Examination of Witnesses (Questions 1-20)
9 NOVEMBER 2004
RT HON
HILARY BENN
MP, MR PETER
GRANT AND
MR STEPHEN
PICKFORD CB
Q1 Tony Worthington: Could I welcome
you, Secretary of State, and your colleagues: Mr Peter Grant,
who is Director of the International Division of DFID, and Mr
Stephen Pickford, who is the Director of International Finance
at Her Majesty's Treasury. We have quite a lot to do this afternoon
because we have a session with yourselves and then a session with
NGOs on the same theme. Could I offer the apologies of the Chairman,
who is in Sierra Leone at the present time. Secretary of State,
we are just back from India and, while out there, we went to see
the World Bank. They had just concluded the Country Assessment
Plan for India and I asked the Director or the Country Manager—I
forget the exact title—of the World Bank in India whether
the Country Assessment Plan had gone to the Indian Parliament:
Had it been the subject of any debate there? He seemed surprised
by the question. That is a common experience one has, that there
is the most important economic document in terms of the inter-relationship
between the outside world and India, and it does not go to their
parliament. Could I link with that what I know is an important
matter to you and to the IMF, the idea of Poverty Reduction Strategy
Papers (PRSPs) that are country-owned. My experience has overwhelmingly
been that the parliaments are not involved in these Poverty Reduction
Strategies; indeed, there is a piece of research by the World
Bank itself indicating disappointment that way. I would welcome
your reflections on the whole business of the involvement of parliaments,
the involvement of civil society, in these key documents of the
World Bank and, indeed, the international community.
Hilary Benn: Thank you very much
for inviting us along here this afternoon. I hope to be of greater
assistance this time than I was a year ago, when I came to give
evidence at an earlier session having not attended the World Bank
Annual Meeting because I had just taken over in the job. The first
thing I would say is that there is nothing to stop any developing
country from involving its parliament in discussion about Poverty
Reduction Strategy Papers or any other aspects of the relationship
with donors, be it DFID bilaterally or the World Bank. There is
not any obstacle that we put in the way. I think it is very important
to get this point across. It is for parliaments—as our own
history in this place demonstrates—to devise their own methods
for holding the Executive to account. Secondly, we would certainly
encourage it, and our paper on conditionality[1]which
I am sure you have seen, makes explicit reference to that. Thirdly,
as your question indicated, if Poverty Reduction Strategy Papers
are truly to be country-owned (in the jargon) as opposed to being
something written to satisfy the donors—which none of
us wants—then it is important that there should be the widest
possible involvement on the part of parliamentarians, civil society,
and others who have an interest, in drawing them up. There is
an interesting conditionality question about the extent to which
we should say to countries, "You must have this mechanism
for consultation" because they might come back and say, "Who
are you to tell us how we should choose to take decisions internally
in deciding whether we want to sign up to agreements with you,
as a bilateral donor, or with the World Bank?" But I think,
in a nutshell, since time is short, that is how I see the issue
http://www.dfid.gov.uk/pubs/files/conditionalitychange.pdf
Q2 Tony Worthington: I accept there is
no obstacle to parliaments doing it, but they do not. I think
part of that is because of the tradition of governments relating
to the World Bank rather than the World Bank relating to the wider
society, including parliament. Do you not think it would be a
considerable step forward if it were to be part of the conditionality
of Poverty Reduction Strategies or Country Assessment Programmes
and so on that they should require the approval of their parliaments?
Hilary Benn: I very much encourage
that. I think it is very important that that is the case. It is
a debatable point whether we should impose it as a condition on
countries, because people might say, "You are seeking to
tell us how we should conduct our own business." One would
hope that parliamentarians in all countries, if they wanted to
be part of the debate about World Bank Country Assistance Strategies
or partnerships that we are agreeing, would want to be part of
that process. We certainly encourage it. I think it is debatable
whether we should say, "If you do not do that, then we are
not going to have an agreement with you"—because is
it our place to tell them how their democratic structures should
run? That is the question. Having said that—and I am sure
you will have a view on that—yes, we very strongly encourage
it in practice, and we would like to see greater participation
on the part of parliaments in this process for, I think, the reasons
that we would share.
Q3 Tony Worthington: It is a pretty minor
conditionality compared with the other conditionalities.
Hilary Benn: At one level, yes.
