Select Committee on European Union Minutes of Evidence


Examination of Witnesses (Questions 1-19)

Mr Tim Cole, Mr Tim Williams, Ms Melinda Simmons and Mr Andrew Key

29 APRIL 2004

  Q1Chairman: Mr Cole, good morning and welcome to you and your colleagues. Thank you for coming to meet the Committee. As I think has been explained to you, we are conducting an inquiry, a short and focused inquiry, into the relationships between the European Union and the African Union. Mr Cole, if I may open, and this question may demonstrate a remarkable lack of knowledge about the African Union, perhaps you could tell us something in general terms about the African Union. We have had a very useful paper from a researcher in which the African Union is described as mirroring the European Union and its institutions, but in practice how far does this go? What is the nature of the Constitutive Act of 2002? Is there actually African Union legislation binding on Member States? Has a court of justice action got jurisdiction over different aspects? What is actually happening or how much is it actually at this stage a question of aspirations? Perhaps, following from that, because your answer to that may govern the answer to this question: is there any way in which, if we were to do business with the African Union, we would actually be certain that we are doing business with all the Member States in the same way that, for example, WTO people doing business with the European Union know that they are doing business with all its members? I apologise if that is rather a simplistic question but I start from a low base of knowledge on the African Union.

  Mr Cole: The thing to remember about the African Union is that it is a very new organisation. It is the Organisation of African Unity reborn, if you like. It was established and launched at the Durban Summit in the summer of 2002. That was when the Constitutive Act came into force. Since then in fact a few of the institutions the African Union wanted to set up have actually been set up. Perhaps the two most significant ones that have started meeting recently are the Peace and Security Council of the African Union, which will be officially inaugurated on 25 May but which first met in March, and then the Pan-African Parliament, which first met in the middle of March. They are in the process of setting up their institutions. Those are the two that have been launched already and are actually starting to meet. It is also important to remember that the directorates that make up the Commission of the African Union are just starting as well and are gradually being supported by donors, by ourselves included, so that they can carry out their work and help the African Union meet the objectives that it has set itself in its Constitutive Act. I think that is the most important thing to remember. We are at a very early stage. The dialogue between the EU and the Africa Union is also at an early stage. I think the question about the Member States is an important one. It depends on which protocol to do which piece of work you are talking about. For example, the protocol that sets up the Peace and Security Council came into force at the end of December last year and now it is set up as the Peace and Security Council, which has amongst its objectives, and this is what is different about the African Union to the OAU, that it can intervene, for example, in situations where there have been crimes against humanity or genocide. Even if countries in Africa have not ratified that protocol, the African Union, under the Peace and Security Council, can make a decision to intervene in those states that have not ratified the protocol. That is quite an important fact. I think with other protocols, and I do not have any details to hand, that is not the case. I think it is true that the African Court of Human Rights' position is that if you have not ratified that protocol as an African country, then you cannot be taken to that court. That only applies to countries which have ratified the African court. My colleague, Tim Williams, might have something to add.

  Mr Williams: May I very much reiterate this issue about the African Union being a new organisation and its Commission, which is headed by President Konaré, formerly of Mali, being very much a new Commission. They are now working on plans about what they are going to do operationally and developmentally and how they are going to organise this Commission with its directors, its staff, its resources. These plans are being put together as we speak. There are outline strategic plans for the African Union and for the Commission. These are being turned into operational level plans at the moment. I understand that President Konaré wants to have those finalised by the end of May for consultation and then ratification at the upcoming African Union summit in July. That shows you the position at such an early stage. I could say as well that in the European Union, and I know you are the European Union sub-committee, the Commission is supporting these development plans for the planning process and is seen by the African Union Commission as a natural partner for development. There is quite an interesting synergy that seems to be developing here between the African Union Commission and the European Union Commission in terms of their developmental support that each is giving the other. In a way, obviously at the moment it is all flowing from Europe to Africa. We are very supportive of that process and we are happy that that process is going on.

  Q2  Lord Powell of Bayswater: As a supplementary to that, obviously it is entirely for the African countries to decide whether to do this or not. But do we in our heart of hearts really believe it is a wise use of scarce resources to set up an elaborate, costly and no doubt increasingly bureaucratic institution? Or could the money be better spent on other projects?

