Examination of Witnesses (Questions 100-119)
MR EDWARD
BELL, MS
HELEN COLLINSON
AND MS
ROMILLY GREENHILL
13 DECEMBER 2007
Q100 Chairman: I take the point you
were making but if you are dealing in fragile states, post-conflict
states, you have very often got political factions, you have got
priorities, you have got the whole explosive mix of resources
and so forth, to what extent is there a legitimate and useful
role for the Bank to say, well, we have got to help determine
what the political priorities are, like binding people into some
kind of political compact, like, say, how we might jointly work
out a development strategy for the country which is focused on
things like poverty and genuine economic development rather than
presumably what was previously the case which was a lot of vested
interests looking after themselves?
Mr Bell: Absolutely. An enormously
important role. Recently, over the last couple of years, DFID
has funded, through the Bank, research on conflict sensitising
poverty reduction strategy papers, which really is looking at
the degree to which there can be more participation through a
national plan to reduce poverty. In that sense, any kind of developmental
process can be used in a transformatory sense. Another example
I would use is this multi-donor, multi-country demobilisation
reintegration programme, which is IDA funding plus at least 13
bilateral donors who participate. Through the partnership between
the bilateral officials and World Bank officials you can make
important progress in some of these very political areas by covering
the different aspects, technical and political, in partnership.
Q101 Mr Singh: You seem quite dissatisfied
with DFID's engagement with the World Bank, certainly over the
issue of fragile states, but I suspect at a number of levels.
Would you share with the Committee what the cause of this dissatisfaction
is?
Mr Bell: It is a very difficult
question because there are certain parts of the World Bank and
certain parts of DFID that work extremely well together—the
MDRP[21]
is one example, the DAC[22]
process on fragile states and on certain issues relating to conflict.
There are other areas where there is very good co-operation but
our concern is institution-wide. Some of the knowledge generation,
some of the more progressive thinking is not spreading and percolating
across the institutions as a whole. We would say that is also
true of DFID, that conflict fragility, these issues tend to be
put into a silo on one side of the institution and the rest of
it proceeds as normal with a very different notion of development
outcomes, a very different notion of improving the situation of
the ultimate beneficiaries.
Q102 Mr Singh: But with DFID, specifically,
you make the point of criticism that the staffing is not up to
the level it should be in terms of human resources to be able
either to engage with or monitor what the World Bank is doing.
Is that the point you make?
Mr Bell: Absolutely, yes. For
example, the multilateral unit within CHASE,[23]
the conflict humanitarian part of DFID, does not have many staff
and they have prioritised UN reform and to some extent engagement
on the European Commission. You do not see in that staffing situation,
nor in the PSA[24]
that recently came out in October, any kind of awareness or agenda
to conflict sensitise the way that the World Bank carries out
its development activities.
Q103 Mr Singh: Is that a recent development
or has it been an ongoing situation? Have the staff numbers been
cut?
Mr Bell: I am not sure. It is
clear that DFID has made a very strong political commitment to
reducing the incidence of violent conflict but that has not come
with the requisite levels of staffing that need to go with it.
I would not say there has been a decision to cut staff but given
the recognition of how important it is, there is not the same
attention to the amount of expert labour and skills that are needed.
Q104 Mr Singh: Given the staffing
levels that we have got, and if you have to prioritise, should
DFID engage with the World Bank at in-country level or at headquarter
level, if there is a choice to be made?
Mr Bell: Certainly, in-country.
That is where ultimately the hardest negotiations take place but
I would not want to say that in Washington, DC, there should not
be attention to these issues as well. Too often, with country
strategy papers, very large development programmes are waved through
the Board of Directors without sufficient input from either DFID
staff in the field or DFID staff in London.
Q105 Mr Singh: In your submission
to us, in your Memorandum, you have a message for DFID to give
to the World Bank management. Would you like to share the content
of that message with us?
Mr Bell: The problem for the World
Bank is that, as the Chairman has said, it has an article of agreement
that means it cannot take into account political considerations
but if you look at economic considerations you cannot separate
them from political considerations. That message from DFID and
other bilateral executive directors needs to come through into
all parts of the World Bank's senior management, to then be passed
down to the staff in the way that their performance is assessed.
Too often performance is assessed on the basis of how much you
get out of the door without due regard for whether or not it is
possible to disperse that money. Take the example of Burundi.
The Finance Minister recently signed certain cheques on her sole
authorisation for $17 million. That meant that the IMF could not
give approval on the Sixth Review and all budget assistance had
to be put on hold. Unless you take into account more the political
and governance dynamics of a country and work out how to build
up accountability from the bottom, any number of promises on money
to be spent are meaningless.
Q106 Mr Singh: If we had to say,
in a couple of seconds, in one line what would your message be
to the World Bank, through DFID?
Mr Bell: That its performance
assessment criteria need to change.
Chairman: Thank you.
Q107 Jim Sheridan: You gave us a
brief insight into the validity of research that was carried out
in Latin America—Peru, Bolivia, Nicaragua and Brazil. I
just wondered if can maybe probe you a bit more and you could
give us more information on that subject, in particular, the roles
of the World Bank and DFID— is it consistent with the poverty
priorities that we share? Is there any case or any possibility
of any duplication from both these organisations?