But I think the question ought to be put to the parliaments themselves
in those countries—after all, it is up to them: "Why
do you not participate to a greater extent in these kinds of discussion?
What steps have you taken? Have you encountered any obstacles?"
I think it would be good to hear their voice in this debate about
participation in the process of drawing up World Bank plans and,
indeed, plans that we have agreed. But you can see very clearly
in our conditionality paper that this is something we very strongly
encourage. I suppose the debate is to what extent we should make
it an explicit condition.
Q4 Mr Battle: I wonder if I could ask
you something about what I perceive, perhaps wrongly, to be the
nature of the World Bank. I see that, in a sense, under the banner
of its modest title: "the World Bank", it gathers everything
together, gives us a view of everyone. But the forces tend to
be to pull everything to the centre and make decisions at the
centre and then to draw up papers to tell the rest of the world,
in detail, how to do it. I am thinking of the Structural Adjustment
papers and of the Poverty Reduction Strategies. More recently,
I understand, there are some Country Policy and Institutional
Assessment papers that will actually rate the economic, social
and political performance of each borrowing government and they
draw up the criteria for what they describe as "good"
policies and institutions. I do not think they are talked about
very much. Similarly, with the Structural Adjustment Policies,
it was not until about four years after they had been thought
up and printed that they came to public awareness. What is your
view of those Country Policy and Institutional Assessment (CPIA)
documents?
Hilary Benn: They provide, if
you like, the background assessment of conditions in circumstances
in a particular country, which will then inform decisions that
the World Bank takes. If one is talking about the transparency
of the process as well as the usefulness of the process itself,
as you may be aware, the World Bank Board agreed on 7 September
to disclose CPIA scores and components, starting with the ratings
from 2005—and we may come on to transparency in the operation
of the World Bank later—and I very much welcome that. The
Bank has not yet taken a decision to disclose actual assessments,
and I think developing countries themselves may have very strong
views on that subject. I should add, linking this to the previous
question, that our Institutional Strategy paper, as I am sure
you will be aware, as well as saying that we encourage developing
country governments to involve their parliaments in this process,
says that we very much want to encourage the World Bank to do
the same. Just to place that on the record.
Q5 Mr Battle: As well as the process
and the transparency point, who determines the criteria? Who decides
to draw up the list of what is good institutional management of
economic, political or social affairs? I wonder whether you feel
they are the right criteria. How are those criteria determined?
Are they discussed rather more publicly? Are they thought up in
head office?
Hilary Benn: Like all the things
that the Bank does, they will need to evolve over time. I think
it makes sense for the Bank itself to have a set of criteria and
these have been in place for a number of years. They are an assessment,
as I say, of the operating environment, the circumstances of the
country itself, which will inform decisions that the Bank takes.
If there are issues that people want to raise about the nature
of that assessment, then I am certainly up for a discussion and
a debate about that, in exactly the same way as I am up for a
discussion and debate about conditionality—which is why
we have published the paper, why this is the single hottest topic
in the debate about effective aid and lending and the relationship
between the World Bank and partner countries, and, indeed, between
bilateral donors and countries. As I say, they have been in place
for a number of years. If people say this is something that should
be looked at, I would not have any objection to that, but I would
see that as part of a process of evolving the Bank's approach
to the work that it does.
Q6 Mr Battle: To my mind it is a question
of whether there is a one-size-fits-all attitude to development,
whereas globalisation might teach us, paradoxically, to look much
more locally and to be much more locally sensitive to particular
circumstances and conditions, and therefore, if I say—and
I do not mean it pejoratively—that generalist and crude
criteria at the centre might not be appropriate to development
at the local level.
Hilary Benn: I would say two things
in response to that. One is that the publication of the scores—the
decision that has been taken in September to make that open—will,
I think, itself generate a debate about the CPIA framework—and
that is a good thing. The second thing to say is that there was
an external review carried out which has made a number of recommendations
which are in the process of being implemented and one of which
is that there should be regular external review of the CPIA framework.
I think that demonstrates a process of movement in the direction
that your question implies.
Q7 Hugh Bayley: Secretary of State, in
the joint statement which you and the Chancellor of the Exchequer
made to the World Bank Development Committee, you say on conditionality:
"Our understanding of what makes aid effective is changing.