  Mr Cole: Our view is that what is written in the Constitutive Act of the African Union is a great step forward. The Organisation of African Unity did not act in a way that was consistent with promoting good governance. For example, the fact that they have taken on this new Constitutive Act means that there is now what they call a culture of non-indifference, that they can intervene when there are grave circumstances. They are also trying to promote good governance, which is very new and which we have not seen before. What it is trying to set out to do we can very much support. On the peace and security side, we think the Peace and Security Council has a very important mandate. This in some ways comes from the momentum that NEPAD has given to the efforts of countries like South Africa to promote security and stability across the continent. With this overarching African Peace and Security Council where that commitment is enshrined, we think that does have a very important role to play. I think the answer is to wait and see on a lot of these things, but certainly there are some things which definitely need supporting.

  Q3  Lord Powell of Bayswater: I quite see that we have no alternative but to wait and see. One might be justified in a little scepticism as to whether some of these aims and objectives set out are actually going to be implemented in practice, given the past history. I agree that the Peace and Security Council may be a bit different. The main ones, one should take with a pinch of salt, even perhaps in the Foreign Office?

  Mr Cole: The Africans are setting out a very long-term agenda here, as we did with Europe 40 or 50 years ago.

  Q4  Lord Powell of Bayswater: You mean that they might have a CAP and all the other desirable benefits of that!

  Mr Cole: Who knows where it will end up?

  Q5  Baroness Park of Monmouth: If I may ask two supplementaries, I seem to remember that when NEPAD was set up and it was announced to us rather late that it was basically under the African Union Council. We were told that, yes, they were interested in producing good governance but good governance could only be produced with the consent of the country which was having bad governance, as far as I remember. You have said here that they can only apply the protocols which they are ratifying if the country concerned has signed up to accept those protocols. I wonder whether it is not going to end with some excellent pious resolutions at the centre but in practice no country in the AU feeling obliged to comply if it does not suit their national interests, which is not an unusual approach, but in this case it might rather gravely disappoint, I think.

  Mr Williams: We can comment on that. I think there are two separate issues about NEPAD and the AU. The first is that obviously the AU itself has said that it may or it can intervene in the internal affairs of Member States "under grave circumstances". The definition of under grave circumstances in a wide body with a membership that is not selective, (it is an inclusive membership), and whether or not to use that clause at some point remains to be seen. Certainly the AU has not moved on that yet. I would suspect we are not going to see that for a little while, although there was one incident with the Central African Republic where there was a coup last year and I believe the intervention of the AU led to a satisfactory resolving of that circumstance. That is one part of the answer. The other part of the answer, as we see it, is that the NEPAD programme, which was officially adopted by the African Union in July 2003 at the Maputo Summit, has within it the so-called Africa Peer Review Mechanism. This is a mechanism which sets out a series of standards on corporate governance, political governance and economic governance and capacity-building. Countries are invited to sign on to this protocol. I think the reason for this is that it is recognised in the AU that for them to make a move in the way that you are suggesting may be politically very difficult but at the same time they do genuinely want to find mechanisms and ways to improve the generality of governance in Africa. By opening up a mechanism which people can sign on to, means that at least in those states some mechanisms of governance peer review in this crucial area will start. We are genuinely hopeful that this Peer Review process will develop over time. The first country is working on its peer review now, which is Ghana. A panel of eminent persons has been established which will oversee the reviews. We wait to see what will happen by the end of this year. Ideally, the African Union has, I think, three countries which it wants to finish by the end of this year on peer review. This is a major change from the old OAU. We are hopeful that this is a very positive step.

  Q6  Lord Morris of Aberavon: Peace and security in Africa is obviously a major prize. It obviously compares with the positive gains within Europe. I recollect I had a minor role within HMG in Biafra and the conflict there. Would there be machinery, would it be an aim to have machinery, to intervene in such internal conflicts?

