Examination of Witnesses(Questions 209-219)
RT HON
CLARE SHORT
MP AND MR
CHRIS AUSTIN
TUESDAY 10 DECEMBER 2002
Chairman
209. Secretary of State, many thanks for coming
and helping us with this inquiry on the long-term reconstruction
of Afghanistan. Also, many thanks to Chris Austin and, in particular,
Dr Ann Freckleton and officials in Kabul, who were ace when a
number of us were there on a visit not so long ago. We were extremely
grateful to them, and very impressed by their professionalism.
The Economist this week has the following comment: "The
Afghan Government has little income of its own. Afghans complain
that the most visible sign of foreign aid is aid workers driving
spotless land cruisers in Kabul, not tangible improvements in
the life of the local people. Of the US$1.9 billion promised for
reconstruction this year, two-thirds has become available but
only a tenth has so far gone to the Afghan Government itself.
About two-thirds of the money has been spent on such necessities
as food and helping refugees, not on longer term reconstruction".
There are two brief questions I would like to ask following on
from that. One has the transitional government, the Afghan Government,
and one has got the UN and various UN agencies, and the money
that was pledged by the international community; but the lion's
share of the money which was pledged by the international community
is going to the UN agencies because, it is said, there is a capacity
problem with the Afghan transitional government, which I think
we all understand. I wondered if you could give us some understanding
of the timescale. When do you see the transitional government
becoming a real government, and bilateral and other aid being
aid directed primarily to the Afghan Government, rather than to
the UN agencies? My second brief question is: one of the lines
to take that Afghan ministers give us is that of the money that
was pledged at Tokyo—they had understood that this was going
to be for reconstruction; but a lot of it, in fact, has been needed
to be used for humanitarian food aid needs and a far faster rate
of return of refugees than was anticipated, and I wondered whether
you might like to respond to those two comments?
(Clare Short) The first thing I would
like to say is I think lots of commentators on situations like
Afghanistan, East Timor, Rwanda, or Kosovo do not understand what
is at stake. You have a completely wrecked country—certainly
in the case of Rwanda and Afghanistan—with no institutions
which work, no legitimate economy (when the only base of the economy
is drug growing and so on), no order or security, no ministries
with any competence, so you are having to reconstruct everything
from scratch in the face of a humanitarian disaster and a dangerous
security situation. It is a fantastically difficult and complicated
task. The international development system has not been well designed
for it. You have got all sorts of countries with their flags trying
to make announcements in the media and say what a big effort they
are making, whereas you need sustained, pooled, patient institutional
capacity-building, but you cannot turn away from the humanitarian
needs while you are trying to build up the structures. My own
view, and I have said this to President Karzai and Finance Minister
Ghani and so on, is that this endless complaining about the international
community and the UN is very unwise. The writ of the Afghan Government
does not reach outside Kabul at all. If all the resources had
gone to them people would have starved. There are six million
people still being fed daily through the UN system. Through the
Transitional Administration the UN is trying to re-establish Kabul
and help build up some competence in ministries, which we have
been very engaged in. The second thing is we, as you know, have
put resources and encouraged others to put resources into a pooled
fund to create a funding base for the Afghan Government. They
are underspent on it, and they have a massive civil service. We
discussed this at Tokyo, and what happened is that the Taliban
civil service, the previous Communist civil service, and anyone
else who thought they were in the civil service all turned up
just before Tokyo, and then the government said, "We've got
to pay salaries; that proves we've got some authority". I
said at Tokyo, "We can't go on paying masses of salaries
for people who aren't doing the job". They have got an unreformed
civil service; very badly paid; enormously large numbers, therefore
bits of corruption, of course, not providing any service at all
to anyone. We cannot go on putting our resources into Afghan budgets
without reform of the civil service. We discussed this when I
was there, and are willing to work with them on it. What I said
when I was in Afghanistan was that I really think this endless
carping about the UN should stop. I really think the Afghan Government
is being unreasonable and making a mistake. What there should
be is a partnership handover. As we get more security outside
Kabul, which is the absolute priority now to stabilise the country
and move it forward, the government should link to the NGOs and
the UN's systems capacity to deliver, and then start to manage
that more; have an umbrella over the budgets and make that part
of a government delivery system—instead of polarising the
relationship between the UN system, which is the only deliverer,
and itself. We have been trying to broker that kind of improved
relationship, and I think there has been some improvement. It
has become the merry tune now: "We haven't had all the money
we need. Give us more money". In the meantime there is no
taxation system. There are warlords all over the country; some
of them are still engaging in growing drugs and dealing in drugs.