Ms Collinson: Duplication between
... ?
Q108 Jim Sheridan: DFID and the World
Bank.
Ms Collinson: The research was
looking primarily at the implications of DFID's Regional Assistance
Plan 2004-07 for civil society organisations. Within that we looked
in quite a lot of detail at how the shift from bilateral programmes
to channelling funding through the World Bank and the IDB on the
one hand, and through INGOs and NGOs on the other hand, was affecting
CSOs, primarily Latin American CSOs. We talked to about 100 stakeholders
across the four countries, about two-thirds of those were CSO
representatives. The overriding issue to emphasise first of all
is that we were largely interviewing civil society organisations
and CARE is an international NGO itself. It is very difficult
to find out exactly what work DFID is funding through the World
Bank and the IDB in the way that the funding works at the moment.
There is this split between funding trust funds based in Washington
and then decentralised funds in the countries on the themes of
access to markets and more accountable public sector management,
etc. There is a broader issue which maybe the Committee is already
engaged with about the lack of transparency around the trust funds.
There is a very good paper that was written by the Bretton Woods
Project on this in 2004 and I think they have been doing on-going
work on it. To be honest until the ODI did its interim evaluation
in January of this year, even the INGOs, the so-called PPA[25]
INGOs have a partnership programme agreement with DFID, so they
are getting £6 million or £7 million a year from DFID,
specifically working in Latin America. Even those INGOs did not
really have any clear idea of how this trust fund money channelled
through the World Bank and the IDB was being spent. It was only
when that ODI evaluation came out that we had some idea as to
what was going on. A key recommendation is that there be greater
transparency around the trust funds and that has to happen given
that DFID, by its own admission, is now the largest contributor
to trust funds. In 2004, there were 800 trust funds in the World
Bank on which there was no detailed disaggregated information
at all. It has been very difficult to find out what is being funded.
Even if you go to in-country IDB and World Bank staff, they do
not necessarily know about these trust funds. The ODI evaluation
did flag up very poor communication between what DFID was funding
via trust funds and what work it was doing via secondees, etc.,
in Washington and what was happening via the decentralised funds
and then what was happening again with the remaining bilateral
money that they have. It is really not very joined up. That is
the issue, perhaps more than duplication, it is not joined up
and there is a lack of transparency. That is much more of a problem
now that you have this hands-off approach and this money going
through these different channels.
Q109 Jim Sheridan: I am somewhat concerned
that you say there is no transparency, or very little transparency.
I certainly hope that DFID take what steps are necessary to rectify
it. Given regimes like we have in Bolivia, is there a possibility
that money could be skewed elsewhere?
Ms Collinson: There is a broader
issue to raise. You talked about the World Bank working in political
environments in fragile states. We have had some fairly major
political upheavals in Latin America and certainly in Bolivia
and Nicaragua it is very unclear how their relations with international
co-operation are going to pan out. There is quite major antagonism,
certainly in Nicaragua, between the Ortega Government and donors
and IFIs. In the context of the Paris Declaration and the emphasis
on national ownership there is a basic question about whether
this is the best way of spending your money, i.e., via multilateral
institutions, not always clearly aligning what they are doing
with national plans. That is even more accentuated in situations
where there is this commitment to promoting national ownership
but then you have governments who are quite ambivalent and antagonistic
towards, say, the World Bank, and are saying, look, you donors
have drawn up this Paris Declaration and you are supposed to be
promoting national ownership, why are you not engaging with us
and funding us to do this work rather than channelling the money
via the World Bank or the IDB.
Q110 Ann McKechin: Could I ask about
the IDB, because we did meet them when we were in Washington a
couple of weeks ago. They were described by the US Treasury as
dysfunctional. Do you agree with that description?
Ms Collinson: There are major
upheavals going on in the IDB at the moment. I am not in a position
to talk in detail about that because we were looking very much
at what was happening on the ground in Latin America. The ODI
evaluation says that because of those major upheavals, this is
a good time to try and influence the IDB, so it could go either
way.
Q111 Ann McKechin: The reason why
I asked is that they thought it was dysfunctional because the
borrowers have a majority share and it is only the African Development
Bank which shares that characteristic, which they also described
as dysfunctional. Would you not accept that the development banks
should be borrower dominated, rather than lender dominated? Do
you think that is more likely to show the priorities of developing
countries in its programme?
Ms Collinson: Yes, that is a principle
that NGOs would generally share.
Q112 Ann McKechin: So why then do
you think it is so off track? I have read your presentation but
I cannot see one specific example of where you have said it has
come out with a policy which is not in keeping with civil society
involvement, not in keeping with appropriate development, because
one of the issues they discussed with us was their investment
in cash transfer systems which have been one of the most successful
social programmes in South America in alleviating poverty. But,
yet, you do not mention that in your report. Is there something
you have not mentioned here?