  Mr Cole: Yes. The plan is for the African Union to set up an African standby force, which the Peace and Security Council could call on to undertake peace support operations where and when they decide that they should. The final planned concept of the African standby force has not yet been finalised, although we understand it will be at the July summit. It will probably be a plan whereby each region of the African Union—and there are five regions—sets up a standby brigade which can be used for intervention and for a peace support approach. The plan is that if this is established over the next six years—there are two phases, 2005 and then 2010 with gradually increasing power, if you like—the first target would be that some regional brigades would be able to undertake peaceful, stand-alone, observer missions and then at a later stage they would undertake much more robust missions. There is that plan. We and the European Union, through its new peace facility, will be working with the African Union to develop and support this idea because clearly in the last year there have been a lot of African peace-keeping operations in Liberia, Côte d'Ivoire, Burundi and the Central African Republic, to name a few. In all of those cases, the limitations of the capabilities of African sub-regional organisations and the African Union to actually manage competently and effectively those peace-keeping operations was in some doubt. It is important to ensure they do have the military capability to do those operations and also the management capability, which would be at the African Union and at the sub-regional level as well.

  Chairman: We have strayed slightly into the area of Lord Lea's first question. You might want to pick up on some of the answers.

  Q7  Lord Lea of Crondall: As I understand it, Chairman, colleagues from the Foreign Office and DFID have had five questions of which they have had notice. I am sure we would like to have had spoken into the record all of the answers they have prepared for each of these five questions. I am asking now number one but, in doing so, can I add a contextual dimension to it? I was quite impressed, Mr Cole, by the ease with which it tripped off your tongue to refer to a "culture of non-indifference". I have never heard that before but it is rather cute! I do not know whether you were practising when you were shaving this morning. It does sum up something which is at the heart of why some of us in the left-hand side of the brain think this is a huge step forward and in the right-hand side of the brain, as with Lord Powell, say, "You, know, this is a bridge too far, or several bridges too far, and it is all aspirational with no likelihood because of the nature of the non-interference in the internal affairs of a sovereign state". It so happens that I was co-founder of the All-Party Group on Africa. Our terms of reference on that talk about helping to sustain the work of NEPAD because it is the most hopeful development in Africa since the release of Nelson Mandela. Yes, it does start to break down the post-1945 and certainly post-independence era idea that the national state with all these straight lines on the map is sacrosanct and no-one can "interfere". This is an enormous step forward in ambition. Could you comment a bit further as to whether or not it is reasonable to say, on the one hand, that this is a highly desirable set of aspirations, and that, although here is scope for deep scepticism, nevertheless, if one did want to construct a path through which some ownership by Africa could mean that they can "interfere" in each other's internal affairs through peer review, is it not helpful to have a strong AU/EU interface, simply because, without AU/NEPAD ownership, it is hard to avoid the charge from the north of colonialism, neo-colonialism and imperialism? That is why the ownership is desperately important. As an a priori conceptual approach, this is rather good?

  Mr Cole: I agree with that entirely. I think African ownership is fundamental in all of this. I think the EU/AU interface is very important as well. These are aspirations at the moment. We have not seen any intervention or interference in an AU Member State as yet, but that is partly because they have not got structures yet which are able to do that. Perhaps there is one example where the AU has shown it is different from the OAU, which is that at last year's Maputo Summit the chair from the Central African Republic was left empty because the AU is allowed to suspend governments from its memberships which come to power unconstitutionally. That would not have happened in the OAU. This was a military government in the Central African Republic and so they were not allowed to attend the Maputo Summit last year. That is perhaps the first example of this very young organisation being different to its predecessor. As my colleague Mr Williams said, there have been a number of situations, such as the coups in Sáo Tomé and Principe and in Guinea Bissau, where the African Union played a very constructive role in helping the process move forward in both of those countries. There have been examples of success and the AU is looking at other conflict situations currently ongoing in Africa where it can play a role. Sudan is a possibility and there may be other areas as well which it could look at. To answer question one, I think the way we see the EU/AU relationship is in three parts. The first is on peace and security where the EU support for the AU is about to be increased quite significantly because they have approved the peace facility for Africa, which will be able to support both African peace support operations themselves, so the direct operations when they are being carried out, and they will also be able to support capacity-building of African institutions, such as the African Union. It is €250 million over a period of three years, so it is quite a significant investment at which the EU is looking. There was an EU mission last week to Addis in fact to try to develop this further now that the financing proposals have been agreed by EU Member States. That is one area. The second area is the EU Africa dialogue, which I can say something about and then perhaps Tim Williams will speak about institutional strengthening. The EU Africa dialogue is now focused on fewer themes than it was previously, which we are very proud of. It is now becoming more widely a political dialogue. Previously it addressed a number of development issues and other types of issues in quite significant detail. It is now largely becoming a political dialogue and it is being taken forward in a much lighter format. We have a lot more Troika meetings now. They happen on a six-monthly basis. The current President and the future President of both the EU and the AU and the Chair or a representative of the Commission in each case attend that meeting. That now takes place every six months in each presidency of the EU. The latest meeting was in Dublin on 1 April and that addressed issues such as peace and security, good governance and also it talked about debt, which is mentioned in one of the later questions.

