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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 923-iii House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE INTERNATIONAL DEVELOPMENT COMMITTEE
CONFLICT AND DEVELOPMENT: PEACEBUILDING AND POST-CONFLICT RECONSTRUCTION
Thursday 27 April 2006 PROFESSOR PAUL COLLIER Evidence heard in Public Questions 97 - 157
USE OF THE TRANSCRIPT
Oral Evidence Taken before the International Development Committee on Thursday 27 April 2006 Members present Malcolm Bruce, in the Chair John Barrett John Battle John Bercow Richard Burden Mr Quentin Davies Ann McKechin Joan Ruddock Mr Marsha Singh ________________
Examination of Witness Witness: Professor Paul Collier, Department of Economics, University of Oxford, gave evidence. Q97 Chairman: Good afternoon, Professor Collier. Thank you very much for coming to give evidence. As you will know, this is part of an inquiry into conflict resolution and post-conflict reconstruction. The Committee has read with interest your submissions and interesting theories and would like to explore with you how they can be applied in ways that might effectively reduce, eliminate and end conflict. You make a number of fairly definitive statements. I pick out things like "doubling the level of income halves the risk of conflicts", which is a straight economic correlation. You also argue that greed and the availability of what might be described as "lootable" or easily obtainable resources is a major cause of conflict. Perhaps I may start with that. To what extent do you think that the availability of easily accessible resources either stimulates or sustains conflicts? I imagine that establishing that determines what one does about it thereafter. Professor Collier: I think that the effect of big resource revenues is broader than greed. Greed is one crude factor, which is clearly present sometimes. To interpret what happened in Sierra Leone, it is helpful to realise that some of the rebels wanted to get their hands on diamond money, but the effect is much broader than that. The broader effect is probably the sheer feasibility of conflict. These rebellions typically go on for a long time, so basically one has to sustain a full-time army of several thousand people for several years. The economics of rebellion look totally different from the economics of protest. For protest one just needs a lot of people on the streets for a couple of days. To run a rebellion one needs thousands of people to be paid, fed and armed, so one must have money. It does not mean that one is doing it for the money but one needs a lot of it. In most situations there is just not that much money around. Big resources are one way of making rebellions more feasible. I have come to believe that the actual agenda of the rebellion can be anything on earth. Once it is feasible probably some organisation will occupy that niche of feasibility and the motivation that it proclaims or has could be anything. They could be nutters; a lot of rebel leaders and groups are. The motivations evolve over time. Organisations like the FARC in Colombia started in the thirties basically as a poor peasants' uprising and protest against inequality and it evolved over time into a big drug barony. One can see why. There was a lot of money to be made in drugs, so the people who were attracted to it were those who liked violence and money and gradually they took over the organisation. One mechanism is greed and another is the finance that makes these things feasible. Some of the routes to finance are pretty grim. For example, it is believed that ELF, the beloved French company which makes everybody else look very honest, pump-primed the rebellion in the Congo to the tune of about $150 million to oust the guy who had been elected democratically to fight his way back to the presidency undemocratically. The quid pro quo was a lot of cheap oil for La France, from which the Congo is now suffering. Q98 Chairman: Are you saying that the prime cause of that conflict was external intervention rather than internal stimulation? Professor Collier: One had an organised rebellion around the former president who wanted to fight his way back against a democratic government. That organisation was certainly helped by big finance which made it feasible for it to win the civil war. We know from where that big finance came and what the quid pro quo was for that finance. The feasibility of UNITA was not pump-priming finance like that but the fact that during the course of the conflict it was getting big revenues from diamonds. Obviously, that was how it kept an army of over 100,000 for many years. A third set of problems is that the governments of resource-rich countries do not need to tax and so do not need to listen to their populations and thus become detached from them. The governments in these environments, therefore, are probably distinctly bad. It does not make the rebels any better but it makes the level of disaffection higher. Q99 Ann McKechin: Your theories seem to stress that there is a strong link between levels of growth and per capita income as a determinant of the likelihood of conflict. What do you believe to be the implications in terms of donor policies? Some may say that this is an interesting theory but it may not necessarily apply in every single situation that a donor comes across? Professor Collier: Nothing in social science applies in every single situation. One could talk about propensities but it would be crazy to say that it applied everywhere. It is a pretty good guide to general policy lessons, but it is not the only one. One must always know the particular circumstances. I should emphasise that the relationship between income and especially growth and the risk of conflict is not just a theory; it is as good as we can establish empirically. The link between growth and conflict risk is not just my work; there is some very distinguished study by other people. The top article in the top economics journal in the world established rigorously a link between growth and lower risk of conflict, so it is as good as we know. Doubtless there will be exceptions as you say, but it is there. It is not theory; it is as robust a relationship in social science as we can reasonably get. Q100 Ann McKechin: In effect, it would be a risk assessment strategy? Professor Collier: Yes. The implication of it is that economic development will be a major component of any longer-term strategy to reduce the global incidence of civil conflict. Without economic development other strategies look very difficult. They are working on the margins, whereas with economic development one can basically get away with a lot of poor governance. Q101 Chairman: You said that resources could fuel a rebellion. If one takes a poor country like Malawi which does not have any resources or economic growth, nobody suggests that that country is about to burst into civil war. There is the counter-argument, is there not, that if one does not have any resources or money one is less likely to have conflict? That is not a very encouraging one for the people. Professor Collier: Basically, there are three economic components of risk: low income, low growth and natural resources. If one comes up with all three cherries one is in trouble. Malawi has two out of three, so there is still a risk. Cote d'Ivoire managed to get two out of three and look what happened. It had peace for a long time. Nobody in 1990 would have said that that was a country at risk. Africa is distinct in its endowments, not its risks, but a lot of it has all three cherries: low income, economic decline and richness in resources. The resource richness is becoming more important as one has more and more discoveries in these fragile states and a price boom. Q102 Ann McKechin: You say that economic development in relation to income can be a high risk. I take it from that you say it must be directly related to employment? Professor Collier: You misheard. I am saying that economic development and growth will bring down risks. Q103 Ann McKechin: Provided it is linked to employment, because in some cases it is not? Professor Collier: The presumption should be that growth will reduce risks. That is the normal relationship. Therefore, normally if there is growth it is good news; it will promote peace. Can one think of ways in which one gets growth that does not help? Of course one can. Take Equatorial Guinea and Chad. Oil is discovered and the government wants to spend the money on the army. It shows up in the figures for GDP because oil will be a big part of it but it does not do any good. Q104 Ann McKechin: But there is a link between economic growth on the one hand and employment on the other. The third factor which you mentioned earlier is the question of taxable income streams collected by governments. It is the correlation between those three factors which is essential to avoid conflict, not just economic growth and nothing else? Professor Collier: Undoubtedly. I am not saying that it is economic growth and nothing else. I am saying that there is a presumption that economic growth is good for peace and is peace-promoting, unless there is a form of economic growth which is pretty weird. One comes across cases of pretty weird growth and I have given the two current