Examination of Witnesses (Questions 320-339)|
Mr Nicholas Grono, Mr Gareth Evans AO QC and Mr Romit
21 MARCH 2006
Q320 Lord Hannay of Chiswick: Do
you think the European Union is learning lessons from Australia
at all? Do you think they even know what has been going on there?
Mr Grono: I doubt it. I doubt that there is
much interest in what happens on the other side of the world.
Q321 Lord Lea of Crondall: Going
back to the African equation, we have talked about the relationship
between the security side and the governance and that, unless
the governance is right, you would get more and more fire brigade
requirements. However, it is also the case that, in terms of reaching
Millennium Development Goals, economic development grinds to a
halt overnight when you get these conflicts. I suppose, trying
to think holistically about this, there is a question, which you
perhaps cannot focus on because you are coming from a security
perception. Would you say that the countries that have the most
conflict have the least economic development, and therefore we
in the EU have somehow to have an across-the-board emphasis on
how the objectives of increasing economic development and the
welfare of the people are being put at risk? I am trying to get
round this sticks-and-carrots problem and the Chinese. The fact
is, even if the Chinese can give you goodies, they cannot give
you sustainable economic development unless they control the military
side of things; and no one is suggesting at the moment that the
Chinese are going to do that.
Mr Grono: You have to look at what the problems
are. Poverty on its own is not a conflict indicator; it is one
of them. There are poor countries that do not go through a cycle
of conflict on a regular basis. The World Bank has done some research
and it says that if you want to look at indicators, it is the
poor economies with declining growth and a predominant dependence
on natural resources exports. So it is a combination of factors.
You do not have to worry just about economies that are poor; you
have to look at the factors that have this kind of strong relationship
to conflict. Then obviously long-term development has a big impact
on conflict. Richer countries are less prone, generally speaking,
to conflict than poorer countries. Again, this is the World Bank
view, if you move up the percentile. However, I think that you
are better focused, if you are looking at the conflict perspective,
on things like the natural resource cycle; identify the entry
Q322 Lord Lea of Crondall: Is that
because, as in Nigeria, in the delta, there is huge wealth from
the state owned oil companies; it is easy to siphon off; so it
is easy to get your guerrilla bands paid for by somebody? Even
the regional administrators will finance their own little armies.
Mr Grono: It is a whole combination. There is
this big debate in this area about greed versus grievance. Is
it greed, this desire to capture resources and so on, that drives
conflict? Or is it grievance, in terms of ethnic hatreds, exclusion
from power and things like this? It really is a mix of all of
these factors, but there are certain things you need to sustain
conflict. You need resources; you need funding, and so on. So
once conflict is underway, the access to resources can help ensure
that conflict will last a lot longer than it otherwise wouldwhich
is part of the thinking behind things like the Kimberley Process
on diamonds or the EITI. Attack the sources of revenue, shut down
the revenue, and it will have an impact on conflict. In somewhere
like Nigeria, therefore, there are disputes that have ethnic elements
to them, but of course access to oil, and the bung climate and
so on that goes on there, enables these conflicts to be sustained.
Q323 Lord Lea of Crondall: Angola
is another example of that sort of thing, would you say?
Mr Grono: Angola is the classic example of oil
funding government and diamonds funding the rebels.
Q324 Chairman: Those sorts of issues
are very difficult for the EU to address. Does the strategy really
Mr Grono: The EU has a key role to play in encouraging
the success of the Kimberley Process and the EITI. In those initiatives
I think that it has a very good role to play.
Q325 Lord Hannay of Chiswick: The
Transparency Initiative, of course, is precisely one of the areas
that the Chinese can make nonsense of.
Mr Grono: Yes.
Q326 Lord Hannay of Chiswick: The
idea that the Chinese will publish the accounts of the oil that
they extract in the Sudan, or whatever it is, is probably for
Mr Grono: Yes.