  Mr Williams: Let me start by saying that there was a question raised earlier about the costs to the African Union. I note that currently the budget runs at about $20 million and that the African Union itself has arrears from non-paid budget contributions from its Member States of roughly the same amount. One of the crucial issues which the African Union is facing I think in its next summit is: what about the financing for the future and what are they going to do about the arrears? Do they write them off or not, and what kind of level of contributions from Member States are they going to request because they would like to increase the budget from the old OAU $20 million upwards and, of course, how all that can be managed. I know that the African countries themselves are in hot debate on this issue. I know it is an issue that really does exercise the very new staff in the Commission at the moment in Addis because they have got to come up with some suggestions by July. With regard to the other issue to do with the EU supporting the AU on the institutional strengthening side, can I preface this by saying that we as a donor and in DFID like many other donors that are supporting—the Dutch and Canadians, et cetera—recognise that the African Union is still very young and very delicate at the moment. Ideally, rather than having many donors climb in to try to inject their little projects of support, we would like as donors, or we DFID have been pushing it with some donors and others we hope will follow, to have one framework to support the African Union. The African Union Commission plan I mentioned earlier that they are building up at the moment is trying to arrange a one-stop shop where donors would put money into the plan of the African Union. We see that as ideal. The European Union is actually supplying the TA to work with the African Union on this. There is a collaboration on how to provide institutional strengthening to the AUC, which is nascent and currently being provided by the European Commission in collaboration with UNDP. The European Commission has a 2 million budget line attached to that particular initial set of activities. If it were in the future practicable to support the African Union to fulfil its mandates, then we would hope that we would work together with the EU Commission initiative, which we have followed very closely over the 18 months that it has been moving forward. That is one thing. We maintain very close links with that and are hoping that if the African Union publishes its plans for its future in May, as I noted Mr Konaré would like to, he will call a meeting, with donors prior to the July summit, which we will go to and I know other donors are prepared to go to, essentially to pledge support, at least in principle at this stage, to this idea. As I say, nothing has been finalised as yet. There is a second area of support in terms of the EU Commission and the African Union, and this is to do with democracy. There is a unit in the AU Commission that deals with elections and election monitoring. The EU Commission has provided TA over the last year or so to support the development of standards on how to conduct elections and also standards on how monitoring missions will be conducted. We have not seen the final draft but we have seen these in earlier drafts. These are top-of-the-range documents at the moment. They really draw on international best practice and they are excellent. It is obviously hoped that these will be adopted by the African Union in future. We see this as something again that is a very positive piece of collaboration between the EU Commission and the African Commission. I think €1.9 million has been allotted by the European Commission to the support of issues around democracy, human rights and good governance. Again, it is early days and things are developing. As I say, I think what we are seeing here is an interesting and positive relationship that is being developed, of which we are supportive. We do not want to barge in, (and I say that as DFID and the British Government), and confuse this relationship. We do respect what the African Union has said in the sense that they see the EU Commission as their natural partner in development. So far, this has been positive.

  Q8  Lord Maclennan of Rogart: Following on from that, I think we will later want to turn to Zimbabwe and the failure of some of these institutional arrangements to deal with that problem. That is not particularly arising from what you have said. The amounts of money that are being donated by the European Union to the AU to promote democracy are pretty exiguous by comparison with the needs of the continent and might be regarded as almost a token expenditure. Is that how it is regarded by the Union or do they think they are doing quite well?