Evidence and experience challenges the traditional approach to
attaching strict terms and conditions to aid."[2]
You continue at some length to elaborate on that. If the UK position
is that the traditional approach to conditionality needs to change
whilst maintaining a focus on poverty alleviation, what in policy
terms would you like the World Bank Annual Meeting to decide?
Do they publish a communiqué at the end of the meeting?
What would you like that communique« to say to explain to
the wider world how conditionality is changing as a policy?
Hilary Benn: The first thing to
say is that, as you will be aware, we got the World Bank Annual
Meeting to agree to undertake a review of the World Bank's policy
and practice on conditionality and that was reflected in the communique«.
That is the start of the process. It is a very welcome step, because,
as well as publishing the conditionality paper, principally but
not exclusively in respect of the UK's approach to conditionality,
if this is the subject of great debate which it undoubtedly is
in the field of development then it is important that we have
that debate in the World Bank as well as donors bilaterally. The
second thing to say is that we talk a lot about country ownership—we
talked about PRSPs a moment ago and country ownership—but
what exactly do we mean by that? Because, let's be honest, there
has always been a tension at the heart of talking about country
ownership on the one hand and the attaching of conditions to aid
on the other. I am listening here really to the issues that need
to be discussed and debated. It is for the review to come up with
proposals, as our conditionality review will come up with a clear
policy at the end of the consultation process, because I think
it is a very, very big, very important issue which goes to the
heart of a lot of what we do—which is why I have allowed
quite a length of time—until the end of the year—for
comments to be received on our paper. Thirdly, to look at the
process by which conditions are agreed: Are they imposed? Are
they jointly discussed and genuinely agreed? These are issues
that I would want to see looked at. We want much greater use to
be made of poverty and social impact analysis (in other words,
what the consequence of doing this would be) and, I think, more
effective use of the evidence. Because if one talks about—I
do not know—private sector involvement in parts of the economy,
in some areas the private sector undoubtedly is extremely effective:
access to mobile telephony being one example; if you look at the
provision of clean water, however, the evidence is much less clear.
So let's have a look at the evidence and let's look at the most
effective means of achieving the objective—which, hopefully,
we share—and then let's not get quite so tied up by the
means; in other words, "It has to be this means as opposed
to that means." I think that would be helpful. I have two
final points. One is about greater transparency about the process,
and, as one of the cries that is constantly heard is about greater
predictability of long-term aid, being very clear about the circumstances
that might lead to aid flows being disrupted. There are circumstances
where it would not be honest to pretend that they would not arise,
but being clearer about that, so that developing country governments
can plan with greater confidence and therefore really use that
aid to best effect rather than thinking: "Will it be here
next year?" That would be my list of the issues that we are
looking at and which the World Bank will be looking at in the
review we have got them to agree to undertake.
Q8 Hugh Bayley: Could I ask you to explain
to the Committee how that kind of new policy adopted by the World
Bank would read across to the Fund, because the Fund imposes its
own conditionality on developing countries and you would want
to make sure that the policy was coherent between the Bank and
the Fund?
Hilary Benn: Yes.
Q9 Hugh Bayley: I generalise, but I think
you will understand what I mean by the generalisation: in general,
the Fund imposes—and perhaps for understandable reasons—harsher
and less flexible conditions than a development agency like the
World Bank.
Hilary Benn: Yes.
Q10 Hugh Bayley: And there is the possibility
that, unless you get that co-ordination, you can have IMF conditionality
undermining the new freedom . . . or perhaps "freedom"
is the wrong word—the new joint setting of conditions that
the Bank might be seeking to develop. How will you avoid that
problem?
Hilary Benn: I will make two quick
comments and then I am sure Stephen will want to say something.
The first is to say that the consultation paper on conditionality
is a joint effort, including the Treasury, and, secondly, to acknowledge
that the Bank and the Fund have different jobs to do—and
that is implicit in your question.
Mr Pickford: You are absolutely
right, the IMF have for a long period of time imposed conditions
for its lending programmes. The underlying rationale for that
is essentially that they want to be repaid, therefore they ask
that countries put in place fiscal policies or monetary policies
which are designed to maximise the chance of being repaid. Having
said that, the debate has been going on for some time in the Fund
also, and every two years they do a review of their conditionality
guidelines. They essentially look again at whether the types of
conditionality they impose on borrowing countries are still appropriate.