Q327 Lord Hannay of Chiswick: I should
have thought that is typically one of the areas where the EU has,
as you say, a major role if it managed to spread across Africa,
through European companies, proper accounting and, through those
companies, compel certain African governments to show more of
their hand; but this is exactly one of the areas where undercutting
by the Chinese is only too likely to take place.
Mr Grono: No, it is going to be a big problem;
but there is still enough leverage, at least at this stage, for
the EU to apply pressure to countriesboth companies incorporated
in the EU, companies that are trading on EU bourses, and so on,
people who want access to EU markets. That is leverage, and even
perhaps on the Chinese down the road. As the Chinese increasingly
become international players, they will be engaging not just in
China but also in Europe and in America. Theirs is perhaps a norm-setting
Lord Hannay of Chiswick: I think that transparency
and accounting will be the last things they are going to come
to us with.
Lord Lea of Crondall: There is no reason
why we cannot ask for this as part of the EU-China dialogue though.
Q328 Lord Hannay of Chiswick: No,
I agree. It is just that realistically
Mr Grono: You are right. It is a classic demonstration
Q329 Lord Hannay of Chiswick: . .
. they are not naturally transparent people.
Mr Grono: And it will be a big problem. Kimberley
diamonds is another example: Europe is a major consumer of diamonds
and it can encourage adoption of these processes.
Q330 Lord Lea of Crondall: Do you
get into money laundering at all? I do not mean personally!
Mr Grono: Unfortunately my salary does not justify
Q331 Lord Lea of Crondall: The EU
has a money laundering initiative and so on. I think that a quarter
of the GDP of Africa goes out of Africa, and the amount of money
that goes out of Africa though embezzlement is equivalent to all
the aid money going in to Africa. That is the statistic. If it
is true that you need a natural resource to fuel the conflict,
it is also true that it is likely that you do put the money in
the famous Swiss bank accounts.
Mr Grono: It is the issue of capital flight.
Not so much money laundering, but another problem with conflict
is funding from diaspora communities, which often will support
more extreme elements internally and is a very active sort of
funding. We have seen that in Sri Lanka and elsewhere.
Mr Evans: Perhaps I may add one thing on the
money issue. To the extent that the loss of resources is through
formal channels, finance ministries, government, either receipt-gathering
agencies or expenditure agencies, the most robust form of intervention
there has ever been internationally in this respect has been in
Liberia, with this particular programme that the World Bank and
the other donors insisted on and stuffed down the throats of the
previous Liberian quasi-government. Ellen Johnson-Sirleaf has
accepted it. It is hugely invasive of sovereignty, but none the
less it basically involves, if someone is caught cheating the
GEMAPwhat is it?
Mr Grono: Governance and Economic Management
Mr Evans: Assistance involves an international
sitting right in the central governing financial institutions
and controlling the money flow, in and out, to ensure that at
least it starts off going to the right places.
Q332 Lord Hannay of Chiswick: That
is what the Europeans did to the Turks in the Ottoman Empire in
the late 19th century.
Mr Evans: It is pretty successful, if you can
make it work. It has been successful in Liberia. There is an attempt
now, which we among others are advocating to be done in the Congo,
for examplewhich is one of the most catastrophic examples
of diversion of resources.
Q333 Lord Hannay of Chiswick: Because
of the history, I would suspect that it would be extremely unwise
for the Europeans to do that. It would be much better for something
like the World Bank or someone who has a little less of a post-imperial
Mr Evans: A lot of that is not for Louis Michel,
I suppose, as a Belgian.