  Mr Williams: The amount of money that is being provided is essentially to provide technical assistance to help with the design of instruments within the African Union. If you like, it is the expert advice. This is not core money for an implementation budget. My understanding, certainly with regard to this issue, is that the African Union is extremely pleased that it is receiving this very high quality TA input or money to facilitate them providing the TA input. They have not as yet looked at the wider issue of funding with the African Union outside Africa. As I mentioned earlier, they would like to increase their budget, and this is one of the critical discussions that is going to go on at the next summit and around that summit. As for how they are funded, I think they are very wary of the political implications of accepting funding from a different area. I spoke to the Deputy Commissioner, Mazimhaka, when I was in Addis Ababa. I think he is one of the key officials inside the African Union looking at how they are funded. He sees the sustainability of the African Union as being part and parcel of funding contributions from Member States which will sustain that operation.

  Q9  Lord Maclennan of Rogart: I think you give the impression that this whole area of democracy, good governance and human rights is so delicate within the African continent that it would be risky for the European Union to seek to tender our profile on those matters and to adopt a conditional approach to the relations between the Union and the African Union. If that is so, I wonder if it is an adequate response to what is obviously one of the main reasons for the ineffectiveness of aid and development assistance. Of course, even dealing with its own democratic internal problems in the European Union—and one thinks of interferences in Austria not so long ago—there are sensitivities and one is aware of that. But there would be ways, would there not, of helping the dialogue forward and having an institutional relationship between the African Union and the European Union which maintained, promoted and pushed the exchange of ideas and practicalities and was not seen as an incursion into the internal affairs of particular countries by Europe so much as an insistence on what appears from the Constitutive Act to be the desire of the Union, though not one that they act upon.

  Mr Cole: That dialogue exists. The EU Africa Dialogue is the place where that dialogue takes place. Governance is one of the core issues that they discuss. I can clarify the four issues. One is peace and security; the second is governance; the third is regional integration and trade; and the fourth is key development issues, which is a catch-all.

  Q10  Lord Maclennan of Rogart: That is a dilution of the whole issue of good governance, democracy and the rule of law by wrapping it up in all the other matters. It may be to disguise the fact that it is being discussed. Is there not a need to have a focused, targeted, high level recognition that these are problems, that we do not wish to be intrusive but we wish to help? When the east European countries became self-governing and democratised, they had a shortage of democratic leaders. Positive steps were taken to provide educational backing and all that kind of thing. Of course, it worked very rapidly. One does not have any sense of the urgency of that kind of case being acknowledged by the European Union, or indeed a recognition that to do something about it would not be an intrusion but would be of positive assistance.

  Mr Cole: I think the European Union does raise human rights and good governance with the African Union and with African Union Member States on a consistent basis. It is certainly a very fundamental part of the dialogue for the European Union. I think the agenda is broader. My understanding is that when this was put together the African Union would certainly have wanted development issues to be discussed as well and there had to be some agreement over what the areas of discussion would be. I do not think there was any attempt to disguise it in any way.

  Q11  Lord Maclennan of Rogart: Could it be conducted in a different forum where it would allow these issues properly to be negotiated, if you like, in parallel with the discussions about trade and aid and all the other matters?

  Mr Cole: In addition to this, there is the EU Heads of Mission Dialogue that goes on in Addis Ababa, which is in addition to the Troika process. So there is the Troika process where foreign ministers and the chairs of the commissions actually talk to each other; in addition to that, there is the dialogue at the heads of mission level. I think those issues are addressed there as well. There is also the engagement with the EU Heads of Mission, Ambassadors and High Commissioners in each Member State of the African Union. That is exactly about those sorts of issues, and so that is a consistent part of the dialogue.

  Mr Williams: May I add that an important point to make is that the African Union at the moment does not have much of a mandate, or it is very unlikely actually to observe that mandate, in terms of the governance issues that you are talking about with regard to its Member States because it just does not have the tools and the mechanisms and also the culture of that in place as yet. It will take a long time.

  Q12  Lord Maclennan of Rogart: Can we not help with that to get that going? It need not take a long time because it is so important that it is holding up development in many countries.

  Mr Williams: My colleague has mentioned that the effort that is being made is in this AU/EU dialogue where the focus is on these critical issues, one of which is governance. Where the dialogue for the EU on these issues really bites and there is conditionally is actually at the country level under the Cotonou Agreement whereby in some countries the European Commission has, under the Cotonou Agreement, the wherewithal to engage in dialogue on governance issues and has clauses in that contract which can require a scaling-up of the seriousness of that dialogue if certain actions are taken, up to and including the suspension of aid. You mention the issue of aid effectiveness and conditionality. I think that is where we are seeing that the EU has been very serious in this particular area.