They had a major review in 2002, which led to the so-called streamlining
of conditionality—which has had some effect; though some
people would want to go further. The next review, which is just
getting under way at the moment, is an opportunity to review again.
If I could just reinforce the point that the Secretary of State
made, the joint consultation document that we put out fully recognises
the importance of looking at the total sum of conditionality across
the two institutions. We are very much in favour of making a clearer
distinction on the division of responsibilities between the Bank
and the Fund and also at trying to develop a measure of the combined
weight of that conditionality, so that we can ensure that when
we call for streamlining in one institution it is not simply replaced
by an increase in the burden of conditionality in the other institution.
But I believe that progress has been made in terms of the Fund
looking more at its own core areas of responsibility, which are
essentially macro-economic, and also trying to reduce the number
of conditions that have been put in place. This is something that
the Development Committee asked for. We will look again at this
over the next few months.
Q11 Hugh Bayley: I would be keen to see
the two tied together. Could I explore a bit further with one
practical example. Christian Aid, in their submission to us, refer
to a World Bank study. They say: "In South Africa, HIV/AIDS
could result in `complete economic collapse' within three generations,
according to a World Bank study."[3]
Then Christian Aid argue that, on the one hand, the World Bank
study is saying the level of infection is so high you could have
these dire economic as well as social and health consequences,
and yet World Bank policies do not give enough attention to combating
the HIV/AIDS pandemic. When the Africa All Party Group was collecting
evidence on studies of HIV/AIDS in Africa, we received evidence
that the Government of Uganda was put in a position where it had
to forego some of the aid that was offered to do work on HIV/AIDS
prevention. It was happy to accept it but it would have put government
expenditure beyond the public expenditure ceiling set by the IMF.
This aid, as I understand it, was grant aid, so it was not a matter
of the IMF proposing conditionality, as you were suggesting, so
that it would be repaid. It is something we raised with the IMF
and they said, "Yes, of course we have an interest in the
macro-economic policy of a country, because if you were simply
to increase expenditure in the field of health care you could
end up in inflated healthcare costs and spending more money but
buying no more." The IMF, I believe together with the Bank
and DFID and USAID and a number of other partners, had a meeting
in Washington earlier this year, to consider the problem. I think
the solution appeared to be that you ought to invest on the supply
side to increase the number of nurses and paramedics and so on,
so that you could push up public expenditure without inflationary
consequences. In terms of conditionality, you certainly need to
remove, in my view, both from Bank conditions and from Fund conditions,
a blanket ceiling, and you need to make public expenditure controls
contingent upon the macro-economic consequences of public expenditure.
Should not effective spending to combat HIV/AIDS be seen as investment
and not as consumption, and something that one should seek to
maximise in those countries most affected and build a macro-economic
policy around that which accommodates that rather than using a
Washington-determined macro-economic framework to prevent it?
Hilary Benn: Would you like to
comment from the IMF point of view?
Mr Pickford: Yes, I will try to
respond briefly to that. The whole issue of fiscal space has been
something that has been fairly hotly debated over the last few
years. The point that the UK has been making consistently is that
there needs to be more flexibility built into fiscal conditionality,
so that if, for instance, donors were to provide X hundred million
more in a particular year, you should go back and work through
the fiscal numbers to see whether the ceilings that you put in
place are appropriate. It partly depends, as you suggest, on
whether there would be macro-economic consequences within the
country. I do not think any of us would disagree with the fact
that you do not want to have policies in place that are going
to put at risk the macro stability of the country. Indeed, the
countries themselves generally have absolutely no interest in
that. But when circumstances change—and the provision of
aid is clearly one where in the way in which many donors provide
their aid there is uncertainty about the level of aid that will
be provided—we have been arguing with the IMF that they
need to look again at the numbers and reflect that in the conditions
that are set. I think it is fair to say that that argument is
getting through and the IMF is now demonstrating more flexibility
in the fiscal assumptions that it puts in place in its programmes.
Hilary Benn: In relation to South
Africa, of course South Africa has not borrowed from the World
Bank since 2002. Secondly, the situation described in Uganda clearly
is not sensible and we should do something about it. Making aid
more predictable would help in the long-term pattern. I think
that is the other thing we should bear in mind.
