Examination of Witnesses (Questions 200
- 215)
THURSDAY 22 MARCH 2007
MR HUGUES MINGARELLI, MR PATRICK CHILD AND MR HANS
DUYNHOUWER
Q200 Lord Tomlinson:
If I can just move on to the question of the impact of some of
the EU instruments because if we just go back to where we started
you produced the three scenarios—full engagement, selective
engagement or no engagement—and I think it is clear that
if it were the selective engagement the main mechanism we have
got, the TIM, would in fact be finished.
Mr Mingarelli: Not necessarily.
Q201 Lord Tomlinson:
I thought you implied it in what you were saying that you might
have to suspend the Temporary International Mechanism.
Mr Mingarelli: Not necessarily.
Q202 Lord Tomlinson:
That being the case, clearly in the recent run the TIM has been
a successful instrument because it has been the only instrument
really, but what do you think are the instruments that have historically
and can in the future make the most significant contribution to
advancing the cause of peace in the Middle East?
Mr Mingarelli: We have a number of instruments.
First of all—
Q203 Lord Tomlinson:
— But not to enumerate them, which ones are the successful
ones, which historically have been the most successful and which
do you anticipate being the most successful?
Mr Mingarelli: I am not sure that we should
necessarily look at history because we are a new actor as the
EU and we are developing constantly new tools and instruments.
We have currently a new tool which might be powerful, our Neighbourhood
Policy, in which we have developed action plans with both the
Palestinian Authority and Israel. Under the action plan we have
a number of levers in order to push both partners in certain directions,
and we will have to use these ENP action plans as soon as we can.
We have to use the Barcelona Process as well. As I told you, we
have a number of meetings either at ministerial level or at senior
official level dealing with a number of important issues which
we can narrow the gap between the parties on important issues.
So for me the main instruments which exist today are the action
plans and the Neighbourhood Policy, the EuroMed partnership, and
then the range of assistance instruments starting with TIM.
Q204 Chairman:
Under the Neighbourhood Policy as far as these action plans are
concerned, there has been a recent decision I think by the Council
that countries in this category are able to take part in a large
number of EU policies directly. Do you see that applying to not
merely Palestine and Israel, which we are thinking about here,
but also other neighbouring countries in that cluster of countries
in the Middle East? Is that something that is likely to occur
in the near future?
Mr Mingarelli: Indeed it will occur. This possibility
has been offered to all the European Neighbourhood Policy (ENP)
partners. This means most countries of Maghreb and Mashrek are
eligible under our Neighbourhood Policy and some of these countries
are well-placed to use this possibility. Here again it will probably
be a way to bring them around the same table to discuss important
issues because a political process can move only by discussing
the issues related to the final status—Jerusalem and the
borders—but you can build confidence by handling more and
more concrete issues. If you want to look back at history let
us look back at our history at the way the EU has developed, pooling
our coal and steel resources to address a specific problem, and
I think that in the Middle East we should not neglect the possibility
of bringing partners closer by ensuring strong co-operation on
issues like management of water resources, for instance, or trade
facilitation. There is a potential there which today has not been
fully exploited but with the development of the new instruments
under the EU and no longer under the Member States we can maybe
make some progress in this regard.
Q205 Lord Crickhowell:
It is all very desirable but not many of the neighbouring countries
have exactly been eager sometimes to get around the table. How
do you move them into a more positive reaction? You clearly are
seeing this as a potential. I have only joined this Committee
relatively recently but my impression is that they have not exactly
been eagerly embraced generally in the area, so are you suggesting
that there is really going to be rather a change of pace on this?
How do you think you are going to achieve it?
Mr Child: With the European Neighbourhood Policy
in general it is true that we have different expectations, different
levels of ambition and different priorities with the different
partners. It is a relatively new policy and we have been working
on it for only a few years, but it does, as Hugues has said, offer
very considerable scope for closer and more effective relations
with all the different countries. In terms of access to EU agencies
and policies I suspect that Israel as a partner is going to be
better placed and more ready to take up that sort of opportunity
than say the Palestinian Authority which is still very much focused
on what we can do through our financial assistance of institution-building
and supporting the basic structures of government. To come back
to Lord Tomlinson's question, whatever the political environment
in which we are working and whichever of the three scenarios that
we are talking about, the more we can do to re-engage with the
sustainable long-term institution-building supporting of the structures
of the government in Palestine the better, of course working within
the political constraints that we face. Already we are working
with some of the more independent organisations and the office
of President Abbas. Incidentally, one of the biggest success stories
of EU support to the Palestinians over time has been the work
we have done with the Independent Election Commission which has
really made that one of the most credible and successful institutions
in the Palestinian landscape, and I think that is a good example.