examples of Equatorial Guinea and Chad. The growth statistics show that the economy is growing, but nothing is happening on the ground except that oil is coming out of it. Q105 Ann McKechin: One can say the same of the Middle East where there is a lot of economic growth but high unemployment and a high risk of strife? Professor Collier: That is right. It is the non-oil economy that must benefit in some way. The most likely mechanism as you suggest is the labour market. I do not disagree with that, but I do not want to get away from the fact that the normal presumption is that growth is beneficial for peace. Q106 Richard Burden: The word "inequality" has not entered your vocabulary so far. Whilst there is evidence that high levels of growth can reduce inequality, do you think that inequality is a relevant factor in all this? Professor Collier: It seems to be much less important than I expected. When I started all this work seven or eight years ago I thought that what would leap off the page was the idea that inequality caused conflict. It does not. Statistically, it is not a very strong factor. I would like to tell you - it would make a lot of sense - that if you reduced inequality you would get rid of the problem. It is just not there in the data. There is some evidence that where there is a lot of inequality once a conflict begins it goes on for longer. In my view, the factors that are over-emphasised in conflict resolution are inequality and elections, and the matter which is under-emphasised is basically economic development, which may emerge as jobs, but the political fixes through elections do not seem to reduce the risks of conflict. We have a lot of examples of conflict in very equal societies and examples of the absence of conflict in some extremely unequal ones. Q107 Ann McKechin: What would be an example of a very equal society? Professor Collier: Sri Lanka is one of the most equal societies around. Mr Singh: The Tamils do not think so. Professor Collier: It is economically equal. If you look at income distribution in Sri Lanka it is very equal compared with most other places. One of the factors that has sustained the conflict in Sri Lanka is external finance from the Tamil diaspora, not from natural resources. We know that the Tamil diaspora has been massively funding the Tamil Tigers. For example, the bomb in Colombo that killed and injured 1,400 people was traced back to finance from the Tamils in Canada. There is currently a move within the European community to try to get the Tamil Tigers declared a terrorist organisation, and I think we should do that. The diaspora financing statistically seems to be one of the factors that makes countries more prone to conflict. We should discipline the diasporas to try to curb that financing. Chairman: On the issue of resources, we have looked at the Kimberley process and extendibility. Mr Singh has a couple of questions on that matter. Q108 Mr Singh: I think that others will ask questions on the issue of grievance and rebel movements. One of the matters you identified in the strategies to reduce the risk or try to stop conflict was the squeezing of the resources available to rebel movements. I think that you see the Kimberley process as a model of international action. I know that that process is to be reviewed after three years, but in your view has that process been an unqualified success to date, or does it have problems? Professor Collier: I think that the whole tension around conflict diamonds produced results and helped to squeeze UNITA. I have seen interviews with the top UNITA leadership that describe how basically it started to run out of money and guns in the closing years. By the time it was defeated it was starving, and that was a transformation from a few years earlier. In the run-up to Kimberley one had much greater scrutiny which helped to make a big difference. De Beers, which had been saying that there was no problem and it had nothing to do with it, withdrew from the diamond market. That was a massive switch in its policy. That killed rebel access. It is not just the moment that Kimberley starts; it is the build‑up to it. In my view Kimberley is getting better as time goes on. The next technology in Kimberley, as I understand it, is the use of smartcards for miners in alluvial diamond areas which can do a lot to track the source of diamonds within a very small area. New technology is making feasible a lot of things that were not in the original Kimberley agreement. I am very hopeful. It is a model of what can be done in timber, perhaps even in oil. Oil-bunkering, as it is called, in the delta region of Nigeria involved rebel groups stealing a lot of oil from the pipelines and selling it. Trace elements in the oil can make it much harder to sell it, if there is proper certification and scrutiny. The object is not to make it unsaleable but to create a deep discount in the price at which rebels can sell it. Q109 Mr Singh: You are talking about legitimate and illegitimate products? Professor Collier: Yes. One is creating an illegal market for a product that is legitimate, and one differentiates the markets by some identifiable measure. In diamonds it would be the certification process; in oil it would be a trace element in the product; and in timber it would be an attempt to trace the source of the trees. Q110 Mr Singh: Could the process be made more effective by, for example, the United Nations applying sanctions to particular areas, for example Cote d'Ivoire, which are rebel-held to make sure that resources from those areas cannot be traded? Professor Collier: Yes. Sanctions go hand in hand with information that makes the sanctions enforceable. Q111 Mr Singh: Do sanctions work in this kind of area? Professor Collier: I think they can. One does not want them to get too far ahead of the technology that provides the information; otherwise, they are discredited, but the technology that provides the information really is advancing, so these measures are becoming much more feasible. Q112 John Battle: I want to ask about the role of rebel groups. It is almost trite to say that some rebels become the leaders of the country later. Therefore, there is not always clarity in motives. I spent some time today meeting people from Sierra Leone and listening to them at a very basic family level. If your argument is that part of the Kimberley process will lower the price that rebel groups rather than governments get for commodities, does it not assume that the rebels' grievances are not the real issue? The real issue is simply that they can get their hands on the dosh and worm their way into power and keep control. Therefore, there is a dichotomy between rebels and government but once they become government their motives are not the same? Professor Collier: I believe that it is very dangerous to go down the route of saying that rebels and governments are equal. In most developing societies lots of people have legitimate grievances against governments. Most of them by our standards are pretty poor, rough governments, so there are a lot of legitimate grievances. Usually, these legitimate grievances do not translate into armed violence, but sometimes they do. Basically, armed violence does not appear to be closely related to the level of legitimate grievance. There is always a strong case for addressing legitimate grievance. There is no evidence that armed violence promotes the redress of grievances; on the contrary, the legacy of armed conflict is far deeper problems than one starts with. Even where one has legitimate grievances and the rebels are addressing them, which is a big assumption because usually the rebels are no better than the government, it is a lousy way to do it because the cost of the violence far exceeds the usual redress. Q113 John Battle: As I have been listening to you I have heard a completely counter-argument. As part of my background I have been heavily involved in Northern Ireland and the conversation has been quietly in the background. I have been listening to what you say within that template. For example, one has Boston funding the IRA and its move into drugs and the rest of it. A lot of my time was spent making comments on the ground in West Belfast to the effect that perhaps it was better to get round the table and talk about the weather than kill each other in the street, including relatives and friends in the post office down the road. Provided they are sitting round a table having a conversation they are not out on the streets shooting people. Therefore, the aim is to try to get a conversation going to end the conflict, because in my experience once people go down the road of armed conflict to get them back to conversation is the most difficult of political tasks. I just wonder what would be the overriding objectives if we wanted to reduce and eliminate conflict, because it might mean compromise. To pretend that rebels and governments are equal forces and should even be respected equally, or to say there is a moral equivalence between them, might not be appropriate, but in the practical world of politics it might be important to get them round the table and listen to the rebels and understand that sometimes their grievances are not actual but perceived grievances which still need to be dealt with? Professor