairman: That is a subject for all of us.

Mr Worthington

  302. You did not use any African examples of where it is good in terms of the political parties campaigning for what we would see as big messages.
  (Mr Malloch Brown) I think that is right, I did not, and I think unfortunately in Africa there are less good examples. What is happening in Africa is a very interesting phenomenon which is suddenly you have got these guys who for up to 30 years have been in opposition, the Mitterands of Africa, suddenly coming into power. President Wade in Senegal, almost certainly on the second ballot Kufuor in Ghana. There are three or four examples now of these leaders; indeed, for all its imperfections Gbagbo in Co®te D'Ivoire. These guys have never been particularly ideologically at odds with the Governments they have replaced and suffer in some cases from all the problems of having been in opposition for 30 years in that they may not necessarily be the best managers. At least regard in to Wade in Senegal, he was at the same conference on democracy and closed it with me and made a brilliant speech about the crisis of democracy in Africa being the "big chief" phenomenon. It sounds much better in French than it does in English, but the point is this absolute power phenomenon, where if you are elected democratically or autocratically you insist on controlling the whole power equation. The first step governments in Africa have got to learn is to share power. This is so clearly the crisis in Zimbabwe and other countries; a reluctance to share. It does not get us where we want to go.

Ms Kingham

  303. In one of the UNDP's discussion papers in 1997 you said that "the history of anti-corruption efforts is filled with programmes that succeeded at first, only to be undermined by subsequent governments or by economic and political crises." How does UNDP now ensure the work you are doing with government is sustainable in developing countries given the economic and political instability that they inevitably suffer?
  (Mr Malloch Brown) I think it is very difficult. The principal approach is to encourage governments to undertake broad-based, national, consensus-building activities around their development agenda which creates some development objectives which outlast government terms. This is the one thing where I would concede to authoritarian governments—they have been able to show a greater consistency over the long term around government objectives than when you have more rapid changes of government. You have got to build that up so that certain parts of the government agenda stay as constant as possible through changes of government, and oppositions recognise that when they are campaigning there is a national consensus and that it is important to sign on to it. There is definitely a zigzag and loss of momentum. That is democracy, but I think we have got to try and minimise it on these issues.

  304. I would also like to ask in terms of civil society how do you determine what civil society is? How do you ensure that it is truly representative of the people in the countries where you are working because there can sometimes be a tendency to go for the easier option of working through NGOs who have got a framework on the ground to deliver rather than seeking out indigenous NGOs to work with. Also how do you identify civil society under authoritarian regimes and ensure that it is not usually para-state or women's organisations that set themselves up that are filled with the Government's wives and sisters?
  (Mr Malloch Brown) Let me just say on that that I formed a Civil Society Advisory Committee when I came in because I was surprised that we did not have very good institutional relations at global level. Of its 15 members, 13 are southern NGOs which is a very different inverted relationship to what you would find in most international organisations. Some of them give the Secretary-General and myself a constant hard time particularly on our relations with the private sector accusing us of "blue washing" the private sector's behaviour in developing countries. We have sought to reach out. How are they representative? I would say that in a sense this whole debate about representativeness of NGOs is going in a false direction. You are never going to have some representative test based on membership, that is not the nature of a CSO. A civil society organisation is in some ways half way between a political party and an editorial writer in the sense that its real power comes from a message which resonates with people and they agree and it gains influence. We do not ask who is the editorial writer on The Times but if it is a good editorial you shake over your breakfast and think, "God, questions in the House today and the rest of the newspapers are going to be on the story tomorrow." If it is not a good editorial, you do not. It is a bit the same with CSOs. I know the ones which have influence and the ones that do not and what kind of influence, and whether it is a young, dynamic group raising new issues of gender, or minorities, and whether they are glib northerners or whether they are people with real feet in those communities. It is instinct but I think we know it. I think our role is not to select anyway, it is to create the space for them. What the southern NGOs are always telling me, whether it is a democracy or authoritarian government is, "Keep on saying that an active civil society is part of governance, it is part of holding government to account and push for more space for us." That is essentially what we do—constantly tell governments that this is part of the governance equation, as much space for as dynamic a debate and a strong CSO sector as possible.