Q12 John Barrett: Secretary of State,
could I ask about the integration of the Poverty Reduction Strategy
process into domestic policy making processes? As we work towards
the Millennium Development Goals, it is clear that the Poverty
Reduction Strategies ought to be as effective as possible. There
was a communique« from the International Monetary and Financial
Committee that said that these processes must be improved, must
be better integrated, and they included the IMF in this. I was
wondering if you could say anything about key findings and recommendations
to the joint World Bank and IMF study on implementing the Poverty
Reduction Strategy approach and also to find out if there is a
plan for making these Poverty Reduction Strategies more effective?
Hilary Benn: We are now beginning
to talk about second generation PRSPs and the study is very important
in trying to draw the lessons. I think there are a number of lessons.
The first is one about the process of drawing them up and the
extent to which those who ought to be interested in the process
and involved in it are indeed part of it—which we have discussed.
The second is that we do not want these to be plans written to
make the donors happy, if I may put it in blunt terms. There is
no point. That is not what they are for. That is why, if we do
not do the things that we do which make it more or less likely
that that is going to happen, we can help the plan to be more
something which the government itself feels is their plan. I think
the third lesson is that this has to be integrated into what we
are doing as a government as a whole: you cannot have the government's
plan over here for running the country and its future, and over
here is the bit of paper we have written for the purposes of the
donors, because that does not make sense. The two have to be integrated.
I think the fourth is about predictability and certainty—again
a point we have touched on—because it is very, very hard
to plan for the medium and long term, dealing with these enormous
challenges (improving health care, tackling AIDS, getting children
into school, dealing with infant and maternal mortality) if you
are not quite sure what the position is going to be next year,
let alone two years, three years, five years. That then links
into the things we are trying to do on further action on debt
relief, because one of the great merits of debt relief is predictability,
subject to the very limited set of conditions which would apply
under the UK proposal. It is how we reflect on all those experiences.
The final point I would add is on what the PRSP covers. Again,
if we are being straight with ourselves: To what extent do the
subjects that the donors bring to the table to discuss and the
areas of expertise that the people doing the discussing have,
influence the shape of the PRSP? We have touched on this previously
in relation to water. One of the great puzzles, in a sense, is
why water does not figure more prominently in PRSP processes.
One view is because it tends to be a local government responsibility
and central governments do not tend to think about it so much.
Another view is: Does it reflect the kind of debate that the donors
sitting on the other side of the table want to have? We need to
ask ourselves that question. There was one example in Africa,
where they went back, after having drawn up the PRSP, and the
people said, "Not bad, but you have not done enough on water,"
so, in drawing up their second version, they said, "We will
give greater priority to water." That shows the benefit of
talking to your own population and political processes, civil
society, parliament, about what the plan is about. Those are the
key lessons I would list as coming out of this process of review,
and, by definition, those are the key issues that need to be addressed
in trying to overcome those difficulties and deal with those contradictions
in taking the process forward for the second round.
Mr Grant: Could I follow up on
that? I think this sense of the Poverty Reduction Strategy evolving
over time is hugely important, both within individual countries
but also for the international community. We need to demonstrate
that we are here for the long term with PRSs, so that we can learn
from each generation. We can see them improving radically over
the second and third generations in individual countries. Following
up the Secretary of State's comments, the breadth of those plans
is vital and the fact that they integrate an approach to growth
and sources of wealth in a society is vital. Picking up on your
earlier question, it is very interesting to see in Asia the extent
to which national planning processes and PRSs are often coming
together; for example in Vietnam, creating a very strongly owned
and much more authoritative plan which is right at the heart of
government.
Q13 Tony Worthington: Could I ask you
about the International Finance Facility (IFF), which, as you
know, now feels like it has been around for quite a long time.
The reports we receive from yourselves and the Chancellor are
that steady progress is being made, it is the pre-eminent solution,
that there is not much else in the field, and, as both you and
I know, unless there is a very, very substantial early injection
of aid then the chances of meeting almost any of the MDGs are
nil. What progress are we really making on this? Where are the
obstacles?
Hilary Benn: The report that came
to the Annual Meetings said very clearly that this is technically
workable, so that is important. The second thing that is happening
is we are looking to run a pilot in immunisation IFF, with the
Global Alliance for Vaccines and Immunisation (GAVI)—indeed,
there are discussions taking place this week on putting that together.