President Karzai is trying very hard to get them under the remit
of the Kabul government, and try and get some of the resources
they command—because they also command some of the borders
and tariffs, and we have not got a government yet that extends
its authority across the country. My comment is both on The
Economist article and the kind of complaints that come from
the government, that they are failing to understand the nature
of the task and that it has to be a rolling programme. For example,
for the UK we put 60 per cent of our effort in the first year
on quick impact through the humanitarian system; keeping people
alive; getting factories and enterprises up and running and so
on; getting a bit of normalisation; building up institutional
capacity in the government; and then would hope, as the years
go by as the government's capacity enhances and as security across
the country enhances, to put more and more of our resource through
the government system. It is that kind of collaborative process
that is needed; and this polarisation, as though it is a divided
interest, I think is very unwise. I think I have answered your
first question. Of the money for Tokyo, they said they thought
it was all for reconstruction and now a lot is for humanitarian—I
think this shows an immaturity about the responsibilities of government.
If six million of your people need food aid daily—and the
drought, happily, is over in the north of the country, but it
is the fifth year of drought with an ever-sinking water table
in the south of Afghanistan and now we have got displacement of
people because of problems with water, not just instability—to
think, "Someone else's job is the humanitarian and we want
to build roads", shows a lack of grasp of the duty of government.
That is quite harsh but I mean it. They have got to see this seamless
transition—of the building and constructing of a country
with order and justice, that can provide public services and economic
development—as the task of the government. I think there
are lots of good ministers; and I think there are lots of people
doing well. President Karzai is a impressive man, but I really
think this endless denunciation of the UN and the donors is very
unwise. Finally, when I was there we led an effort to pay off
arrears to the World Bank and the Asian Development Bank so that
they could start to borrow long-term, highly concessional assistance
because they are going to need vast sums. Everything in the country
needs reconstructing. To keep beating up the donors and demanding
more grant and not seeing it as part of their responsibility to
extend order and get a tax system is a very unfortunate drum to
be banging, and they do keep banging it.
John Barrett
210. You mentioned the difficulty of separating
the humanitarian work from the reconstruction work because of
the overlap; yet a lot of witnesses have certainly left me with
the impression that a very high percentage of what has been spent
in Afghanistan so far as been on humanitarian aid. How has the
focus been made on what is the priority in the short-term, as
against the longer term reconstruction? Is it feasible to distinguish
between the two areas of expenditure—humanitarian and reconstruction?
Would having different kitties, different pots of money, help;
or is that not wise and realistic?
(Clare Short) I have already said I think this polarisation
is foolish and does not face what the reconstruction task is.
Right through the Taliban years and the conflict, up to as many
as nine million people were being fed by external assistance in
this wrecked country that was also experiencing drought. Clearly,
the job is to keep that effort going—you cannot stop feeding
people—while you then try and get more stability and start
moving towards food for work rather than food handouts, and start
expanding people's capacity to re-build their communities. Through
the Bonn process we had to construct a new government (a transitional
government) from scratch to create some legitimacy. We had to
create a central bank because there was not one; the currency
was completely unreliable. We had to make the arrangements to
help them bring in a new currency and create a ministry of finance,
that has not got any operational system of any kind whatsoever.
