Examination of Witnesses (Questions 100-119)
MR GARETH
THOMAS MP, MR
KENNY DICK
AND MS
KATE JOSEPH
1 MARCH 2007
Q100 Richard Burden: Do you think
the fact that there is reliance on it—and I take the point
about those countries where there is conflict is an issue—coming
back to Morocco, Morocco has an ongoing issue in Western Sahara
and yet it does not appear on the list. Does that indicate that
it perhaps means the government departments take their eye off
the ball. If it is not on the list, you have to think "Should
we look at a particular country?" without having that trigger.
In other words, have you reviewed whether that list is the most
appropriate one to be using?
Mr Thomas: We have reviewed the
list of them and we do believe, on balance, that it is the most
appropriate list. Criterion 8 is used to make a judgment specifically
about the risk of an economy of a developing country being undermined.
Development obviously goes broader than the issue purely of the
economy and that is why there are other criteria, such as those
around human rights and conflict in the guidance to help make
that broader judgment. Criterion 8 is more specific.
Q101 Richard Burden: I might ask
you about some of the other criteria in a while, but could I ask
you about the numbers of licences that DFID does scrutinise and
use its right to comment on. As I understand it, last year 1.5%
of standard individual export licences were looked at and examined
by DFID and 27% of the open individual export licences. Both of
those figures seem small. In relation to SIELs it is very small
indeed: 1.5%. Why is that?
Mr Thomas: I think it reflects
a number of things. First, that only a relatively small percentage
of UK exports are destined for developing countries, possibly
under 7%, and I do not think you should, in a sense, make a judgment
about the numbers of licences that we can look at to judge whether
or not Criterion 8 works. There is a clear methodology in place.
When that methodology triggers a value threshold to be breached
because of the size of the potential export, then we will look
at the licence in detail. But I do come back to the point that
that is a methodology shared across government and I would generally
remind you of the nature of the arms export market in the UK and
the fact that the focus of that market is not towards developing
countries in general terms. So I do not think you should read
anything into the percentages or numbers of such licences either
turned down or looked at specifically.
Q102 Chairman: Minister, I wonder
if you might let the Committee have a note about the use of this
IDA borrowers' list because it is perfectly clear that the borrowers'
list does not correspond to the world's poorest countries as the
DFID memorandum states. There are countries with much higher GDP
per capita than Morocco that are on the list and Morocco is not.
If you line up GDP per capita against the IDA borrowers' list,
you simply do not see it as the poorest countries being on the
list. Other considerations apply. For example, there may be perfectly
good reasons why Cuba is not on the list, I do not know—your
guess is as good as mine—but in all seriousness it is not
self-evident to me, looking at the data, that the IDA borrowers'
list clearly does represent the poorest countries.
Mr Thomas: I am happy to drop
you a line.
Chairman: Thank you. That would be helpful.
Q103 Judy Mallaber: As I understand
it, the first stage of what DFID does is to look at the list of
countries that you will examine, and the second stage is that
when you get an application for an export licence you look in
a detailed way at the effect of that proposed export on the economy
or development of that country. I would like to explore how you
carry out that assessment of what the impact is. From paragraph
20 of the Department's evidence, it would appear that the key
indicator is a value threshold based on the value of the export
as a proportion of health and education spending in that country.
That is the key indicator. What percentage would the export have
to be as a proportion of health and education spending to trigger
a warning light?
Mr Thomas: 5%.
Q104 Judy Mallaber: Is it the same
threshold for all countries?
Mr Thomas: The methodology means
that, yes, it would be. When an application is received, the application
goes to the DTI. The DTI will use the methodology agreed across
government to investigate whether or not the value threshold is
exceeded. If the value threshold is exceeded then it comes to
the Department for International Development to have an even closer
look at the merits of that particular export or not. So, is that
5% figure used for every country? Yes, it is.
Q105 Judy Mallaber: Does the DTI
determine their valuation on both the value of the export and
also the value of spending on health and education in that country?
The DTI determines both those statistics does it?
Mr Thomas: It is not the DTI,
as such, that determines those statistics. There is a methodology
which we have agreed across government. It is a mathematical process
that is used to make assessment as to whether or not DFID needs
to have a more detailed look at whether the export is appropriate
or not. You rightly highlighted the first element of how that
value threshold is drawn up, the relationship between the potential
size of the cost of that export and health and education spending,
but there is a series of other indicators that also influence
the size and value of the threshold and that information is obviously
what I have been able to release to you earlier on, at the start
of this session.
Q106 Judy Mallaber: How reliable
are the statistics from developing countries on the value of health
and education spending, which are used in making that assessment?
Mr Thomas: If we have concerns
about the reliability of the data, there are international financial
institutions that we can go to, to discuss the data set that we
have available. There are a number of sources for the data that
we would seek to use to help us to make that judgment.
Q107 Judy Mallaber: Is that criterion
on the relationship of health and education spending the primary
one? Could you summarise briefly which would be the other most
important indicators that DFID would look at.
Mr Thomas: I would prefer, in
public session, not to go into a lot more detail on that at this
stage around the other indicators, but you will see in the information
we have given to the Committee what those other indicators are.
I would be happy to answer further questions to the Committee
about the other indicators that we use.
Q108 Linda Gilroy: Why do the words
"corruption", "fraud" and "bribery"
not appear in DFID's memorandum to the Committee?
Mr Thomas: I hesitate to give
you this answer because I do not wish to be trite but we were
asked specific questions and we replied to those questions. In
answer to Mr Luff I said we are shortly going to start a review
of how the Department implements the methodology. As part of that
review, one of the issues we will look at is the issue of corruption.