We feel there is a huge benefit because raising additional resources
for immunisation is desperately needed, but, also, because
to demonstrate that if you turn the key in the engine of the IFF
it works, the engine runs, will give people confidence. I think
the third thing to say is that, as you referred, while France
and others have been working on medium and long term sources of
additional financing above and beyond the march towards the 0.7%—and
we have made big progress in the UK since we last met on that
front—the fundamental question is: Next year we will be
10 years off, we know we are short, how do we raise the money
now? In pressing the IFF, we say, "Here's the one practical
proposal on the table that can work that will raise us the additional
finance that we need today" and there is no other proposal
of which I am aware that offers the same hope of raising the finance
that is needed. There is a lot of support from developing countries.
France has offered support. Some of the Scandinavian countries
are expressing, I would say, more interest in it. But the United
States has not been a supporter of the IFF up until now, let's
be very frank. The arguments have tended to fall into two camps,
in my experience. The first has been, when we did not have a commitment
on progress towards the 0.7%: "Well, this is a substitute
for lack of progress towards the 0.7%." We have dealt with
that argument by what the Chancellor announced in the summer.
The second argument is about what will happen to aid flows in
the future, when it comes to paying back the IFF. I think the
honest answer to that is: Nobody can guarantee the future, but
the argument we have always put very strongly is: In the end that
is a political decision for governments and parliaments to reach,
but are we going to be in a stronger position to continue to argue
the case for aid and more aid, if that is what is required in
the years ahead, if we have demonstrated our capacity to make
progress towards the MDGs and achieved as many of them as possible—as
opposed to a world in 2015 where we say, "We didn't manage
to do it." That is the argument, because we know we are short,
for investing the money up front in making progress. But I recognise
that implicit in your question is: When is this thing going to
move? 2005 is going to be a crucial year, because the world is
going to have to decide: Is it going to raise the additional resources
that are required or not?—and in the end, that comes down
to political will. The final point I would make is that there
are things that have seemed in the past impossible, like any progress
on debt relief. Go back over a decade and people just said, "It
is very difficult to do anything about this problem," and
here we are, $70 billion worth of debt relief later, now talking
about how to take debt relief forward. So it does show that where
there is a will, things can move. I do not know whether from the
Treasury's point of view, Stephen, there is anything you would
like to add.
Mr Pickford: For us, one of the
key determinants in persuading others of the IFF principles is
actually to demonstrate that it does work. That is why, for us,
it is very important for the two departments jointly to make progress
on getting this pilot underway and up and running. Once those
principles are demonstrated, then it is easier to go further and
demonstrate that the wider IFF itself is feasible.
Q14 Hugh Bayley: In their evidence to
us the Bretton Woods Project made five recommendations for increasing
transparency[4]These
were that the UK Government should: "Release transcripts
of UK interventions to the boards of institutions . . ."
Hilary Benn: Yes.
Q15 Hugh Bayley: Secondly, "Posting
of UK objectives for the spring and annual meetings of the IMF
and World Bank at least 10 working days in advance of the meetings."
I know you do publish objectives, because you send them to us,
but I am not sure whether they are published 10 days in advance.
Thirdly, that "Scrutiny of these objectives" should
take place at a meeting of our Committee—well, that is down
to us.
Hilary Benn: It is.
Q16 Hugh Bayley: Fourthly, that "Debate
on the annual reports" of the Department and the Bank should
take place in the UK Parliament. That might be a joint effort,
with us both talking to the party whips about whether there could
be an annual debate in Westminster Hall.
Hilary Benn: Agreed.
Q17 Hugh Bayley: Finally, they say that
in 1992 Canada commissioned an independent audit of their contributions
to the Bretton Woods Institutions, and they suggest now would
be an opportune time for the UK to do the same of UK contributions.
Because the Government has so greatly increased aid in the triennial
review, there would be substantially more UK aid going through
the World Bank, and therefore they suggest this would be an appropriate
time to get an independent audit. I know the National Audit Office
is independent of the Government but I suppose they mean some
firm of consultants to look at what the money will buy.