There is nothing in it. You have to keep people fed; try to move
over to food for work. We have not really got order and stability
outside Kabul, so we are still in emergency mode. We try to create
these institutions, to try and make it a rolling programme so
that the institutions will strengthen: we get the Afghan National
Army; the government enlarges its capacity to deliver services.
For example, the UK is strengthening the Ministry for Rural Reconstruction
to give it the capacity to start to take over the quick impact
projects that organisations like us have done, to enable people
to begin to grow their crops where the drought has ended, and
so on. It has to be a seamless transition. At the moment polio
is nearly eradicated. Children have been immunised and the estimate
is that probably 30,000 children who would have died from measles
have not died. No-one can measure that. There is no mother holding
her child who knows that otherwise her child would have died;
but that sort of thing has been achieved by the UN. Three million
children back at school. This is all humanitarian. To suggest
that that is not reconstruction and there is something wrong with
it, and we should be building roads if we want to reconstruct
Afghanistan, is to make an error in analysis and how we approach
the job.
211. Do you think the language used is not helping?
We have heard on a number of occasions that three-quarters of
the expenditure so far has been on humanitarian aid, but really
there is no clear distinction between the two?
(Clare Short) I think it is development-speak, of
which there is a lot as I am sure you will increasingly see. There
is this traditional divide between humanitarian assistance and
development assistance. The international development system is
increasingly trying to learn to not polarise in that way; otherwise
you have funds through certain agencies that prop people up while
wars go on, and people often forget that it might be a good idea
to end the war because this is coming out of the humanitarian
pocket. Like Sudan, the argument went on; people pressed for more
development in Sudan and then "Oh dear, there's a hole in
the middle of the system"; and no-one remembered that you
really need to attend to creating peace in order to get development.
The international system, post a conflict, or post some natural
disaster, is in emergency mode and it has got the humanitarian
system, so-called, working; and in the past it has been very,
very bad at building up local institutions in doing the handover.
I think it is in the mindset of the international development
system to take this by vocation. If you look at the reality of
these countries that have been left in disastrous conditions,
Rwanda, East Timor, Kosovo, Afghanistan and so on, you have got
to seamlessly keep the humanitarian—get it to be humanitarian-plus;
build up local institutions; create the capacity for them to take
over those responsibilities and to get things onto a more long-term,
sustainable system. Over time, therefore, our budgets are disbursed
and will shift over, especially if you can get agriculture up
and going again but on that we depend on the end of the drought.
Sorry to go on, but I really think it is not at all a useful polarisation.
It creates a false concept of the nature of the task of rebuilding
a country where all its institutions and economy have been destroyed.
Tony Worthington
212. Could I ask about DFID's own budget. After
a war I do not know how anyone truly works out what aid budget
is going to be for Afghanistan because of the scale of the problem.
What has happened to your own projections about how the DFID budget
will be spent? You must have had a notion when the war stopped,
but how has that changed as experience has come along?
(Clare Short) We contribute across the international
system into humanitarian disasters 5 per cent of the international
humanitarian effort—we are nearer 10 per cent, I think.
As a percentage of GDP of an OECD country, when the whole international
system needs to come in behind a country in deep trouble, we are
above the going rate, so to speak. Through all the years of disaster
in Afghanistan, when it was not on the front pages, we were contributing
into the system. We had extra difficulties, as you know. There
were security threats to US and UK personnel, so we had to do
it through Afghan-led organisations, and we had some clashes with
our NGOs, but we were there. I do not know what we spent, but
it varied with the drought and so on. We go according to need
and UN assessments and so on. When you are talking about countries
with drought it goes up and down—as Southern Africa is up
at the moment and the Horn of Africa. Then in preparation for
Tokyo we had to decide what kind of pledge to make that is then
going to be bigger and contributing towards the reconstruction.