So I hope that within the constraints that Hugues has described
and very much with the hope that the actions of the new Government
will enable us to engage on as broad a canvas as possible, but
of course within the conditions of the Quartet that we will be
able to take that work forward. We have also been working through
the Partnership for Peace with civil society actors, so looking
beyond government, and that that has been something which has
been productive and which I hope can continue. We have also been
doing things like police training and customs training. I do not
know whether Hans would like to add something on this but there
is a lot of practical work with the less political and more operational
bits of public administration machinery which are vital for the
success of Palestinian society. Within that the Rafah crossing,
although an ESDP mission, has been operating with considerable
support from Community policies in terms of the training and longer-term
supporting measures that are needed ultimately to (we hope) equip
the Palestinians to take a bigger role in managing their own borders.
I think that is something else that we must continue and we are
also starting to look, in discussion with the Americans, at what
might be possible at the Karni crossing point, and that comes
back to what you said earlier about the importance of the freedom
of movement and access agreement and providing an economic lifeline
to the Palestinian population. The third element, which is also
linked to what Hugues said earlier, is through the Neighbourhood
Policy and the EuroMed structures and before the Hamas Government
came along we had taken some quite concrete steps to get three-way
talks going between the EU, the Palestinians and the Israelis
on trade issues. That is something which in the right political
context could also make an important contribution.
Q206 Lord Lea of Crondall:
You have mentioned infrastructure and co-operation on infrastructure
and the Israelis having a different role in it from the Palestinian
Authority. I am wondering in your role as midwife, as I read it,
to more joint action, is there a thought in your mind about a
joint board between Israel and the Palestinians for reviewing
infrastructure? If not, why not? Is it because of the fragmentation
in the West Bank? How would you see this process creating some
unified solutions on infrastructure in the West Bank?
Mr Child: Grand institutional structures tend
to attract political attention which can then make their smooth
and effective functioning difficult, so I have not heard of any
such plan; I do not know whether colleagues have. That does not
stop there having to be some rather obvious, pragmatic, day-to-day
co-operation between Israeli and Palestinian actors at a non-political
level on the whole question of delivering utilities, of waste
disposal and things about daily life where Palestinian municipalities
who in the past, even those which had Hamas leadership, were in
fairly frequent and operational contact with their Israeli counterparts
just to manage the cross-border story. I would like if possible
to ask Hans to add a little bit more about the concrete side of
our co-operation and whether there are things he would like to
add on the discussion.
Mr Duynhouwer: In terms of concrete actions
we have been undertaking, there is this autonomous body, for example,
work with the judiciary council where we have been doing training.
We are going to work with the Palestinian monetary authority on
their internal management information system. We have been working
of course with customs and we have been providing funds which
will allow for the better management of customs revenues, so that
is all directly relevant in terms of nation-state building. We
have been working extensively in terms of internal financial control
with the ministry of finance. This has been a big project with
very good results in terms of internal audit and financial control.
We are also now envisaging extending that to external control
where a lot still has to be done. These are all examples where
we work in terms of capacity building outside the autonomous body
and also inside the Palestinian Authority. I suppose that when
conditions are right we will resume that as soon as possible.
Q207 Chairman:
That point also goes back to the point about the European Neighbourhood
Policy action plan; as far as that is concerned, I understand
that is currently suspended or is it still operational?
Mr Mingarelli: Our action plan with the Palestinian
Authority has never been implemented for obvious reasons.
Q208 Chairman:
The one with the Palestinian Authority has not been implemented?
Mr Mingarelli: No, it has not been implemented.
Q209 Chairman:
But who would have to make the decision in order to start implementing
it.
Mr Mingarelli: It is the absence of the administrative
capacity on the Palestinian side and the contacts policy of the
EU which made it impossible to implement the various actions spelt
out in the action plan. If we manage now to strengthen the institutions
of government it will be possible then to implement this action
plan.
Q210 Chairman:
But that would be a decision which would be made where?
Mr Mingarelli: It will depend on our degree
of engagement with the new Government. If we are in a position
once again of having political contacts and providing some kind
of assistance, for instance technical assistance for capacity-building
and institution-strengthening purposes, it is clear that sooner
or later we will be in a position to have a dialogue on the various
policies covered by the action plan with the various ministers
and we would be in a position to implement the action plan, so
all will depend upon the degree of engagement that our political
masters decide to grant us.
Q211 Lord Tomlinson:
I just want to ask a question and it straddles a couple of the
things that we have already been discussing and I want to try
to draw a link between them for my own peace of mind. Fatah was
widely perceived as being corrupt. If we have the selective engagement
option it would be used exclusively to Fatah ministries. Do you
really believe that the creation of the Palestinian Unity Government
produces such a pressure on Fatah that there would be a perception
of a reduced Fatah propensity to fraud in the future? If you want
to answer it off the record I would understand.