Mr Grono: The way it worked in Liberia was that
the EU was engaged. It conducted audits, and ECOWAS conducted
audits of the institutions. There was such blatant corruption
that the donors, including the EU and the World Bank, said, "We
won't get engaged here unless you introduce these controls":
among them being this co-location of internationals, with the
idea that the money comes transparently into the central treasury
and, hopefully, is disbursed for proper purposes. The other side
of GEMAP, which is a very interesting side, is on the one hand
intrusive financial controls and, on the other, to pull out of
the political sphereso do not micro-manage the politics;
encourage the development of civil society; encourage things like
freedom of the press, freedom of association; and hope that civil
society will play an active role in ensuring appropriate disbursement
of these monies. At one level this might sound like pie-in-the-sky
NGO stuff, but in Liberia over the last year hawse have seen a
very active role by civil society, to the extent of levelling
corruption allegations against the Speaker, the Deputy Speaker,
the head of the maritime registrywho were in the end charged.
I think it has been quite a while since Liberia has seen corruption
charges against figures like this, who have stepped down or been
prosecuted. So something we tout, for Liberia at least and maybe
adapted it elsewhere, is a very interesting use of conditionality,
encouraging civil society with a mix of different approaches.
Liberia is not a special case, but Liberia is a small country
with, potentially, a great amount of domestic wealth from timber,
from diamonds, from the maritime registry.
Q334 Lord Lea of Crondall: Iron ore?
Mr Grono: Iron ore. So there is potential for
something like that to work there.
Mr Evans: The Liberian strategy is so intrusive
that it is almost impossible to imagine it being able to be imposed
or implemented elsewhere; but it remains an ideal, in the sense
that if you can get local buy-in and can work to get local buy-in
through a transitional period, it is so tough and so robust a
strategy that it can cut the sequence and give you a chance of
starting again. So, yes, it is not totally pie-in-the-sky to think
about recommending that in this context.
Mr Jain: The European Commission launched a
project at the end of last year to reform the chain of payments
of the army in the DRC. That is an instance, therefore, where
the European Union is getting involved.
Mr Evans: A payment chain which was a classic
diversion and siphoning-off.
Mr Jain: It is to make sure that it is the soldiers
on the ground who are getting the money, rather than it going
to the generals and then dispersed or put in their pockets.
Q335 Chairman: Is there anything
that you want to say to us that we have not asked you?
Mr Grono: I think that we have
covered it pretty exhaustively. There is just one thing.
Q336 Chairman: Perhaps you could
tell us that and also, if you were writing our report, what would
be your number one recommendation?
Mr Grono: If I were writing your report, my
number one recommendation . . . .
Q337 Lord Lea of Crondall: While
you are thinking about that, what was it that you were going to
Mr Grono: I was going to say that one of the
issues in which we think the EU can play a more active role, and
there are certain restrictions, is the need for security sector
reform. It kind of touches on security sector reform, but in the
past has been constrained: partly because of DAC guidelinesthe
OECD Development Assistance Committeewhich basically said
that you cannot spend money on military matters. However, if you
go into somewhere like the Congo, the military and the security
structures are so wrapped up in their problems that it is not
a case of funding their military, et cetera. If you want to address
the root causes or some of the drivers of conflict, you have to
address their security apparatus. You can only do that by going
in and engaging in security sector reform, which embraces a whole
lot of the issues that the EU very strongly supports. At its broadest,
it includes rule of law and so on, but it is effective, responsive
military, chain of command, all that kind of stuff: security forces
that are adapted to their functions, whether it is protecting
borders or looking after the civilian population. Aldo Ajello,
the EU Special Representative for the Great Lakes, has been banging
on about this for years, because the EU will fund a whole lot
of things but tends to step away from security sector reform because
of this problem. Military that prey on their populations, security
forces that prey on their populations, are a huge problem and
something that does not get enough attention. As the EU seeks
to engage more actively, it is something that I think they could
very usefully look at.
Q338 Lord Hannay of Chiswick: Presumably
the decision which appears to be coming out, that they are going
to support the Africa Peace Facility and all the other things
from the EDF, is precisely that, is it not?
Mr Grono: But the EDF has the same restriction.
Q339 Lord Hannay of Chiswick: Yes,
but they must have overcome those restrictions.
Mr Grono: No, they fund certain things and cannot
fund other things. There is a pool of money, including bilateral
contributions by states.