Collier: One would want to make a distinction, in that where a rebellion is going on as a practical matter one has to try to deal with the rebel group to get peace. That is a massively difficult thing to do for a variety of reasons. One is that the rebel group becomes an organisation that gets used to conflict. It knows how to swim in conflict and peace becomes some sort of mythical thing with which it is not very comfortable. When the FARC finally met the Colombian government a few years ago the government said, "This is a private meeting. What do you want?" The FARC leaders did not know what they wanted; for years they had been used to fighting. The major reason why it is very difficult to achieve peace is that once peace is arrived at governments become progressively more powerful relative to rebels. Rebel forces disintegrate during peace. Therefore, governments have an incentive to promise the movement and then renege on it. Because rebels know that one cannot get peace in the first place. The rebels will not be duped into peace. There is no offer the government can make that is credible. External actors like ourselves have a role in trying to guarantee peace settlements. Q114 John Battle: Does that include listening to the rebels, or someone engaging with them? Professor Collier: Of course it does. Once one has a rebel group, no matter how awful it is, it must be given an interest in peace, which means that sometimes it has to be literally bribed into peace. RENAMO in Mozambique was bribed into peace because Italian aid agencies were sufficiently cavalier in their accounting that money could be diverted into setting up the leadership of that organisation. For the best of reasons DFID could not have done that. Q115 John Bercow: A few moments ago you said that in your judgment there was fairly conclusive evidence that the use of violence did not result in the redress of grievances. It does not follow from that statement, even if it is true, that the non‑use of violence by aggrieved persons, whether as a result of a calculated choice not to deploy it or because of an insufficiency of weaponry or numbers of troops to do so, would achieve any better result. In other words, whether there is use or non-use of violence the grievances might not be redressed. What is the significance in that sense of a multilateral intervention from outside, if that takes place; or do you suggest that the use of rebel violence is more likely than not to discourage an external actor from becoming involved? In the event of such intervention is it more likely than not that not merely will one achieve peace but that the government whose behaviour has caused the violence and multilateral intervention will be prepared to come to an agreement which at least in part resolves those grievances? Professor Collier: I caution you against assuming government behaviour which has caused the violence. In these low-income and low-growth but resource-rich societies sometimes, no matter what the government does, the opportunities for violence are so great that one will have violence. In southern Sudan a terrible government has bought peace with the SPLA. There are 30 armed groups in southern Sudan. It is so easy to be an armed group in southern Sudan, and with oil coming out it will be so profitable to be an armed group. It is a desperate situation. There are some environments in which even with good governance the opportunities for violence are just too great. You ask about the scope for external intervention. "Intervention" is a broad word. Of course, in these environments one has struggles. One has brave local heroes, for example John Githongo in Kenya, who are peacefully sustaining a force for reform, and it is our proper business to do everything we can to strengthen their position. Usually, that will be non-military. Our opportunity for military intervention is post-conflict or in the very late stages of conflict. Our intervention in Sierra Leone both to establish and guarantee was absolutely brilliant. In my view, that is the future. I just hope that the difficulties in Iraq will not lead us to learn the wrong lesson, just as the difficulties in Somalia led to the wrong lesson - not to intervene - which produced Rwanda within a year. If we draw the lesson from Iraq that we should never intervene we will have another Rwanda. Q116 John Bercow: In your experience, is the presence or absence of television cameras during a conflict a relevant variable which points conclusively in one direction or another in terms of the likelihood of conflict being resolved and grievances redressed, or is the picture too varied and unpredictable to allow a conclusion to be drawn? Professor Collier: I have not studied it statistically. It probably cuts both ways. Clearly, there are situations in which the presence of the external media disciplines government behaviour. We must also not forget that the media are used by rebel groups to try to stimulate their own financing. One notices that all of the public relations of a lot of rebel groups is done in English. The audience of the rebels is us, not their own people, because they are appealing to a diaspora which harbours ancient grievances. Diasporas tend to be less forgiving than the local population. Quite often the local population comes to a modus vivendi, whereas the diasporas just want vengeance for some real or imagined past slight. Q117 Chairman: Does it imply that the Department for International Development should reconsider some of its policies? Some of us went to Uganda. I think of a meeting that Quentin Davies and I had with the Prime Minister of Uganda. There is an unresolved conflict and general belief that it suits the Prime Minister of Uganda to keep it unresolved, and yet we are providing direct support to him and his state. We are giving his government support; the international community is providing policing and medical aid in northern Uganda. I think that Quentin Davies will confirm that when he and I met the Prime Minister and asked about the relationship with the Democratic Republic of the Congo he sneered contemptuously and said that that was not a serious country and Uganda had every right to pursue anybody it wanted as far as it liked. As you know, reparations have been awarded but I imagine they will never be paid. The question is: is it right for our own department to continue to provide support to Uganda which is not fulfilling its responsibilities in the north even though it has jurisdiction there and is effectively freely invading its neighbour? Professor Collier: I think that in a lot of these countries it is legitimate for us to try to influence both the level of military spending and the conduct of the governments. One simple reason for that is that we are financing a lot of African military spending. On average about 11 per cent of aid leaks into military spending. When one adds that up it means that in Africa about 40 per cent of its military spending is inadvertently financed by aid. What is more, unfortunately aid seems to increase the risk of a coup d'etat. That is the honey pot effect. Aid is a little like a natural resource. The greater the aid the bigger the incentive for armies to try to capture power. In response to the high risk of a coup d'etat governments tend to spend more on the military to try to buy it off; they buy off the military in part with our money because we are financing so much of it. Therefore, it is entirely legitimate that we try to place demands on governments in the areas of security, behaviour and military spending. In the particular case of Uganda the history is more complicated because for years Sudan has financed the Lord's Resistance Army. It is hard to see the LRA as other than a deeply warped phenomenon and it is not easy to negotiate a peace arrangement with it. The south sent a clergyman to negotiate and the LRA killed him, so negotiation is not easy. Q118 Richard Burden: If we can go back to Sierra Leone for a minute, one problem is the large number of unemployed youth which is closely related to instances of conflict. Reading your analysis, is it right that you attribute to that unemployed youth, who arguably do not have very much, the motivation of greed? Professor Collier: No. I see them more like cannon fodder. My advice is that we should not get too hung up on motivation. Most of these phenomena have very complex patterns of motivation: grievances, lunacy, the allure and glamour of violence and the frustration of desperate circumstances. The cocktail of motivations is very complicated. As implied by the question, when one has a lot of unemployed youth with no hope what does one expect? One wants to try to create jobs for those people and kick-start the economy in these post-conflict situations. Unfortunately, economic recovery takes time to deliver significant effects. It will take a decade to rebuild an economy and the risks are the here and now. That is one major reason why one needs an external military presence for quite a long time just to keep the lid on whilst one is rebuilding the economy and providing the jobs so there is less cannon fodder for opportunists to use. Q119 Richard Burden: That is where I have trouble. In relation to Sierra Leone I would not particularly disagree with you. You have already