  Chairman: We have had some evidence about the Cotonou Agreement in Togo.

  Q13  Lord Inge: When you talked about the EU/AU dialogue, you said the peace and security features was one of the main items on it, and clearly it should be. What are we really talking about in that dialogue? What are the subjects we cover in that?

  Mr Cole: I can refer you to the communiqué of the recent EU/AU ministerial which took place on 1 April. On peace and security, the discussion is very much about where has the AU got to in developing its own institutions? The answer is: the Peace Council and the standby force. The peace facility has been a large element of that dialogue, because clearly that is the main way that the EU will engage with the AU on it. They talk about a number of regional issues as well.

  Q14  Lord Inge: So they do look at the issues that they might have to face or, in other words, for which they might have to use their forces?

  Mr Cole: They do. It helps them; it helps the European Union identify what action it should be taking to help address conflict wherever it might be. Here, for example, they talked about Sierra Leone, Liberia, Côte d'Ivoire, Burundi and the DRC.

  Q15  Lord Inge: Do they also recognise in that dialogue the importance of the training of their forces before they go there? Do they recognise the weaknesses?

  Mr Cole: Absolutely, and the African Union is very aware of the limitations of their forces, training and otherwise, and training is a fundamental part of that. We do not yet know what they are going to suggest in terms of what sort of training facilities they would need, but it is a fundamental concern, yes.

  Q16  Lord Powell of Bayswater: I think we can leave the question of the relative sizes of the left side of Lord Lea's brain and the right side of mine, to the coroner. I do not think there will be any great surprises! It is very easy to aid institutions. It is wonderful: Europe has a Commission and a Council and a Parliament, and so we can have all that in Africa, too. I think Lord MacLennan put his finger on the problem: how committed are we to using the levers and instruments available to us in Europe to ensure that those concepts are given real substance, particularly the concept of good governance? That leads in my mind to at least three questions: one, while there is certainly leverage in Cotonou in the form of conditionality, will we apply the same degree of conditionality to aid to the African Union? Secondly, can we be sure that we will not see double dipping; that is, aid going for the same purposes directly bilaterally to Cotonou countries and to the African Union as an institution? Third, can we be sure that European aid to which we contribute will not be used for paying off arrears in the African Union for Member States who just fail to divvy up?

  Mr Williams: That is a good question. I will talk about the areas that are not peace and security and perhaps on the funding issues to do with peace and security I will ask Tim Cole to comment. We would be thinking, and certainly the EU is thinking, of only providing resources for TA and equipment to the African Union. It is for the Commission, for the processes of the African Union; it is not that that money is then going to move out and be somewhere else. It is in Addis Ababa but it is not actually under the control of the Ethiopian Government. It is particularly for the institution of the African Union and how that runs; it is not for any programme it may have at this point. As I said, we support establishing standards for election monitoring, the AU funds the election monitors. That is how it is at the moment. On that first worry that you had, certainly at the moment I do not see that there is likely to be doubling up.

  Q17  Lord Powell of Bayswater: The first point was: would we apply conditionality? I accept your answer that we would not, because it is still too early a stage to happen. Would it be our intention to apply conditionality in future? The second part was on double dipping.

  Mr Williams: On conditionality, the conditionality that we would seek to apply on institutional strengthening would normally be the way that we would think of an institutional strengthening programme. It will set itself objectives for the functioning of the Commission and we will support that. If they are moving towards achieving those objectives, we will be happy and the money will continue to flow. If they are not achieving the objectives, we will consider changing the configuration, or if there is the possibility that there is a diversion or the funds are not being utilised in a proper way, then we would close the programme, as is always the case. Certainly, we have not thought through the wider question of if the African Union were not, for instance, to fulfil an aspect of its mandate within ten years, would that mean that we should stop providing institutional development support to the centre? We are a long way from that. We are right at the beginning of the story at the moment. Certainly, the amount of resources that we as the British Government would consider putting there has to be proportional to what we think is for the good of the institution. When I am talking about proportionality here, this is to look at what is the overall budget, what are its needs for this Commission, the AU Commission. It is not going to be a Rolls-Royce model; maybe it should not be a bicycle but somewhere in between would be appropriate. What are other donors thinking? What are other African institutions looking like in a similar sense? We would want to be appropriate. We have not thought through, certainly at this stage, the wider issue of conditionality. On the issue of arrears, I think it is a bit like the answer to your earlier point: with the moneys that we would provide, certainly at this stage, there is no question that we would be paying off their arrears. This is very squarely a question that they are trying to deal with. The question may come up, however, depending on how they finally decide to resolve their arrears problem. I suppose it is conceivable that the African Union could turn round and ask donors to come forward to pay their arrears. I suspect that our answer would be absolutely no to that.