Mr Child: On the record I would say that we
have worked extremely hard both in the past and we will continue
to do so in the future—and Hans will know this even better
than I—to ensure that the way that we are managing the money
that we give to the Palestinian Authority is controlled in a highly
effective and careful way, irrespective of suspicions that we
might have about any particular faction's propensity to any sort
of thinking, and we will continue to do that. I think the more
important answer to the question that you put is what Hugues said
at an earlier stage which is that we are certainly not approaching
the Palestinian Authority with a mind to support any particular
faction or group.
Mr Mingarelli: Once again our purpose should
be to support the democratic process and not to back the so-called
moderates against the so-called extremists our objective should
be to assist the democratic process. It is nevertheless true,
to be frank, that it is a problem and it could produce undesirable
effects if we just focus on assisting and backing ministers of
one faction.
Lord Crickhowell: This has been worrying
me ever since you spoke about the options right at the beginning—and
I know I come from a different world of a Cabinet which had collective
responsibility and so on—because I find it very difficult
to have a picture of talking to one lot of ministers in a government
but not another. I suppose one objective of doing it that way
is that you can put more and more pressure on Hamas as they come
in and they are forming ministries and it might move them, but
if you get to a position where you are actually only talking to
one group of ministers and not to others it seems to me that is
an extremely dangerous situation and not a helpful one. You did
say at one time I think that that was probably the most likely
option to find yourself in. Throughout this meeting I have been
sitting worrying about it. It seems to me a potentially very dangerous
option because here you have had an election, helped by the instruments
of the EU and so on, which has produced a result which the EU
does not much like and then you get into this position where you
are saying we will talk to one lot of ministers and not another.
Can you make me less unhappy at the end of the meeting about that
prospect than I have been throughout it?
Q212 Lord Tomlinson:
I fear not!
Mr Mingarelli: We are working as best we can
in the political environment in which we find ourselves. I think
we have to be clear about that. There are quite obvious reasons
why the Quartet and the European Union has taken the position
it has about working with a Hamas-led Government which was not
willing to meet the Quartet conditions. I hope that with the move
towards a National Unity Government that this will lead to a step-by
step improvement in the political environment which will enable
us to reach out to as much of the Palestinian Government as is
willing and able to meet the Quartet principles.
Q213 Chairman:
It is of course quite important that a number of the most important
ministries to which contact has already been made have been held
by ministers who are neither in Fatah or in Hamas but are technocrats
and that facilitates the co-operation I suppose and perhaps you
would like to say something about whether that is in fact the
case.
Mr Child: I would just say that Mrs Ferrero-Waldner
did indeed speak to Mr Fayyad on the telephone yesterday and it
is clear that in the finance ministry, where we hope we can return
to the sort of single treasury account set-up that existed in
the past, he will resume the political position that he used to
play in the past when he was working in a government under Mr
Arafat.
Chairman: We have touched upon the Temporary
International Mechanism but I think Lord Chidgey could pursue
it a little further.
Q214 Lord Chidgey:
We have indeed touched on the impact of the EU in quite some scope,
if I may say so, but what I would like you to do, if you would
Mr Child, is to try and summarise for us some of the most important
features. If I could throw you some bullet questions maybe you
could give us some relatively straight forward answers, if possible.
Has the TIM process proved effective in stabilising or ameliorating
the deepening crisis in the Palestinian territories? That is the
first point. Secondly, should its scope be extended and then what
mechanisms and safeguards—and you have touch on this already
with Lord Tomlinson about the question of fraud—but can
you give us any specific steer, guidance or reference to the measures
that the Commission has implemented for the detection and prevention
of fraud and misappropriation of EU funds? You did say that the
Commission has taken steps but is there anything on the record
that you could quote as a demonstration of that?
Mr Child: I have brought, as I indicated earlier,
some additional documentation on the operation and activities
of the TIM which I think includes some of the background also
on the control measures, which you may find helpful in your future
work, and I am sure that Hans would be able to give you some additional
information on that. Just to give you bullet answers, to your
first question I think that in the political environment in which
we are working TIM is effective and in fact is the only game in
town as far as bringing much-needed support to the Palestinian
people who were suffering very seriously under the effects of
the political crisis and the economic isolation that they are
facing, and so I think that, yes, it has been successful. As you
will know, we have already from the initial stages extended quite
a lot the scope of the TIM into new areas of activity and I think
that it has been encouraging that we have had the continued backing
both of the Quartet and also of the Member States and the European
Union for that evolution of its role. As I indicated earlier,
I do not think that the TIM, as its name suggests, is something
which can be a permanent feature of the landscape. It is an extremely
costly instrument which does not create the sort of lasting effects
in terms of building up the Palestinian system of government which
we would all like to see, and so I would much prefer us to be,
as we develop new ideas for a new sort of international support
mechanism for the Palestinians, starting to work in new ways more
directly in capacity-building and institution-building with the
Government rather than doing the sort of things that have been
covered up to now in the TIM in a yet more elaborate or extensive
way. I would like Hans to say a few words about the financial
controls.