answered the question that I was going to ask about whether some conclusions needed to be drawn about employment, but you appear to apply the same prescription across the board. It may well be that in particular situations, not necessarily in Sierra Leone, the grievances, whether they be lack of employment or high levels of poverty, are real and the government bears a large degree of responsibility for them. That is where I have difficulty in your comment about being careful about assuming an equivalence between rebels and governments. Surely, does one not have to judge that on a case-by-case basis? There is nothing which says that a government is more or less legitimate than a rebel group unless one relates it to the circumstances of the particular country and what the conflict is about. Let us say that people take up arms in Burma. How does that fit with your analysis? You say that there is no equivalence because there is a government in Burma and we need to think of it in an entirely different way from the people who are complaining about what is going on to the extent of taking up arms? Professor Collier: I guess the point is that in Burma on the whole people have not, have they? Burma is about as bad a government as one can get and yet the circumstances there are such that it has not provoked violence. In most low-income societies lots of people have genuine grievances which ought, therefore, to be addressed by definition. Where one has violence which is usually related to factors other than grievances, unless they are total idiots, the people who lead those rebellions will say that they are doing it because they have legitimate grievances, and they will be perfectly legitimate grievances which they can speak of. Do not be duped into thinking that this conflict is caused by unusual grievances. That is what they want you to think. Q120 Richard Burden: By "conflict" do you mean the point at which they take up arms? Professor Collier: I mean violence. Conflict is endemic to all societies; it is healthy. One has rebellions where one has large-scale sustained and organised killing on a freelance basis. They are private armies killing people. If one regards that as having moral equivalence with the government one makes a big mistake. Let us all sign up for the grievances that they allege. I was the one who found shelter for John Githongo because I believed that his grievances were right and we had better support him. I passionately believe in the redress of grievances. If one has some damned armed group in Kenya organising a few hundred people with Kalashnikovs it will use the language of John Githongo but it is unlikely to be John Githongo. Richard Burden: Do you say that there was no moral equivalence between the Milosevic government in Kosovo and the KLA? I do not argue for the KLA, but do you say that the Milosevic government was on a different moral plane? Q121 Chairman: You are taking morality out of the argument? Professor Collier: I am saying that the KLA was not the answer to the problem. Q122 Richard Burden: That is not the answer to my question. Professor Collier: Just because there were manifest, powerful and legitimate grievances in that situation does not mean that we should endorse the KLA as the solution. The KLA was a classic diaspora-funded violent organisation which created as many problems as it solved. Q123 John Barrett: I want to touch on an initiative which was mentioned at the start: employment as part of the post-conflict strategy to reduce the likelihood of a recurrence of violence. One of the things we saw in action by donors in Sierra Leone was the training of a pool of young men as mechanics, carpenters or bricklayers, but, as you mentioned, if the economy does not take off at the same time one then has a group of unemployed skilled people. What can donors do to reduce the likelihood of an increase in frustration and grievances? It is bad enough to be unemployed and unskilled, but one can imagine that the grievance increases when skills go up and unemployment remains? Professor Collier: Absolutely. One key to post-conflict recovery is some sense of confidence that in future there will be a sufficient period of peace. One of the big phenomena that happen during conflict is the flight of capital. Huge amounts of the economy's own capital leave the country for obvious reasons. Usually, in post-conflict situations that capital flight continues. Sometimes it is reversed. The big success in post-conflict Uganda is that it managed to get capital coming back in instead of going out. For a start, that was a matter of re‑establishing property rights. The typical post-conflict situation carries a high risk of returning to conflict. If one had assets parked abroad and one lived in a society where there was a big risk of a return to conflict one's calculation would be whether to bring that money back or keep it abroad. The more one can do to make the post-conflict peace credible the more the economy is likely to revive, because the essence of revival is that people start to bring their own money back into the economy. To my mind, our security guarantees to make that peace credible are a vitally new instrument. The long-term guarantee that we have given in Sierra Leone is the right instrument alongside sustained aid. The typical aid story in the past decade was that aid came in in a rush and left much too quickly. That problem is now being rectified. Donors recognise that mistake and aid programmes are being sustained for longer. The security guarantees are very new, and I believe that that is the model for the future. The normal way in which governments try to maintain post-conflict peace is by having big eyes. On my statistical analysis that is not the solution; it is part of the problem. The quid pro quo for our security guarantees is deep military downsizing by the post-conflict government itself. I refer to the sort of thing that the Government of Mozambique did post-conflict. It massively slashed its army, which most post-conflict governments do not do. Spending typically post-conflict looks very much like spending during the conflict. Q124 John Barrett: You said earlier that 40 per cent of military spending in Africa was financed through aid. Where does that come from, because clearly that arises in the post-conflict situation? If there is a transfer of that kind the potential for a recurrence of the problem remains? Professor Collier: You have got it in one. These post-conflict situations are appropriately times when we want to put in a lot of aid. Most aid does not leak into military spending, but on average about 11 per cent does. That is enough to worry about but is not sufficient to cancel the aid programmes. However, it is enough to give us a legitimate role in saying, "You're spending too much. If we are to provide you with security guarantees you will spend less than you want." That is the quid pro quo, and it is entirely legitimate if only because we are paying for its army. Q125 Joan Ruddock: You said in a previous publication, and repeated it today at one point, that essentially there was often too much concentration in post-conflict situations on democracy and elections, trying to bring about new political institutions when really economic growth was required. If we look at very familiar examples, I know a little about Afghanistan. I entirely sympathise with what you have said. We have these institutions and have spent all this time and effort. We think it is great that so many people have turned out to vote, but actually on the ground very little has changed. The situation in Iraq and many countries is similar. You also said that it would take a decade to develop or rebuild an economy. What do you do in the meantime? Professor Collier: You keep the lid on it as best you can. Q126 Joan Ruddock: But how? Professor Collier: With an external military presence or guarantee. Obviously, I am not against trying to build democratic institutions. One has to do that. But we fool ourselves if we pretend that just by holding an election we have eliminated the risks and, therefore, our army is not needed. I believe that shortly the Committee is to go to the DRC. That is exactly the discourse that is needed now in the DRC. There is a big external military force: 17,000 men are keeping the peace at the moment. The clock is ticking towards an election and it is quite likely that as soon as the election is over the governments that provide that external military force will say goodbye. I believe that that would be a big mistake. I have tried to see what effect post-conflict elections have on risk. The tentative findings are that in the year before an election post-conflict that election reduces the risks; in the year after the risks are increased, and the net effect is about zero. Elections overall, therefore, do not reduce risk but shift it into the future. You may remember that before the elections in Iraq we were told that the high level of violence was because it was a run-up to those elections. Then we had the elections and the level of violence went up, not down. That is consistent with commonsense. If one has an election coming up there is hope that one can gain power legitimately. If one has just lost it one goes back to war. Of course we have to build these political