  305. I am a bit worried about that response. I accept that there has got to be a space created for NGOs, civil society groups, but I think a lot of those organisations can have their own agendas and can declare that they are speaking on behalf of people, things about good governance and involving communities, particularly poorer communities, to ensure that they are responsible or complacent. Do you not have any kind of mechanisms whereby you can ensure that the leadership of those NGOs do have some kind of democratic structure or leadership, that there are some kind of gender balances, equal opportunities, structures within those indigenous NGOs? Good, progressive, northern NGOs will look for those qualities in partners that they are work with and there are standards that can be set.
  (Mr Malloch Brown) Let me be clear, in terms of who we ourselves partner with as partners at the community level, we apply all those standards. I have some very progressive goals on the gender issue particularly in terms of local partners. So I do not want it to be misunderstood in terms of our local partners. Our view is that we do not try and create a register of good NGOs at country level. We think the more space the better because the basic characteristic of government in a poor developing country is the huge gap between the local officials and the poor, so the more organisation and community activity there is to bridge that the better.

  Ms Kingham: I am not worried now, thank you.

Mr Rowe

  306. I think you have covered quite a lot of this already but it would be interesting to hear your views. The suggestion is that good governance is the principal weapon against corruption, but are there other factors apart from the institutions that make developing countries more susceptible to corruption?
  (Mr Malloch Brown) Yes. I think that the structure of their economy has enormous influence particularly if it is very resource based—that is a limitation—but also if it has closed structures. I also think there are some cultural dimensions but, broadly, I think the cultural argument is a mischief-making argument in that I do not know countries which genuinely think that corruption maintains a sense of hierarchy and admirable tradition. It is perhaps worth saying that there are often some big structural impediments which are not directly governance in nature but which are holding a country up which I look at as having to address. I would not want you to think we just do governance. We have been talking about the political end, but we also work on mainstreaming HIV/AIDS as a national development priority. We work on rebuilding governance after conflict. It is dealing with a broader national policy agenda that countries must deal with. To give you the most pressing current example of this—I think if you discovered afterwards I had not mentioned it you would think I have left something out today—I have been representing the Secretary-General in trying to get a land reform programme started and financed in Zimbabwe. There is a classic obstacle right across the road in the way of the development of democratic sustainable development in that country. It is an issue which is completely cancerous in the political economy of the country in the way it is used by a government of a country, in the way that it has completely thrown off track a more sensible political and economic evolution. We are not afraid of taking on these kinds of issues because we see them as governance.

  307. Corruption takes many forms. I remember years ago being told that, for example, in The Gambia the Ministry of Health took on what she regarded as an immoral research programme because she thought it was quite wrong for half the country's children to be used as a control group, but she said that it was quite impossible to refuse because when the programme was finished all the Land Rovers and all the equipment would be left behind for her to use, so she had this balance to strike. It seems to me that The Gambia is rather a good example as far as I can make out. The current health care systems in The Gambia do not reflect in any way the amount of money poured in by research organisations. That is corrupting too. I wonder whether you would like to comment on that.
  (Mr Malloch Brown) I would. The United Kingdom in its White Paper is talking about untying aid which will immediately cut the costs of that now small portion of the United Kingdom aid programme by 25 per cent and probably lead to fewer Land Rovers and a few more Toyotas on these projects, which is not altogether a good thing. But I think the whole of development is going through this change from a supply-driven to a demand-driven business. It comes out of a context where it was a tool of geo-politics and under that basic umbrella people could engage in every supply-driven folly they wanted to, experimenting on developing countries with everything from medical research programmes to infrastructure which was entirely inappropriate. We are now seeking to reformulate the model so that it is developing country determined, driven and owned. I do not think developing countries will be any less prone to mistakes than the supply drivers of the past, but it will be a much more wholesome process and hopefully will lead to less of these kinds of examples. Three-quarters of our staff are national staff and our international staff, like in DFID or the World Bank I hope are increasingly culturally attuned to not pushing their expert solution on people but to listening better and responding more carefully.