(Mr Austin) Back of the envelope calculations, as
I recall, were looking at how much did it take to rebuild Bosnia;
thinking, in general terms, of the size of the Afghan economy,
what its current level of domestic revenue and foreign exchange
earnings might be; what would be a level of resources that the
Afghan people could absorb and could be managed effectively. That
came up with the figure that has been quite widely quoted in an
evidence session of about $2 billion a year over five years, so
a $10 billion over five years projection. The World Bank needs
assessment looked at the first 2Ö years. We are working back
from how much of that should be in the multilateral system in
the World Bank, the IMF and the Asian Bank.
(Clare Short) People sometimes talk as though the
only contribution we make is bilateral. In the UN system we are
contributing to all of that all the time as well.
(Mr Austin) An assumption about the EC, which falls
between bilateral and multilateral. I think we were looking that
something like a billion pounds over five years might be a reasonable
contribution for bilaterals, and that we would go for a fifth
of that.
(Clare Short) Following that final decision, we would
have to look at our budgets. We were scraping up what we could
afford. Although the Department has a growing budget, our spend
is tight everywhere. If you took a crude "OECD—what's
our share?" we are a bit above that. We go through this process
in order to come up with some objective basis for the decision.
213. It is just the mechanics of it. You make
this calculation of 200 million—you are putting it into
a central kitty, a central bank, which is then drawn down from
at some time during the pledging period; or do you think in terms
of, "We put in this amount for this year, and we have underspent
on this year, therefore we've lost it"?
(Clare Short) No, the way we run the Department for
International Development (and it is envied by other development
organisations across the world) as you know when we look at the
annual report we notionally allocate but we have got the flexibility
and the ability to move money across the departments, depending
on spend or extra or growing need. When we make a pledge we take
it incredibly seriously and we honour it; but we do not put the
money into the separate pots. In fact, we did need 200 million
over five years but we knew we would front load our spend, so
we spent well over a fifth.
(Mr Austin) We have spent just over £50 million
this year.
214. The flexibility is within the DFID budget,
rather than the flexibility year-on-year in the Afghanistan budget?
(Clare Short) That is right. We provide money to the
whole of the UN system, the World Bank and so on. If you put all
the money you pledged you would have trust funds all over the
place with piles of money not being spent, and you would have
a lot of money in the international development system, sitting
about in bank accounts—so we do not do it like that. We
make pledges; we always honour them; and all these institutions
draw down as they can spend it. You are right, we have to have
the discipline of the financial year. We have to account for our
spend, and we have to spend up to our limit, and there is a limit
of how much you can roll over from one financial year to an end.
That is a matter of managing our budget. In Afghanistan we will
spend over a fifth of £200 million in the first year. We
are planning a run of figures. Then we have to manage that across
the Department by something else spending a bit less. As I always
say, when we are about to do financial allocations, our nightmare
would be every country we work in coming good, because we would
not have enough money. We would love to have that nightmare but,
sad to say, we have never had it yet.
215. You have to have some planned cock-ups?
(Clare Short) We have planned overspend. We know not
everywhere will go swimmingly and spend every cent of what we
have got, sadly. If we ever get that problem I will come and discuss
it with you!
216. One other point that has come in some of
the evidence is from NGOs about education projects, saying they
are having difficulty getting education projects underway. Why
would that be? Would that be lack of local capacity; is it not
true; or is it one of your priorities?
(Clare Short) UNICEF is the great leader, and I think
it has done a fantastic job of getting the education system up
and rolling with over three million children in school. If you
go to Kabul there are little girls wandering up and down with
their school books in their little white scarves and it is quite
moving. There are transitional schools for girls who have missed
out on school so that they can catch up and go back into the state
system. UNICEF say there are 6,500 schools which are now functioning
with three million children in school. About the NGO complaint,
I do not know. NGOs do complain
(Mr Austin) I have not seen the particular problems.