  Lord Powell of Bayswater: So at the very least we would apply conditionality at that stage.

  Q18  Lord Morris of Aberavon: I want to deal with the external debt in Africa. I will ask three questions. First, at the recent Troika meeting of Foreign Ministers, did they want the AU proposals for dealing and addressing this issue? Second, how is the EU assessing why Africa only receives 1 per cent of the world's private capital flows? Third, how is it doing that?

  Mr Williams: On the first question, the important thing is that Ministers from the African Union and from the European Union welcomed the report. There was a joint report done on Africa's debt between the two organisations. It looked at the quantum of this debt. It looked at what were the processes involved around ameliorating that debt and for the future as well. The document, which we could supply you, European Africa Dialogue: Joint Report on External Debt of African Countries, is a very useful document which goes through and sets out the whole area around debt and what is going on. It is a relatively short document at 20 pages and I would recommend it. In the document there is a general agreement about the structure and magnitude of Africa's debt, the adverse impact of excessive debt on Africa and agreement that the recent developments—and this is essentially the HIPC initiative—are moving in the right direction. I am not an economist and so if you want to pick my brains on the details of HIPC, we will have to come back to you on that. Broadly speaking, the HIPC initiative is moving along. Some countries have already gained relief under HIPC II, enhanced HIPC, and there is a number of countries that are now waiting for completion points, having reached decision point. Our position on this and the position in this paper is very much that all efforts should be made to help countries that have started on the HIPC road to complete that road and that the future, again recognised in this document, is actually a very sensible conclusion, which is that obviously debt sustainability is about good macroeconomic management and development and getting the policies and governance right in the countries themselves, and that all players on the international scene, ie the donors and the international development banks, need to be aware of these key issues as they move into funding development activities in the future, developments activities which are going to be enhancing growth and not placing burdens, which of course was the reason why this debt has become so onerous in the first place. The EU has not done any particular studies on the issue of capital flows in and out of Africa. However, many people have. The World Bank and the IMF are studying this issue and the World Development Report 05 will be about FDI capital flows, direct investment in capital flows. A lot of background work is going into that. The big table, which is a UN ECA meeting, has been scheduled for June this year and it is also about capital flows. We know that the European Union is involved and has seen these documents publicly. One of them I have brought along, World Investment Report 2003. This was a United Nations report. Our view on this is certainly that the European Union does not need to do any more work than is being done. This agenda is being looked at very seriously by a lot of people. The EU is involved in those discussions. It certainly does not need to do extra work, shall we say, not that we have seen any gaps in the work that is going on.

  Q19  Lord Morris of Aberavon: As regards the first question, what is the bottom line, and it is not a technical term? Is the load of the debt allowing for write-offs getting less or heavier?

  Mr Williams: Through the HIPC initiative, it is being reduced. There is an issue which is technical, called topping-up. This is where, when you have moved into decision point, you then go through a year or two preparing to reach completion point, which is where you get full, complete debt relief. In that period, your terms of trade or interest rates can change, which can affect your debt load. You can get to the end of the story and your debt can be worse than had been agreed that they would write off. Although you are meant to get down to a ratio of I think it is 150 per cent of exports—I think that is a technical issue to do with the debt cost—and that was agreed as a fiscal amount at completion point, two or three years later you may reach decision point where your debt has actually expanded because of what they call the exogenous shocks, things that you cannot control, which have occurred and expanded your debt. Then comes the question: do European and other donors agree to what they call topping-up to make sure that when you do get your enhanced HIPC relief, you are brought back to this agreed sustainable ratio? I just note that in this report of course this was one of the issues which again was agreed between the EU and the AU in this report, that they supported the issue of topping-up. The short answer is: yes, the HIPC initiative is not without its developmental problems but it is moving in the right direction and it seems that the EU and the AU are at one about the direction in which it should be moving.


 
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