Ms Collinson: I can talk about
Bolsa Familia, I can talk about the IDB. I am not an expert on
the internal workings of the IDB. I do not know if others want
to comment on that. There are complex political issues behind
the fact that on the one hand the IDB, yes, has a majority of
borrower shareholders, and on the other hand, is not necessarily
performing in the way that one might one want it to in terms of
poverty reduction, etc. That has to do with the political and
macroeconomic influences in Latin America and where power lies;
you are talking about the Washington Consensus, which has had
a major hold on the continent for 20 years and has dominated the
macroeconomic policies of the IDB and the World Bank. How those
have managed to get a hold on those institutions is a bit more
complex.
Q113 Ann McKechin: It does seem to
be ironic that Washington thinks the Inter-American Development
Bank is actually dysfunctional because it is not following the
Consensus. They say that they find because they are borrower dominated
they are able to work more according to the agenda which is required
by the borrower. I put it to you that theirs is a different interpretation
from what your report states, which does not give me any facts
on the ground in your submission. It would be helpful for the
Committee to have ...
Ms Collinson: It is CARE's submission,
so I will pass on those comments.
Q114 Ann McKechin: Yes, perhaps it
would be helpful to give us some examples.[26]
The other issue is, how do you think DFID should demonstrate evidence
of its influence? It is has a 1% share, for example, in the IDB,
but we were told that it is very influential in the way that policies
are formed because they do work in partnership?
Ms Collinson: We have already
said to DFID that if you are going to continue with this strategy
of channelling funds through the IDB and the World Bank, you have
got to demonstrate that there has been an impact on those institutions.
Even in the fairly detailed ODI interim evaluation, there is not
really concrete evidence. They say that the fact that there has
been a secondee from DFID in the IDB in Washington has meant that
DFID has had more influence on promoting a greater poverty focus
and more social inclusion, in the IDB compared to the World Bank.
But we are not really given any concrete details on that.
Q115 Ann McKechin: So you want better
reporting?
Ms Collinson: Yes. In the region,
the civil society advisory committees that the IDB has have been
welcomed to varying degrees although they are fairly limited.
DFID has played quite an important role in promoting that kind
of engagement.
Q116 Ann McKechin: So, that is the
kind of thing you want to see more evidence about?
Ms Collinson: Yes.
Chairman: Thank you.
Q117 Hugh Bayley: It is about one
question of Ann's to Helen. As Ann said, the US Treasury thought
the IDB was dysfunctional because a majority of the board were
from recipient countries. When we asked why they thought that
made the Bank dysfunctional, they said, well it means that the
board is not prepared to ask difficult or penetrating questions
of borrowers, and the temptation is simply to approve a proposal
on the basis of reciprocity, that the majority would approve your
country's proposal when it came up next. There may be a real problem
there, that it is not self-evident that developing countries have
a great interest in poverty alleviation. Maybe it is a bad thing
for this reciprocity principle to be the basis upon which resources
are given. Do you see any merit in the US Treasury's concerns?
Ms Collinson: I am a bit concerned
with the way that this discussion is going because (a) I thought
we were going to be focused on the World Bank and now we are looking
at the IDB, and (b), I have not got the information at my fingertips
to look at the pros and cons of having a ...
Q118 Hugh Bayley: Do either of your
colleagues want to answer?
Ms Greenhill: I can come in on
that. We need to go back to one of the fundamental principles
of development which is that development needs to be country-owned
in order to be effective and most development experts and professionals,
including most people in DFID, would agree with that principle.
We know that when countries have strong development strategies
but also have a strong picture of how much aid they are going
to get, what they want to use that aid for, what forms they would
like that aid in, that is where it tends to be most effective
in the long run. If you have institutions where developing countries
have a very strong voice, where they are able very clearly to
articulate what kind of aid they want, under what forms, how it
should be used and so forth, that in the long run leads to more
effective results.
Q119 Hugh Bayley: As Ann said earlier,
maybe in the previous evidence session, these bodies are banks
and the people seeking loans or grants put together a proposal
and go to the bank; it is not the other way around. So I agree
with you about the recipients deciding what help they need, but
that is implicit in the process, that the Government of—I
will go to a part of the world I know better—Mozambique,
will put in a bid for something which the Government of Mozambique
thinks is a development priority. Then. of course. there is a
process of negotiation. Surely, that country-ownership principle
is fairly well established, whether or not there is a majority
of donors or recipients on the board of the Bank?
Ms Greenhill: I do not think it
always works like that. What we know from the World Bank side
is that often countries will ask for what they know the World
Bank is likely to give. We also know that with a lot of both budget
support and investment lending, there is very strong involvement
of World Bank staff, World Bank funded consultants and so on,
in putting together those project proposals. So, it is not simply
the case that the country puts together a proposal and asks for
funding.
21 Multi-Country Demobilization and Reintegration
Program Back
22
Development Assistance Committee of the Organisation for Economic
Co-operation and Development Back
23
Conflict, Humanitarian and Security Department of DFID Back
24
Public Service Agreement Back
25
Partnership Programme Agreement Back
26
Ev 77 Back
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