Examination of Witnesses (Questions 428
- 439)
WEDNESDAY 9 FEBRUARY 2005
MR JIM
DRUMMOND, MS
PAULINE HAYS
AND MR
RODNEY MATTHEWS
Chairman: Welcome. You appeared before
the International Development Committee recently to give evidence
on the same topic. I am sorry we are not quite yet into joined-up
committee work; we demand joined-up government but, I am afraid,
we should practise in our own Select Committee system rather more
coherently. It is a different culture in the Defence Committee,
alas, to that of our colleagues to whom you spoke. We are taking
evidence, of course, as you know, on the reconstruction in Iraq
and related DfID issues. We realise that judging a war by the
military campaign only is akin to judging an opera only by the
overture. Developments in Iraq have shown that reconstruction
and technical assistance is as important in the complex peace
support operation as military functions in very, very many ways.
The Prime Minister indicated to the Liaison Committee yesterday
that the review of current operations in Iraq would take place
and would be published. He seemed to indicate that this would
include a review of reconstruction activities, and we look forward
to hearing more about this in the course of our session today.
Firstly, the role of DfID more generally. I will ask my colleague,
Mr Viggers, to start.
Q428 Mr Viggers: I think it is generally
accepted now that economic reconstruction was not sufficiently
factored into the coalition's pre-war planning. Starting from
this rather low base, can you please look forward and give us
an overview of DfID's programmes and disbursement of funds?
Mr Drummond: Can I just start
by saying that the challenges that we faced in Iraq were more
difficult than we have faced in other places. We are dealing with
a country which has had 30 years of very chronic under-investment
and lack of contact with the outside world. There was widespread
looting when the forces arrived, which caused lots of damage and
made things more difficult at the beginning. DfID's definition
of "reconstruction" is quite a wide one. It relates
to progress of the economy and the private sector, it relates
to the institutions of the state and it relates to physical infrastructure,
and in facing all of those tasks we have to be joined up with
other donors, because DfID's contribution to this process is necessarily
going to be significant but small compared to the wider picture.
I think there are a lot of lessons, obviously, to be learnt from
the early stages. I know you have produced reports on this already
and taken evidence from my predecessors about it. The planning
for the humanitarian phase of the operation was successful; many
of the humanitarian issues that we thought we would face did not,
in fact, transpire. So we were into the next phase of reconstruction
a bit quicker than was anticipated at the beginning. So there
had to be some adjustments in the summer of 2003, as we moved
from the early phase to the CPA South phase of reconstruction.
Rod Matthews, on my left, was Head of Reconstruction in the CPA
South before he became head of the DfID office when that started
in July 2004. As to progress, there has been good progress in
some areas and not such good progress in others. If you look at
the progress of the Iraqi economy, there are some reasonably encouraging
figures. The growth figure for 2004 is 50%, although you have
to factor in a reduction of 30% in 2003 for the war year, but
that is still not a bad recovery rate. It does reflect high oil
prices but that is not the only factor. If you read World Bank
and IMF reports they say that there has been a significant increase
in trading, that agricultural production is improving and that
the private sector is getting moving. Part of the credit for that,
has to go to the way that the CPA introduced reforms into the
Iraqi economy so that inflation was brought under control, the
central bank was freed from government control, the currency was
unified and tariffs were simplified. All of these things are necessary
pre-cursors for the economy to grow and the private sector to
develop. There are still big challenges because the economy needs
to diversify from oil and there is a need to remove subsidies.
One of the things that DfID has been doing is trying to provide
advice into that process, so we have a team of people working
on economic reform in Baghdad who can help the IMF to reach agreement
and help to reach the debt agreement. Unemployment is still high,
but there is some evidence from the World Bank that it is reducing.