  Chairman: Your answer concerning working with other institutions such as the World Bank leads us to Andrew Robathan's questions.

Mr Robathan

  308. You are particularly well qualified to talk about relations with the World Bank. We heard from James Wolfensohn when he made his anti-corruption speech in 1996 that before that corruption had almost been a taboo subject in the World Bank. You have told us that you have had anti-corruption programmes for over ten years in developing countries so obviously it has not been at the UNDP but, leading on from that, do you think there are different roles for the multi-lateral donors and bilateral donors in tackling corruption and should we be working closer together?
  (Mr Malloch Brown) We have been doing it for 10 years. Jim Wolfensohn was a hugely important convert because the sheer lending power and money power of the World Bank was very important. It was very brave leadership on his part when he did it because, perversely, going back to this trusted role the UNDP has, we had been allowed to talk about corruption for years and nobody thought it was culturally offensive behaviour by a domineering international organisation, but whenever the Bank hinted at it everybody cried foul and said it was "western values" and all the rest. Behind it lies the serious point that we are a Trojan horse. We can make a lot of quiet progress on this issue which is our role. The Bank's role is to clean up its own portfolio and in the economic restructuring of countries to press for more open systems with less regulation, and where there is regulation, much more transparent and open regulation. I think that is a critical area for it to work in. The British Government's role is certainly to demand the same things in its own aid programmes and in the sectors where that aid programme is active in countries, but it is equally to be robust on these issues at the board of the Bank as well as the board of UNDP and other organisations, and finally to play its own role in pushing the issue of corporate responsibility with British companies. Britain does not have the problem with its companies that some Europeans have in that British companies are in general pretty straight, but nevertheless it is important that British companies recognise the obligations of the OECD guidelines and respect them.

  309. You have already said that developing countries used to shout foul and talk about western values whenever corruption might have been mentioned by the World Bank but, historically, why do you think (it was not just the World Bank) the international community in general was unwilling to take on the subject of corruption with developing countries and what has changed?
  (Mr Malloch Brown) Up until 1989 the geo-political nature of aid was that it followed alliances rather than development performance of countries, which meant that the West had plenty of embarrassing preferred recipient countries who were front-line countries in terms of the east/west confrontation in the Horn of Africa, in South Asia, in the Indian sub-continent, in East Asia, and other places, to all of whom a blind eye was turned who were receiving huge, huge assistance amounts which were not being well spent, and which had a high level of corruption. So after 1989 the game has totally changed and you have seen corruption and good governance come on to the agenda as part of the performance commitment that donors probably want of developing countries in return for aid. So corruption has come out of the attic and is now something that is openly discussed.


  310. Did the UNDP date its anti-corruption work from the fall of the Berlin Wall in 1989-90?
  (Mr Malloch Brown) I am sure if I had a colleague with a long enough memory here, they could point to something prior to that but Michael has an even shorter memory than I. For us it picked up in the early 1990s in a substantial way.

Mr Robathan

  311. It is as simple as that; the ending of the Cold War and the collapse of Communism was the pivotal moment?
  (Mr Malloch Brown) After that we have moved to a situation where we have a world population of six billion. In the mid-1980s before Latin America went back to democracy we had one billion people in market economies, two billion in democracies. The billion were the OECD countries, the two billion were the OECD countries plus India. Today in a world population of six billion we have five billion plus in market economies and we have four billion plus in democracies, so the nature of the political economy has been transformed and with it issues like corruption, which you did not address in closed, state-owned, authoritarian political systems, are suddenly very much open debate in countries. I think what Transparency International would have argued to you, and which is critical, is the real fight against corruption has to come from within societies and not be externally imposed. That is the genius of Transparency International; all these national chapters of brave professors and public officials and crusading journalists who are taking on these issues in these new, more open political and economic environments.