I do not know if there were problems getting funding for activities
they wanted to do, or whether it was access across the country,
which is a major constraint.
Tony Worthington: I am sure we could
get the gist of that point to you and perhaps you could reply
on that[1].
Hugh Bayley
217. Perhaps I could ask a bit more about the
barriers to channelling assistance through the Transitional Administration.
You have talked about the management problems they have in terms
of delivering development programmes. Could you say a little more
about that, and give us some examples of situations in which they
cannot deliver? You have talked about corruption as being a problem.
How much of an issue is that? Specifically, how do you respond
to Hanif Atmar's comment he made to this Committee that you do
not know whether a system is leaking until you put money through
it?
(Clare Short) No-one disagrees—Brahimi, the
UN system, President Karzai, Ashraf Ghani, any of the ministers
in the Transitional Administration. They have no capacity to deliver
services outside Kabul. I cannot give you examples—it is
everything, health, education—
218. Are you saying that they have a management
capacity within their civil service, if they had the money to
deliver within Kabul?
(Clare Short) I took this issue up in Tokyo. We, the
UK, are very, very keen always to build up local capacity and
local institutions. There is an old fault in the international
development system of all UN agencies wanting to run their own
things and never building up local capacity. We are very much
the other way. I said when we made our pledge in Tokyo that it
would have to go with civil service reform, because we could not
just keep pouring money into a big hole that went disbursing out
to who knows what if it was not providing any services. In fact,
the World Bank and UNDP did a study to try and get a pay roll;
because there are people outside Kabul notionally employed. Always
in weak systems like this you get ghost workers; you get people
putting all sorts of names of teachers or health workers who do
not exist and shovelling the money into their pockets. In badly
managed systems that always goes on. We got a list of the pay
roll, and it is very big, it is badly paid and it does not provide
much service at all; and people have to do other jobs that are
not in the office and take payments from people. These are classical
ways we know happen in developing countries where you have got
very weak institutions and badly paid public servants, and often
too many of them because jobs are being used as patronage rather
than the provision of a service. That is where we are now, although
we have put ten million pounds into the ARTF, and in the first
year more into delivering services outside Kabul, quick impact
projects and money into the UN system, and into NGOs just to keep
things moving for people while we have also been trying to construct
more capacity in government ministries. Our plan is to increase
that. I said to President Karzai, Ashraf Ghani, and the rest,
"We've got to go for serious civil service reform or I won't
do it". It is irresponsible. This is taxpayers' money for
poor people in Afghanistan and we cannot just keep pouring it
into a colander and it all leaks out and is not providing services.
By the time we withdraw from UN provided services, that the government
does not take over, we cannot do that. We have very bold and strong
civil service reform, which Karzai very much wants, and we have
sent an adviser, I think. We need to get on with it, otherwise
it would be irresponsible to keep putting money through that system.
219. Is it possible to identify some ministries
which are well run or better run and some ministries which are
not so well run and more corrupt and with less accountability
and, therefore, to show the way forward by providing more direct
funding to those ministries which are modernising, changing and
improving the civil service?
(Clare Short) Whoever said you do not know if a system
works until you put money through it, I think that is a really
foolish statement. If any institution in the public sector anywhere
in the world has proper accounting systems, has proper auditing,
and has some rules on procurement—you know these things
and know that before you put any money into it. The international
community was meant to share out the tasks to then create institutional
capacity in the Afghan system. We have been working with the World
Bank on the finance ministry and made a lot of progress. Ashraf
Ghani, as you know, used to work for the World Bank and has that
kind of technical competence. He is putting in auditing systems,
financial accounting systems and so on. There has been a lot of
progress. We have been working with this rural rehabilitation
ministry to try and get the capacity in the Afghan Government
to begin to take over some of the work that has been done outside
Kabul through NGOs. That is a good ministry and we think quite
a lot of progress is being made. These things are not complete.
Building up a ministry from scratch is an enormous task.
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