institutions, but let us not kid ourselves that that is the short-term solution because, being new institutions, they do not have much credibility with the very people who have the choice of going back to violence. Q127 Joan Ruddock: What you are saying is incredibly significant particularly in relation to Iraq. It sounds as though you are predicting that what is there already is most likely to result in civil war. Many have suggested that it is civil war. Do you say that the risks have been increased by concentration on the electoral process? Professor Collier: I never predict individual civil wars. Q128 Joan Ruddock: But your theory suggests it? Professor Collier: The sort of work that I do and the use that can be made of my material is concerned with propensities and hence the direction of a policy regime. If one wants to apply it to any particular situation one has to know a lot about it as well, because the particular is always important. My stuff is useful in guarding against false generalisations from the particular. Q129 Joan Ruddock: How realistic is it to try to implement what you are arguing for which suggests to me that the international community has to spend a decade in every post-conflict state without any perceived political legitimacy? Professor Collier: As you will have found, Britain was pretty popular in Sierra Leone in providing security. The more that is internationalised the more that role is usually welcomed, not by everybody because there are always spoilers in these situations that want violence. But the damage done by these civil wars is so horrendous and the risks of going back to more civil war so high, that it is really legitimate for the international community to say that it is going to do something about these situations. The cost of civil war both to the country itself and its neighbourhood is enormous. The cost to the neighbourhood is even greater than the cost to the country itself. The external world has a legitimate interest in saying that it is going to have peace for a sufficient time to give the country a real chance of rebuilding the economy to a level at which peace is more likely to be sustained. Q130 Chairman: This is a fascinating study. The primary responsibility of this Committee is to call its own department, the Department for International Development, to account and hopefully make constructive recommendations. We are major donors in these conflict areas. I think that we are about to become the biggest donor in the Democratic Republic of the Congo. We are a major donor in Uganda, and we are a major aid force in Darfur and so on. What would be your recommendation as to the key policy instruments that DFID should use in these conflicts? What can we do about resources in terms of diverting them away from the funding of rebels? Can you identify what you believe to be the key policies that we should pursue? Professor Collier: DFID is already much further along the road than any other bilateral development agency, but the key step that it needs to be encouraged to continue is to think of itself as a development agency, not just an aid agency. The essence of post-conflict work is to get joined‑up thinking across military and security interventions, governance interventions, aid and possibly also trade. We are now learning how to use the instrument of security. Where we have been weakest is on the instruments of governance. We have been afraid to use what I call governance conditionality because of the abject failure of policy conditionality 10 years ago. Then we tried to tell governments what economic policies they should adopt, and that was stupid; it was a confusion of legitimacy. Who were citizens supposed to hold to account if we dictated to the government? Governance conditionality is quite different; it is much more legitimate. What we as donors try to insist on by governance conditionality is that the government be accountable to its own citizens. That struggle for accountability to citizens has always been internationalised, so it is legitimate that we play a role in that now. Q131 Chairman: The Committee is about to visit the DRC. You have already said that the danger in the DRC is that an election is coming up and that lowers the temperature. There are lots of armed groups which post-election are ready to re‑engage. Should one of the things to be done is to say, for example, "You must lower your military involvement and we will support police reform"? Is that the kind of priority? Professor Collier: Absolutely. We will probably need enough control of the mechanics of the budget process to ensure that money is not diverted. The government should be free to decide on what to spend it and choose its budget, subject to the military aspect where we have a legitimate concern, but we should have a role in scrutinising the actual execution of that budget, basically empowering civil society to do its own scrutiny. The Chad model was not a bad one on which to build. International, external actors insisted that the government empower its own civil society to scrutinise what it was doing. International society, as it were, shadowing civil society for a decade or so gives civil society both the protection and the skills to discipline its own government. That is a legitimate role which is only in its infancy. Chairman: The Committee has a good deal of food for thought. I see that a colleague wishes to cut in, but we are quite a bit over time. We have another session. Thank you very much indeed for coming today.
Examination of Witness Witness: Mr Alex Yearsley, Campaign Co‑ordinator, Global Witness, gave evidence. Q132 Chairman: Mr Yearsley, thank you for your patience. I know that we are a little later than we anticipated. You will have heard from the flavour of the previous discussions, particularly towards the end, some ideas as to what our government can do to help resolve conflicts. I just wonder whether, on the back of the submission that you have given to us, you can identify perhaps on the negative side what you think the UK Government has done wrong, or what is inconsistent in what it has done, in sub-Saharan Africa. We have identified some of the issues with which we are not entirely happy, so perhaps you can give us your thoughts on that? Mr Yearsley: To start with, in the Democratic Republic of the Congo one of the key matters that we look for as an organisation is consistency in government particularly within DFID on the issue of governance. To be quite honest, we are funded by DFID to do mainstream work in the Congo, looking at corruption and the role of resources. We have produced quite a number of reports into most of the resources that have been fuelling the conflict and corruption there. One of the key problems we have found is a general unwillingness to talk about them quite as brazenly as we did especially in relation to some of the key political groups and actors within the Congo in order not to upset the applecart on the basis that the elections were the most important thing to happen in the Congo. In part they might be. There was, therefore, a definite attempt to try to make sure that not too much revelatory information emerged to cause areas of concern on the governance side. We have also seen that in relation to Rwanda and Uganda. In our submission we state how the UK Government has been depressingly quiet on the issue of governance in Rwanda, especially with regard to the smuggling of resources out of the Congo. We feel that quite a lot of Rwanda's post-conflict economic change can be attributed to that large resource grab; similarly with Uganda. One has only to look at the amount of gold and other commodities that have gone over the border from northern Congo into Uganda to see that. Q133 Chairman: Do you suggest that to some extent indirectly our Government's actions or inactions have contributed to those problems? Mr Yearsley: It could have taken a much tougher line and for reasons of expediency did not do so, and continues not to do so. One could say the same of Angola. As far as we can see, at the moment there is no interest within the Foreign Office or DFID in democracy or human rights in a way that should occur, especially in regard to corruption. There is a continued siphoning off of enormous quantities of revenue which amount to literally billions of dollars. Q134 Chairman: What do you think we could constructively do to stop that? Mr Yearsley: A number of initiatives could easily derail that. One could begin by looking at offshore tax centres such as British Virgin Islands, Jersey and Guernsey. The list of places where most of the money sits is pretty large. We could reform trust company law and the global financial system that facilitates and allows money to be taken out of countries such as Angola, Kazakhstan and a number of other countries that are resource-rich and resource-dependent. It could be done easily and very quickly. Q135 Chairman: You are referring to a Kimberley process where one marks the goods and then takes them off the legitimate market? Mr Yearsley: As to the Kimberley process, I do not agree entirely with Professor Collier's comments. It is working and it has had some tremendous successes. It is not perfect, and one will never stop diamond smuggling. It did an enormous amount of good. His