  312. That is extremely interesting. Past relations between the World Bank and the UNDP have not always been good, although I am sure they are excellent now with your past. What are the common features and differences between the approaches now of the World Bank and UNDP in tackling corruption?
  (Mr Malloch Brown) Obviously I felt as a former Bank Vice President that it was incumbent on me to make the relationship work and it was not easy, you are right, Andrew. There was a history of tremendous suspicion which basically was rooted in the growing economic strength of the Bank, the declining fortunes of UNDP and development systems generally, combined with the Bank's embrace in the mid-1980s to the mid-1990s of unreconstructed structural adjustment. The UNDP's response to that, as was UNICEF's, was to stay outside that and throw bricks from the outside arguing that it was impoverishing the poor.


  313. It could be demonstrated as adding to debt, right?
  (Mr Malloch Brown) Exactly. But it was an unheard lament and it was seen as the complaint of UN bureaucrats who had lost touch. Until 1989 we had a period where aid followed defence spending. It really did. In the United Kingdom or anywhere they all tracked. Suddenly after 1989 you were supposed to get a post-Cold War dividend. Military spending plateaued. I am not talking about the United Kingdom, but generally. Development spending, which you would have expected to have gone up, plummeted and in that environment efficiency became the name of the game, plus who had the most powerful voice. This led to people protecting their own bilateral programmes and supporting Bretton Woods for whom the client ministries are chancellors of the exchequer and ministries of finance, not worthy but politically powerless development ministers. This is a generic comment, I hasten to say, with no application to the United Kingdom setting! The UNDP and all the UN agencies were getting squeezed in terms of financing. We had a 40 per cent decline in core resources in the 1990s. These all led to very unharmonious relations. When I was at the Bank in charge of UN Affairs Jim Wolfensohn and I took the first step towards peace when we declared that we had realised that structural adjustment had not worked as expected and the new model was that structural adjustment had to attend to the social and impoverishment dimensions and we therefore accepted the UN and NGO critique. However, we said the UN must recognise that economic stability, contained public spending, and a well-managed macro-economic environment is indispensable to growth and therefore to poverty reduction, and if we accept your social agenda, you accept our macro-economic one, and that is broadly the new consensus on which progress has been made. I think I have to make three very quick points to you. One is that these new poverty reduction papers have led to huge partnerships at the country level. We are counsel for the defence in about 30 countries now. We help countries formulate these strategies and presentations to the World Bank and IMF with the full encouragement of those two institutions. We help countries make the case that they should have higher social spending ceilings so that they can loosen the macro-economic straightjacket. We help them with the national consultations and to set development objectives. It is a very important operational partnership around poverty reduction to improve the instruments and make them more socially responsible. In countries like Indonesia, on governance it is full partnership where we will deal with the sensitive, internal policy issues or sensitive political institutions like strengthening parliaments or electoral processes. We revamped the whole election system in Indonesia. Before the elections when the change of power happened we spent $80 million. The Bank could not have done that; they are doing more the economic governance dimensions. It is a strong partnership, but I do have to say that if it stopped there we would be perceived as a wholly-owned subsidiary of the Bank which would be a catastrophe for development. We have to be the loyal opposition offering development choices and alternatives. I am very anxious to make UNDP a more progressive voice on gender, on poverty reduction, on other development issues but we have got into a terrible period where we have said we all agree what has got to be done in development. It is all about implementation and how to do it. We absolutely do not. Development is a hugely high-risk complex issue where policies have unintended consequences. It is not easy stuff, so there have got to be choices. Finally our role, which is to be the legitimate, trusted friend of developing countries, is lost if we become patsies of the Bank. We want to combine operational partnership with policy and political differentiation. And it has worked so far very, very well and I think is a bedrock on which we can build a broader system of UN development co-operation.