Hilary Benn: Obviously, yes, the
International Development Committee (IDC) scrutiny is entirely
a matter for you. I would be very keen for an opportunity to debate
these issues on the floor of the House or, indeed, in Westminster
Hall. You referred to the National Audit Office. It is undertaking
a review next year on our relations with multilaterals which will
include the World Bank. Whether that quite covers what the Bretton
Woods Project has proposed, I am not entirely sure. On the 10
days in advance, we will certainly seek to do that, because we
publish it with a view to informing people about what it is that
we are seeking to do. On the release of transcripts, at the moment
it is against the rules of the Bank to release individual Executive
Director interventions. I think this is what ought to happen,
but we have to persuade others. Could I just say, more generally
on transparency, that we will this year be publishing for the
first time a report on our work with the Bank, in a sense mirroring
what the Treasury has done in relation to the IMF in the past.
If you ask me why we did not do it before, the honest answer is:
"I do not know" but I am doing it now because I think
it is the right thing to do. We touched on earlier some of the
other steps that have been taken by the Bank already. The Board
is going to be discussing on 18 November the publication of Board
minutes. We strongly support that and I hope others will agree.
On the disclosure of Board documents prior to discussion by the
Board, again the Board will be discussing on 18 November a pilot
project. This will also apply to operational policy papers, if
that is agreed. We would support this move and also the extension
of the pilot. I just want to give you an indication of the steps
that are already underway, and, to be honest, my inclination is—but
we have to look at the details and how it is going to work—that
some developing countries themselves might be not very keen on
forms of disclosure and I think we need to acknowledge that. But,
as I hope you can tell by what I have done, what we are pressing
for, I want to see further progress in this direction because,
frankly, it is overdue, it will improve transparency and accountability
and help us to have a more informed debate. So we are working
on it.
Q18 Mr Battle: Could I quickly come back
both to conditionality and the International Finance Facility.
Hoping that the International Finance Facility gets going, there
is an ironing out of what seems to be a slight tension (to put
it at its mildest) between Treasury and DFID, because the Chancellor
in May in the House of Commons suggested that there would be a
special conditionality attached to access to International Finance
Facility funds. He said that poor countries should receive aid
if they open up to trade and investment and that "It is a
condition of the International Finance Facility . . . that countries
receive the proposed development aid only if they show that they
are tackling problems of corruption, lack of transparency and
those associated with fiscal and monetary stability" and
then he went on to add "as well as opening up to trade and
investment."[5]
I want you to assure me that there is a reconciliation between
the conditionality paper and what the Chancellor is suggesting.
Otherwise, we might find a replication of the divisions that we
have had between the World Bank and the IMF reflected in our own
government departments.
Hilary Benn: Heaven forbid! There
is never any tension between the Treasury and any government department,
least of all DFID. The conditionality paper is a joint enterprise,
because our joint thinking on conditionality is evolving. It is
evolving in the international system, it is evolving in the UK
Government. Depending on the nature of the conditionality you
are discussing, what is very clear is that you will come across
very different views, on being able to demonstrate that the resources
you put in—whether it is through our development programme
or through the IFF—are used for the purposes for which it
is intended, can be accounted for, has not disappeared in corruption.
I have not encountered anyone who says, "No, you should not
be doing that," because it is about accountability for the
resources that we have committed to development. If you talk about
human rights conditionality, NGOs will rightly come and speak
very strongly to us about linking development assistance very
clearly to countries upholding basic human rights, but when it
comes to economic conditionality it is different. If you talk
about the trade as a "for instance", well this is at
the heart of the world trade talks: At what pace do countries
open up? What do we mean by special and differential treatment?
While moving in the same direction, how long will countries have
to adjust, recognising that not all countries can move at the
same pace. That is what we are talking about.
Q19 Mr Battle: It is trade and investment—just
to make sure there is not a waiver.
Hilary Benn: Indeed, but, in relation
to investment, as far as the World Trade talks are concerned,
of course investment and competition are off the table, and we
have made that position very clear.
Q20 Tony Worthington: Secretary of State,
could I thank you very much, and your colleagues as well, for
your responses to us. As you know, a huge topic, and we have not
covered all the questions we intended to. Perhaps we could write
to you and ask for a response to those we have not covered, so
that we can incorporate them in our evidence?
Hilary Benn: With pleasure. I
hope it has been helpful.
1 Partnerships for poverty reduction: changing aid
"conditionality" DFID, FCO and HM Treasury, September
2004: Back
2
Ev 18 Back
3
Ev 49 Back
4
Ev 39 Back
5
Gordon Brown, Chancellor of the Exchequer, Parliamentary answer
on international aid, 13 May 2004, col 465. Back
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