analysis of what will happen in the future is not true. The system to which he referred as emerging in future was designed by us. The governments are refusing to accept it, which we regard as a shame. That would bring about greater control in the diamond fields in Africa in particular. One can mark timber and other commodities. A number of initiatives are being debated at the moment, but there is still considerable inaction. Q136 Chairman: What you are implying is that the problem is not DFID's actions on the ground but the intervention of British corporations and, therefore, it is really the Treasury or the DTI that ought to be taking action? Mr Yearsley: I would say that across government within the UK there is general inaction, first, to take the issue of corruption seriously within the countries that are being assisted; second, seriously to investigate British companies that are involved in corruption and money-laundering which facilitates it; and, third, to rush resource-extractive companies into post-conflict environments. If we look at the rush of investment into the Congo at the moment to get hold of strategic national resources, that has the potential to undermine peace. These are serious issues that are not being addressed. Q137 John Barrett: Can you say something about the sequencing of action in post-conflict situations? On the one hand, one has foreign direct investment. From its point of view, DFID as donor wants to move in to help the poorest of the poor. At the same time, if security is not at the level where the government has control of what is derived from the extraction of minerals, or whatever, on the one hand there is an argument for delaying the investment by donors or the private sector. On the other hand, there is the argument that if there is delay the poorest of the poor will suffer for longer than they need to. How do you get that balance right? Mr Yearsley: It is not the case that mineral resource companies going into a post-conflict environment will bring about immediate benefits in terms of taxation and royalties, if they are ever paid in the host country, which is a rare event, and their redistribution back by the so‑called government to those provinces, which again is a very rare thing. In the Congo there are approximately three million people involved in the artismal mining sector which is key to their survival. If each of those has 10 dependants when one starts to look at the figures the artismal side of it is very important. However, sequencing is vital if one has a large-scale industrial resource extraction in a post-conflict situation. If the government structures are not in place there is no transparency and there is still fighting in the ministries as to who controls what and who gets what in the post-conflict "divi-up". One must have a degree of accountability and transparency within the government structures. One needs a decent civil service that is paid and one needs government inspectors who have the ability to go to the areas to do the inspections. In Sierra Leone the mines monitoring officers are equipped only with bicycles and the diamond dealers are in Suzuki jeeps. If the mines inspectors are paid only $5 a month, if that, and they are given $100 bribes to ensure that the diamonds go the other way, of course they will take it. That is where the support needs to be given. Once those structures are in place one can bring in some large-scale extraction that will benefit the economy where the money goes into the budge transparently and to the appropriate places. Q138 John Barrett: Are you saying that one should wait until everything is in place and somebody agrees that now is the time to move, or do you believe there is an overlap and we must go in there to facilitate those particular circumstances being in place? Mr Yearsley: I would say we should wait. They will not be facilitated by rushing in or even going in cautiously. In the Congo the extent of organised crime masquerading as so‑called legitimate mining companies - we can look at some very interesting Russian/Israeli companies operating there - has dramatically undermined any semblance of an attempt to bring in transparency and good corporate governance. One can even dress it up as elegant organised crime. There are people who have access to the aid market here in London to raise finance. The World Bank rushed in very quickly in the Congo to redraft the mining law without much consideration or thought. It is doing it at the moment in order to try to re‑introduce industrial logging in the Congo without realising that nearly one million people are dependent on the forest for their livelihoods. Sequencing is key. Q139 Mr Davies: You are saying some rather remarkable things that we ought to probe before we just accept them on the record. You said you thought that there would always be diamond smuggling but it would be quite easy, to use your words, to close off the financial channels through which money gained as a result of corruption is salted away, such as the Channel Islands to which you referred. But, surely, if one closes down one tax haven of that kind one merely creates a market for another. There are 200 countries in this world and a lot of people would find it very attractive to get into that business if one closed down the existing tax havens. Equally, if as you suggested we kept the extractive industries out of post-conflict situations for some time until after the conflict had been resolved a lot of other countries would be delighted to rush in, notably China which would be there in five minutes. It would be very grateful to you for keeping out any competition, but it would not be in the interests of the country concerned to have no competition when the Chinese made some sort of bid for its natural resources. Do you accept that there are other possible perspectives on these complicated issues? Mr Yearsley: Most definitely. I did not suggest that we should wait indefinitely. With regard to the Chinese, Indians and Brazilians they are already there, and have been for some time. I do not know whether on your trip to the Congo you will see just how prevalent is the Chinese influence. Q140 Mr Davies: Precisely. I do not, therefore, see the benefit to the country concerned in keeping out, let us say, European extractive industries and preventing them from making bids and offers to the host government? Mr Yearsley: The country itself will accept the bid that is best for itself. Q141 Mr Davies: It will not have any other bids if you do what you suggest? Mr Yearsley: With a quite simple change to a number of laws now in place and with the enforcement of current laws the situation can be cleaned up dramatically. I did not mean to single out the Channel Islands. There are numerous tax havens around the world. Through FATF and the UN Convention against Corruption we can quite happily fine-tune a number of treaties and laws which will crack down on fairly significant money-laundering and corruption, and major attention needs to be paid to that. Simple enforcement of the current laws would dramatically reduce the problem. On Monday we released a report which showed how the president of an Eastern European country has close to $4 billion in Deutsche Bank under his personal control. It is the country's money, not his, and yet he uses it as his own money. Mr Davies: It is a very well known phenomenon, but I put it to you that if you close down the Channel Islands it will just go to Macao or somewhere else. Q142 Ann McKechin: Earlier Professor Collier said that elections did not mean that suddenly there was a solution. Perhaps I may take as an example the DRC where there is a very fragile peace settlement about to be legitimised by a democratic election. How does one negotiate with a democratic government, as it will then become, on the use of the proceeds of minerals? At the end of day, if it has the tag of democratic government surely it is for it rather than any outside influence to decide on the sequence, or not, and how to prevent corruption. Clearly, it is aid-dependent, but it is a matter of how we try to preserve and grow the democratic government at the same time as we try to tackle the issues that you have mentioned, such as corruption. Mr Yearsley: It is about making investment more attractive. If one wants to attract legitimate investment one has to have the relevant laws and processes in place. As to the elections in the Congo, I disagree with Professor Collier. They are tremendously important to that country. I have met taxi drivers in New York who have flown back especially to register. National identity is vitally important. The protracted delay in the elections has been pretty disgraceful. Some of the blame for that lies with some western governments that have been messing around in some of the election politics. The issue of national sovereignty, however, is very important to governments, and how they use their resources legitimately is a matter for them. But if one wishes to attract companies of a pedigree and quality that will produce the best return, provide the most jobs and the best professional services one needs a secure operating environment for them to ensure that they are not asked for a $2 million bribe every other month or asked to falsify their invoices. Q143 Ann