Mr Colman

  314. I think that you have covered most of the area in terms of co-ordination between the UNDP and the World Bank, but if I can ask a wider question. Clearly there are other key stakeholders. You have mentioned parliaments, the IPU, local government, the International Union of Local Authorities. You have not mentioned the International Chamber of Commerce, the World Business Council. There is a whole range of bodies that need to be co-ordinated in this fight against corruption and push for good governance. How do you see that co-ordination led by yourself as chair of the UN Development Group going forward? Is there a role to bring this up in the CST on financing which is coming up next April? Do you see this as a major area for the World Summit on Sustainable Development which was announced last Thursday will be in Johannesburg. Not one word about this is in the original Rio Treaty 40 chapters. Should this be a major push in this culminating conference that will happen in 2002? How do you see the co-ordinating function of what you are doing into the future?
  (Mr Malloch Brown) Let me particularly answer on the private sector point because it has been underplayed this morning by me in the answers. You know that the Secretary-General launched the Global Compact, of which a number of British companies are very prominent. Groups like the Prince of Wales Business Forum have been very active in the organisation of British companies internationally around the issues of corporate social responsibilities. The Secretary-General's and my view is that an increasing proportion of the finance for development will come from the private sector. That is in the nature of the fact that we are moving into market economies, more private finance and less public finance. How do we engage the private sector around development goals? There is one group of purists who say that you do not, you retain a position of confrontation. For many years in the UN we had a centre on trans-national corporations, which, indeed, took that view of the inherent dangers of international catalyst organisations. The Secretary-General and I are self-confessed pragmatists in this area, who believe that corporations have a huge stake in successful democratic sustainable development in the countries in which they are operating, stakes in the future of their operations in those countries and stakes globally in terms of their relations with shareholders, customers and other groups. We all see the disasters that visited Shell, or others if they are in breach of this, and the efforts that Shell subsequently made to ensure that something like that never happens again. Shell is one of the many strong partners we see ourselves as having. What I am doing is taking the Secretary-General's Global Compact, which is the dialogue about human rights, corruption, labour standards and environmental standards, and taking it local and trying to create in the first group of pilot countries a national compact—we will not use the name initially—where international business, domestic business, civil society and government come together around a dialogue of these issues as they affect them, for example child labour and labour standards in Asia, and the environment is likely to dominate in large parts of Latin America, as in parts of Africa. We are going to work with groups like the ICC and the Prince of Wales Business Forum supporting us to see if we can create these forums. We want them to be very unstructured. We are going to have the representative issue business is going to feel they are getting trapped into involuntary standards. We feel if we can get a dialogue going around solutions to problems at the national level, then out of it will come new relationships, out of which transactions will flow. When I talked earlier about the Niger Delta and organising the private sector to contribute to community development, Bob Sanders and I are thinking of doing it in this context, of creating a national version of the Secretary-General's Global Compact, to start talking about the problems of The Delta as the pilot for talking about the problems of the whole country around bringing these different constituent actors together. UNDP's power will never come from its money; its power will come from its conditioning and its ability to convene.


  315. Why do you think Shell is not wanting to come and talk to us?
  (Mr Malloch Brown) I will encourage them to do so. I do not know, I am surprised. I have a very old-fashioned view of Parliament I thought once invited you came.

  316. You are quite right, of course. We can command, but the first approach to Shell has been to refuse. We may have to command. I am interested they should refuse, because if you are as involved as you say you are with Shell what have they got to hide from us?
  (Mr Malloch Brown) I think they have a lot of progress to report. They have continuing problems, but they are trying in a very serious minded way to address them.

  317. Is BP in Columbia or is it Shell?
  (Mr Malloch Brown) BP is in Columbia.

  318. That is another little story.
  (Mr Malloch Brown) To be honest, on the CSD one I think it is soon, I just do not know yet. In the financing for development we are looking at this as a watershed moment in getting all of this right. It is a very important set of principles because it recognises the founding principles for that conference, and the role of the domestic environment to generate domestic and international capital flows. We have to get the equation right, which is that foreign direct investment in developing countries is five times that of official development assistance. That is a well known statistic. What is less well known is that on average the figures are a lot less good. Domestic annual capital formation is ten times the FDI. The real trick is to create the environment where domestic capital is formed and kept in countries.

  319. Everyone forgets that the formation of domestic capital is absolutely vital.
  (Mr Malloch Brown) This is where the World Bank and the IMF have an idealogy in this international capital flow. They are completely blinkered to the fact that the history of international capital going into countries follows domestic capital returning and domestic capital being formed.

  Chairman: If you can get a trustworthy banking system going in one of these developing countries, you draw in this capital flight and that is really the foundation, as you say, of capital inflow.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2001
Prepared 5 April 2001