Q109 Linda Gilroy: The answer is
that that does not come into your use of Criterion 8 at all at
the moment.
Mr Thomas: I do not think that
is an appropriate conclusion to draw. In the economic data and
the economic information that you have, both through our conversations
with the international financial institutions and through the
expertise of our own staff in country, we have access to information
which obviously will have a bearing on the levels of corruption
in the countries and it is part of the broader picture that is
taken into account by that economic data. I am simply saying that
one of the things we will look at is whether or not we need to
do anything else on that particular question.
Q110 Linda Gilroy: Under question
7 in the memorandum you did respond to "The impact of irresponsible
and illegal arms transfers on developing countries". Currently
corruption and bribery you would not define under "irresponsible
illegal arms transfers".
Mr Thomas: I do not have the memorandum
in front of me, but I would say that we do take corruption into
account in economic data that we have available to us. We are
going to look at whether or not we need to do more.
Q111 Linda Gilroy: You say that in
2004 you commissioned research from Bradford University on the
impact of armed violence on poverty. Did that study cover corruption
at all?
Ms Joseph: That study did look
at a number of different factors and one of those factors was
the impact of corruption on arms transfers. The focus of that
study was on the legal trade in conventional weapons and what
impact that would have on development. That was one of the aspects
that were considered. That is why we have been interested in taking
it into account further in the way we apply Criterion 8.
Q112 Linda Gilroy: Is that study
in the public domain?
Ms Joseph: It is in the public
domain. It is on the Bradford University website. I am sure we
can make that available to the Committee.
Q113 John Battle: The Department
put out an excellent White Paper on governance. There are good
chapters and sections on corruption. I cannot recall whether the
arms trade and arms industry is referred to at all in that White
Paper. Given that DFID has to spend so much time, money and possibly
energy picking up the pieces, whether it is in the clearance of
mines in post-conflict resolution work, the collection of goods
in Sierra Leone and the Congo, is DFID able to give a stronger,
clearer lead on this whole business and suggest this is the way
forward in the way that DFID has done in other areas, or are you
quietly playing down this area in the hope that people do not
notice and in the background the DTI and the Foreign Office are
saying, "We have to carry on with this business and really
try to do our best to make sure it does not interfere with development"?
Or are you positively on the offensive to take arms out of the
equation?
Mr Thomas: One of the successful
initiatives which Clare Short kick-started was the extractive
industries' transparency initiative. As a result of the success
of that initiative to date, we have begun to look at whether or
not we can apply that model to other sectors. The defence sector
is one of those sectors on which we are beginning to have to do
some preparatory work with Transparency International. I do not
think it would be true to say we have gone quiet on corruption
in the arms industry, but we are engaged in some thinking and
some work there. Obviously we are happy to keep the Committee
informed about the progress of that work.
Q114 Linda Gilroy: How does what
you just said fit into the International Development Secretary's
appointment following the G8 summit last year as the person to
champion tackling corruption across Government?
Mr Thomas: That he is willing,
through DFID, to look at whether or not there is more we can do
on corruption in the defence industries is, in a sense, a further
reason why the Prime Minister wanted him to take a particular
lead on corruption in general.
Q115 Linda Gilroy: Presumably what
you have just been discussing with us about corruption and defence
features within his programme of work.
Mr Thomas: Absolutely. It is work
which is taking place with other government departments and with
Transparency International. I am not in a position at this stage
to give the Committee lots of detail about the nature of that
initiative because it is still very much in the early stages but
we have some work underway. I hope it will lead to an initiative
as successful as the extractive industries' transparency initiative
has turned out to be. At the moment, I cannot give you the confidence
that that is how it is going to turn out because we are still
very much at an early stage.
Q116 Richard Burden: When I was asking
you a little earlier about Criterion 8, you explained that the
Department will comment on other criteria as well: Criterion 2,
human rights; Criterion 3, internal tension or conflict; and Criterion
4, regional peace and security. You mentioned a number of countries
you would look at under those kinds of criteria. In your evidence,
paragraph 12, you say you have a list and I was wondering if that
list is available.
Mr Thomas: Sure. It is Iraq, Sudan,
Nepal and we have recently extended it to include Afghanistan,
Burma, Burundi, Chad, Cote D'Ivoire, DRC, Ethiopia, Eritrea, Sri
Lanka, Somalia and Zimbabwe.
Q117 Richard Burden: In terms of
results, reviewing applications in relation to those countries,
do you think it does add value to your work in each country?
Mr Thomas: I think it does. Issues
around human rights and conflict are part of the broader understanding
about development. Therefore, I think we should comment under
those criteria and help government as a whole reach a conclusion
on whether or not an export is appropriate under those criteria
too.
Q118 Richard Burden: Do you know
if the Foreign Office is also involved in that level of scrutiny
of those countries. After all, the Foreign and Commonwealth Office
technically leads on human rights in these countries. It produces
a human rights report annually. You have the list. You say they
are the countries we look at really clearly. Do you get the impression
that FCO are doing the same?
Mr Thomas: Yes, I do. We have
a genuine cross-government process. If these are things we look
at together, departments have particular strengths by the nature
of the type of work they do and we bring the individual strengths
to try to get an even stronger process jointly.
Q119 Richard Burden: That list is
a government list.
Mr Thomas: That is the list that
we will focus on in particular. I think you need to ask questions
of other departments about the specific areas they focus on.
| 