McKechin: You believe that there should be the sort of governance conditionality that DFID and other donors should apply in their aid? Mr Yearsley: Very much. Q144 Ann McKechin: In its submission to us the ODI pointed out the relative difficulties in addressing natural resources. If one has interstate conflict it is relatively easy to deal with it; it has not ended up with post-conflict problems over natural resources, but if it is a civil war, as has happened in the DRC, there are continuing difficulties about who actually gets the resources. Realistically, in somewhere like the Congo where one has a number of disparate factions that are divided physically as well as in terms of a long-standing, vicious war what lessons do you believe the UK Government can learn from how to apply best practice and encourage post-conflict peace? Mr Yearsley: One of the key issues that we have looked at in a number of conflicts - Angola, Sierra Leone, Liberia and Cambodia - is the role of the peace process itself and the negotiating phase when the belligerents are brought together. In many of these conflicts the key negotiating point has been the control of the resource or the ministry that will eventually control the revenues that come from that resource. In Sierra Leone Foday Sankoh was made chairman of the Strategic Minerals Marketing Corporation. In Angola in 1992-1993 UNITA tried to turn itself initially into a diamond-mining company. It tried again in 1997. It was almost as if the rebel groups were being rewarded for their mayhem; in other words, "We are going to fight for this area; we are going to cause a mess. We are saying that we want this and this is what we are being rewarded with." One has bribed them to get to that situation. One sees that as a dangerous practice to continue from which one has not learned the lessons. The same applies within the DRC. The fighting of the ministries which will have the greatest economic gain was one of the key factors in that long drawn-out peace process. Those lessons have yet to be learned. There must be a way to deal with a rebel group which has genuine and legitimate concerns. In Sierra Leone it certainly did, and many argue that it still does today. The corruption within government has not gone way. DFID and the Foreign Office have tried very hard to eradicate the corruption but, unfortunately, they have failed and there are still many grievances in Sierra Leone. There remain concerns and fears that those grievances may return. Somehow the lessons of peace negotiations need to be learned. Q145 Ann McKechin: It is a long-term process rather than a short-term fix? Mr Yearsley: Yes. Q146 John Battle: In practice, what can the Government learn from interstate conflicts where problems spill over? What lessons can be learned from how we handle that situation in civil wars? Mr Yearsley: Numerous. One of the key issues in many interstate conflicts is the movement of resources, as Paul Collier stated earlier. One of the chronic failures of the past few years has been the implementation of targeted commodity sanctions. Many people think that they have been successful. I have spent literally the past seven years talking to the people who have been smuggling diamonds, timber and arms. Those measures have been dramatically unsuccessful. There has been no successful prosecution of a single UN-imposed commodity sanction. At the moment, there is one trial taking place in Holland in which we have been fairly instrumental. It involves the Dutch timber/arms trader Gus Kouvenhoven. We need to learn the lessons of implementation, monitoring and enforcement in relation to how those interstate conflicts are financed, and we need to learn the lessons as to how arms arrive in the country. If one seeks to cut off the supply of money and guns, which are the two critical factors in stopping conflicts, one must have systems to stop them arriving in the first place. We still have not learned how to do that effectively. Many governments are deliberately not doing so because there are certain belligerents that they want to arm and keep in power, or they want to maintain the conflict. Q147 John Battle: In terms of spillovers, most conflicts now are, as it were, internal and civil wars rather than interstate wars. Have we not developed processes that are better able to handle interstate conflicts and keep countries separate and organisations within countries separate - call them governments or whatever - than civil wars? How can we, or do we, apply the techniques to resolve conflicts between states to conflicts within states? Can we make such a quick transfer? Mr Yearsley: The answers are known but it is a question of having the willingness to apply them. If one wants to cut off the financing of a warring group one can do it very quickly if there is the political will to do so. When a UN panel is set up why does it take three months to appoint it and to find the members of it so that the rebel group has another three months to move its money and to change the techniques that it uses to finance itself and the air route by which it brings in its weapons? There needs to be a permanent panel of experts within the UN to monitor arms embargoes and trade in natural resources that fund conflicts. One needs to institutionalise the knowledge so one learns from past mistakes. Many of the people who finance these conflicts and move the arms are the same. Q148 John Battle: There has been talk in the past few weeks about efforts to "reorganise the UN". Do you think the UN sees things too simplistically in terms of state-to-state relations and conflicts and does not understand intervention in a civil war? Mr Yearsley: I think that it is very sophisticated in its understanding of it. The ability to do anything about it is where the problem emerges. Mobilising 17,000 troops to go into a conflict or post-conflict situation takes an extraordinary amount of planning. Troop commitments from the majority of the countries are very hard to achieve. It understands the complexities; it is the political dealing in New York that causes the problems and delay. Q149 John Battle: If I may just push it one stage further, I believe that there are some facile assumptions that the UN can intervene easily. To give a practical example, one can point to the intervention of the UN in Indonesia vis á vis East Timor. I remember CNN asking me why the UN did not get an army that it assumed was parked in a field outside New York to march into Indonesia and intervene immediately. I was trying to explain that for the UN to invade Indonesia was not so obvious given that its population was 218 million and quite a few of them were armed. Maybe Indonesia had to invite the UN to help it resolve a conflict within its territory between East Timor and itself at the time. Do you think we will make any progress on the policy of invited intervention within the UN? Mr Yearsley: In the short term, I doubt it; it is too much of the moment. If one wanted to do some forward planning and the UN could become as sophisticated as the Department of Defense in America in relation to how many countries the US might have to invade in the future, or be invited to participate in defensive or peace-keeping operations, these interventions might be sequenced a little better. Q150 Chairman: You are recommending the definition of conflict resources and taking action to deal with them. I believe that the definition in your brief is "natural resources whose systematic exploitation and trade in the context of violent conflict contribute to, benefit from, or result in, the commission of serious violations of human rights, international humanitarian war, or violations amounting to crimes under international law". That is fine as a definition; it tells you something, but in practice what does it mean? For example, we have all kinds of conflict in Sudan fuelled mostly by the discovery of oil in that country. Would one get a country like China to agree that that was a conflict resource, and how could you enforce it? I give that as an example. Can you give an indication of how it would work? Mr Yearsley: The rationale for it came from the Kimberley process and the issue of conflict diamonds. We spent a year and a half negotiating a very turgid definition of what "conflict diamonds" meant. At the same time, it emerged that there were a number of other conflicts financed by natural resources: coltan cassiterite, timber, gold, rubies, sapphires - you name it. These are natural resources with easy market access which can be easily transported. Therefore, rather than have a Kimberley process for every single resource - gold, coltan and so on - it would be far easier if there was an instrument within international law to make the trade in that resource automatically illegal. Rather than having to launch a two or three-year campaign through the United Nations or other organisations to get the trade in a particular resource banned in a particular country it would already effectively be illegal. World customs organisations and enforcement practitioners would have the ability to apprehend the people trafficking in that resource and fuelling that conflict and would already have the law on their side. The reason why it took so long to apprehend the diamond traders who were buying from