The food distribution system has held up well with outside help
from us and the Americans, and so people have not gone hungry
in Iraq. On health care and schools, there is a rehabilitation
process underway. It has not gone as fast as we would have liked
but it is underway and we have contributed some funds into that
process, both in the south and nationally. The transport system
is functioning better than it was; airports are now open (Basra
Airport, as you will know, was opened), there has been rehabilitation
of railway lines and the port system is more effective than it
was before. If you look at the media, there are now 75 radio stations,
21 TV stations. DfID has helped with the training of journalists.
The justice system is operational; it needs a lot more investment
but DfID has helped with the training of judges. The government
system with de-Ba'athification has suffered initially a big loss
of efficiency, so we need to build up new structures at the centre.
DfID has helped with public administration reform and provides
a team of advisors to Prime Minister Alawi's office to help him
run that, which has been much appreciated. On the power side,
the position is disappointing. Rod can talk a bit about power
in the south; investments have been made but have not yet produced
a significant jump in power output, as you will have seen during
your visit in December. The situation in Basra is still poor,
and that requires more investment from us and more investment
from other donors.
Q429 Mr Viggers: DfID's Public Service
Agreement Objective IV states that the department's aim is to
"Increase the impact of the international system in reducing
poverty, preventing conflict and responding effectively to conflict
and humanitarian crises." How does this aim of preventing
conflict sit with the UK's objective in Iraq, which was of course
to plan for conflict and post-conflict situations? Do you work
round the Armed Forces? If one of your objectives is to prevent
conflict, do you take what you are given and prevent conflict
insofar as you can once the Armed Forces have done their work?
Or do you plan with them to prevent conflict?
Mr Drummond: Clearly, in Iraq,
a decision was taken by Parliament to take military action. In
those circumstances, DfID was asked to help with the post-conflict
arrangements. Of course, as part of the Government, that is what
we did. We did planning alongside the military before the conflict
and we have worked very closely with them since. We can go into
the detail of how that operated on the ground, if you wish.
Q430 Mr Viggers: You told the International
Development Committee that you would like, for the purpose of
broadening your programme, to be able to post more people to Iraq,
"but in the current circumstances we have to be quite careful
about our numbers." What are the current circumstances that
were referred to there?
Mr Drummond: The security situation.
Q431 Mr Viggers: Rather than the
economic circumstances?
Mr Drummond: Yes.
Q432 Mr Viggers: What additional
staff would you wish to deploy, and how many do you plan to deploy?
Mr Drummond: Over the last six
months we have had quite tight restrictions on numbers because
of the security situation and the difficulty of people moving
around. So we have had about 30 or so in Baghdad and 20-30 in
Basra. We would like to be able to deploy people to the other
southern governorates apart from Basra because southern Iraq is
a priority for our programme. We are about to send somebody to
Maysan but the security judgment over the last six months or so
has been that we can have people visiting those governorates but
we should not have them living there. In order to do what we would
like to do, which is to strengthen the capacity of those governorates
to link them better up with Baghdad, you need to establish good
relationships with the Iraqi officials working in the governorate
and their teams, and it is difficult to do that if you are popping
in for the day and going back to Basra before nightfall, which
is the situation we have.
Mr Hancock: Can I ask two very quick
supplementaries to what you have said? Do you think we should
have been surprised at the amount of looting that went on, bearing
in mind the experiences in the Balkans when the conflict had ceased,
where people blew up houses unnecessarily and looted neighbours'
houses simply as payback? Should we have been surprised about
that? Was there no contingency really built in, nobody thought
that that might ever happen? Secondly, when you said about the
power, the failure to get the power back on in Basra being, really,
dependent on resources coming both from the UK and other donors,
what about the money from within Iraq itself to fund this? Who
co-ordinates how much money is made available from Iraq's own
resources to put the infrastructure back together?
Chairman: Do not answer the second one
because that is Mr Havard's question.
Q433 Mr Hancock: I am sorry, it is
just that you said in your answer to Peter that the resources
were not there to do more with the power.
Mr Drummond: On the first point,
should we across government—and indeed across the coalition—have
anticipated better that there would be large-scale looting? Hindsight
is wonderful, but yes, I guess we should. I think that the scale
of it in Iraq was different to what happened in the Balkans, from
my knowledge of the Balkans. Certainly, the destruction of government
offices and the destruction of government records made the first
few months much more difficult than people had anticipated.