Angola, Sierra Leone, Liberia and Congo was that there was no law against it; it was legal for them to do so. No customs agents or enforcement agency, therefore, would take any action. If through the Security Council, which is the ultimate international legal instrument that covers as many countries as possible, one has a definition that is automatically translated into international law and action is taken to the best of each and every country's ability one will automatically have a very good tool to curtail that trade. Q151 Chairman: I do not think any of us would disagree that that is a worthwhile thing to do, but the practicalities are that we have lots of laws about drug-trafficking but it is multiplying and fuelling all kinds of conflict. In the context of Africa countries like China say that to get these resources is absolutely crucial, so to what extent will they be bound by it? Russia and Congo are among the top 10 corrupt countries in the world. How do you enforce it? I do not dispute the value of having a legal definition, but in practice how will it work in a way that will genuinely stop or reduce conflicts or give us a chance to end them? Mr Yearsley: One of the most important things is the markets for these resources. The diamond campaign was successful by targeting Belgium, Israel, the United States and Dubai - the people who were taking the diamonds. By squeezing that market for the resource which drives the economic need for that resource one starts to close it down. If one has that definition one will be able to do that legally. Customs agents generally are interested in things only if they have revenue attached to them and they are able to make money by applying tax to them. For many reasons diamonds had no taxes and therefore they were not interested. There are many other resources like that. Bilateral trade agreements between countries remove import and export taxes obviously to stimulate growth in trade. If one has that definition there is legal accountability for those enforcement practitioners - customs agents, law enforcement agencies and so on - to do something about it. It does not mean that they necessarily will do so, but at least one is able to call them to account and ask, "Why have you not done this? We think you should. Hold on, there is a conflict that is fuelled by a resource which is coming into this country. You need to take action." That is how it will work in practice. Q152 John Battle: I should like to follow that through in two areas that may seem to you tangential. Commodity prices, perhaps even in the case of diamonds, fell in the eighties and nineties. Now copper prices and so on have risen very sharply. Oil and gas are other massive commodities. But beyond even those resources the commodities that cause most of the problems in terms of raising money illegally are drugs, for example heroin and cocaine. We have lots of discussions on where we should go. Some groups argue that, for example, one should buy all of the heroin crop from Afghanistan and solve the problem in that way. There is also trafficking in people. Does that feature on your radar as part of the commodity analysis? Mr Yearsley: About a year ago we were asked to become involved in the issue of people- trafficking to see whether it would be possible to do anything about it in a way similar to the tracking of commodities. We did not do that because we did not believe that we had the relevant expertise to do so. As to drugs, this is the one natural resource that has not hit in the same way as other natural resource conflicts. Mention was made earlier of FARC. Dealing with environmental, human rights and the pure and simple conflict aspects, FARC is not concerned solely with the production of coca; it is involved in gold and even diamonds in Venezuela. An article appeared a few months ago in which it was said that DfID or the Foreign Office wanted to try to mount a consumer campaign about the role of cocaine and the human rights implications. Those kinds of campaigns need to be mounted if one is to try to affect the market, or one should look at complete legalisation. That is not the viewpoint of my organisation but a personal viewpoint. If one legalised, legitimised or controlled the heroin trade in Afghanistan in a constructive way - again, this is not a matter on which my organisation has worked - it would go a long way to bringing about stability and controlling that market, and it would also bring some legitimate cash, one could say, into the country. Q153 Chairman: You do a lot of work in DRC. You also said that you were working for DFID. Some members of the Committee are about to go there in the next couple of weeks. Briefly, can you give us a flavour of what is currently happening particularly on the frontier on the east in terms of who is fighting whom, the main problems and what actions you are looking for which could lower the temperature, stop these incursions and bring a more stable regime, allowing for the fact that MONUC is on the ground? We had a briefing from MONUC when we were in Kampala, Uganda. The point that they made to us very frankly and honestly was that given the job they had been asked to do and the troops they had the resources were nothing like enough. Mr Yearsley: I will start by saying that I am not the DRC expert within our organisation. I have been there a few times, but my colleagues have given, or will give, a more detailed briefing. In relation to the various different armed groups in Ituri, there is still involvement in and fighting over the control of those natural resources. It will be a problem for a while, and it will become even more problematic during the elections and in the immediate post-election period, if the elections ever occur. From my trips to the Congo, one of the most important things is that there is an equitable return on the money that is levied in tax. One of the main problems is that Mbuji-Mayi, the diamond-mining capital of the Congo, is a town through which billions of dollars of diamonds have passed over the past 50 or 60 years. This town has no running water and no paved roads of any description that can be traversed unless one is in a four by four. It has seen nothing because the money has been systematically stolen for a number of years. Even now, the governor of that province has to fight to get the 1 per cent tax that he is supposed to receive on the monthly exports of the diamonds that come from that region. It is seen very much as a regional issue. The money goes to Kinshasa and never returns. There are laws relating to it. Q154 Chairman: It is being collected? Mr Yearsley: It is being collected, but not all of it; a fair percentage disappears, but it never returns to provide those services. The same can be said for Ituri. What is the point of declaring officially what one is mining if one knows that the taxes one pays will never return and one will not see any benefit? That is why people continue to smuggle and do not want to declare what they have, because if they put it into a bank they know that potentially it can be stolen. They also become a target for people who do not have access to that resource but may have access to guns. One needs decent systems in place - everything from micro-credit - to be able to finance people so they can set up in business for themselves. One needs a system to keep wealth in the country so it is not pillaged at the whim of various different officials, and one needs an equitable return on any taxes, if they are ever paid. The extractive industries transparency initiative, although it is still in its infancy and has a very long way to go, could be a potential success across many countries. Under Jean-Pierre Bemba Congo has implemented a law on this matter. Nothing is happening; it was done for political gain, but the willingness to do it can be exploited, and it could be pushed further by DFID and the Foreign Office. Q155 Chairman: Quentin Davies has left. As a final question, should British companies not be transacting business there or is there also the counter-argument that if they are the right companies applying the right standards they should be there? What is the right answer? Mr Yearsley: The second answer. There needs to be a level playing field. If one is concerned about the Chinese coming in and undermining supposedly high standards set by European or North American companies one needs a law in the Congo that is enforced by the Congolese, or whoever, which says investment or the particular activity will be accepted only under certain conditions that need to be applied rigorously across the board. Then healthy competition will win through. If a British company has the best bid and provides the best services, so be it. But there must be a level playing field; otherwise, exactly what you say will happen: Chinese, Indian, Russian, even British, companies will come in and undermine the process. Q156 Chairman: I wish you were right, but I fear that sometimes to apply law in lawless states does not appear to be terribly effective. Mr Yearsley: Absolutely. Many people even wonder how one can call the DRC a state. It is not even a failed state because it never was a state. Chairman: Thank you very much. We will see some of this for ourselves, but it is helpful to have this input. |