Q434 Mr Havard: Can I take you back
to the beginning? I did not recognise some of that description
that you gave me of the country of Iraq. I visited it twice last
year, albeit only two single weeks at different times, but I did
not recognise the description you gave. You said something about
Basra Airport being open. I would like you to say a little bit
more about that, to be honest. What I would really like from you
is the question about priorities. What you do is you give a descriptive
list of all the difficulties and all the tasks—and that
is fine, and it is a huge problem with all this multiplicity and
difficulties overlain by all sorts of other problems, such as
tribalism and politics. I understand that, it is a hugely complex
issue. However, within that, the Government presumably, our Government,
as part of the coalition has coalition priorities and its own
priorities. Your department, within that has other priorities.
Which of these tasks for the areas and sectors that you describe
then are priorities, and what is this priority list? I have no
feel for anything other than an understanding that we have all
of the problems to deal with. We have to have some order of difficulty
and an assessment of which to tackle first.
Mr Drummond: On Basra Airport,
it was opened in the last month.
Q435 Chairman: The week after we
left.
Mr Drummond: The timing was related
to the Hajjpilgrimage.
Q436 Mr Havard: In what way is it
open? What is happening there now? How is that developing? Is
that a DfID priority?
Mr Drummond: Basra airport has
not been a particular priority for DfID. Can I tell you what DfID
priorities have been and how we arrived at that? In February last
year we produced a Country Assistance Plan, which we published,
and sent round the select committees, which identified the priorities
for the DfID programme over the next year. It identified three
main objectives for us: one was to help the international community
to re-engage, to help get the World Bank and the UN back involved.
Second was to have an impact on the functioning of national government.
Thirdly, was to promote reconstruction in the south. On the first
of those, we have, as you will know, had difficulty with the UN
and the World Bank in persuading them that they should send their
staff back to Iraq. We understand why they are reluctant to do
this. The UN is now changing its line on this and, in fact, has
done a very good job on the elections. On the World Bank side,
they are still not back but we have provided staff in Baghdad
to act as liaison for the World Bank and the UN between the Iraqi
Government and their staff outside of Iraq. We have provided funds
through the Trust Fund for Bank and UN programmes. The second
part was national level programmes. We have provided support for
public administration to the Prime Minister's office, as I mentioned
before. This is intended to broaden out across government to work
on planning and budgeting systems. It has done some of that so
far but because of the constraints on the numbers we have not
been able to do as much as we wanted. When I visited Baghdad in
December we got a very positive reaction to that support from
everybody we talked to, from the Deputy Prime Minister down.
Q437 Mr Havard: I bet you did, it
was pretty dysfunctional before. I am sorry you are not required
to agree with that, I am just telling you what I see.
Mr Drummond: But that is the point
of the assistance.
Q438 Mr Havard: Absolutely.
Mr Drummond: The other main programme
at the centre has been support for economic reform. Iraq should
be a wealthy country, and it will be a wealthy country if it can
reorganise its economy in a way that lets the private sector develop.
Q439 Mr Havard: Is that encompassed
within what you said was your third large priority, the reconstruction
itself—
Mr Drummond: That is policy support
at the centre including for economic reform. We have also provided
judicial training; we have provided training for journalists,
and a number of other things. On the third area, in the south,
we had a number of programmes through the CPA days—the Emergency
Infrastructure Programme, which Rod Matthews was the leader of—and
a number of other reconstruction and infrastructure programmes
in the south. At the end of the CPA we had to adjust what we were
doing so that projects were not linked to an occupying power but
much more to supporting the Iraqis to do what they wanted to do.
So we have main programmes, which are to create jobs, to provide
emergency funding for infrastructure, and a team of ten technical
specialists to provide technical advice, both to the Iraqis and
to the other donors. We had a project continuity team which was
to spend the remaining balances of the Development Fund for Iraq
money that spilled over the end of the CPA days.
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