Mr Duynhouwer: Perhaps on the results of the
TIM when I saw your question I ran back again to the Quartet statement
of 9 May which more or less triggered all that, where it was mentioned
that the TIM would be a mechanism limited in scope and duration,
which operates with full transparency and accountability and ensures
direct delivery of assistance to the Palestinian people. I think
all along these principles have been guiding us. We made that
operational in our own concept paper of June last year where we
said that it should have a quick impact on the lives of the Palestinian
people by ensuring that essential services can continue to be
delivered and by injecting money into the economy. If you look
at the various windows you can see that this is exactly what we
have been doing. Under window two, as is explained in the documentation
we have prepared, we estimate that about 1.3 million Gazans have
benefited from our aid through the fact that we have been providing
fuel for back-up generators so that essential services—health,
education—could continue. Another objective has been to
facilitate a matching level of donor support, including that of
Arab donors. I think that is an aspect where we have been extremely
successful. We have had great success in working with the Member
States. The Commission contributed about €110 million last
year. That amount has been matched by contributions from the Member
States. That is absolutely unheard of. There is not a single other
project where Member States have moved that fast in matching the
contributions of the Commission, and I think that is a real European
success, and it is not much underlined but I think deserves to
be emphasised. In terms of control measures, of course from the
very start this has been our biggest concern. We all know the
history so we were very well aware of that. In designing the various
windows we paid utmost attention to that. If I take window two
for example, the delivery of fuel to the Gaza power plant, we
have been working with an international auditing firm which worked
on the basis of agreed audit plans starting from the delivery
up to the payment. We have agreed the process with them step-to-step,
so when the fuel entered into Gaza, when it was delivered from
the Gaza hub to the Gaza power plant, we described in detail what
sort of control measures had to be implemented in order to have
the level of control we wanted to have and to make sure that the
fuel was not redirected to other purposes which we did not want.
We have been working on the basis of audit plans which we believe
will give us a very high level of assurance. It is the same for
window three, payment of social allowances, where we have been
working again with an international audit firm which has been
doing all sorts of checks—ex ante, ex post—in terms
of beneficiaries. We have been working through an international
bank, as you know, which was in charge of checking compliance
with various regulations in terms of fraud, money laundering,
et cetera, and all that we believe has given us a very high degree
of assurance. Also in terms of payment we have paid directly into
the bank accounts of the beneficiary concerned and if they did
not have a bank account we made sure that they had to show their
identity card so that we were certain that the right person was
reached. In brief those are the sorts of measures that we have
implemented. I could show you informally audit plans which clearly
demonstrate the sort of measures that we have implemented to get
the necessary assurance.
Lord Chidgey: Is this something you might
wish to take up later?
Q215 Chairman:
I would just like to ask one question because you, Mr Child, in
beginning to answer this talked about the cost of operating through
the TIM rather than operating in other ways and making use of
the mechanisms of the state, and of course there has been critical
comment that certain banks have found this an interesting revenue-gaining
exercise (although I do not know how profitable it has been for
them). Is there any way in which the costs can be brought down
because obviously they do seem to have been very substantial?
Mr Child: There was some public comment a few
weeks ago raised I think by one NGO in the United Kingdom which
highlighted the bank charges in particular which had been paid
in managing this money. I think it was unfortunate that those
statements were made without first coming to check all the detail
of the facts with us. We subsequently did have some discussions
with that NGO and were able to explain to them and bring them
to a better understanding of what we were doing, in particular
the comparisons with the normal costs of making any international
payments either in the European Union or elsewhere, which were
entirely comparable. We also have to recognise that we are working
in an environment where there is a relatively small number of
active financial institutions capable of taking on this task and
that as a proportion of the amounts of money that we were handling
they were at a surprisingly low and realistic level. I understand
that the NGO in question may have seen this opportunity to make
a broader political point. To some extent I regret that it was
done at the expense of the one vehicle of assistance to the very
acute humanitarian needs of the Palestinian populations that we
are helping and which they too are most preoccupied about for
obvious reasons.
Chairman: Thank you very much. I think
it was helpful to get that answer from you because obviously it
did cause some concern. Although there are a lot of other things
which we could raise with you, we had for instance an interesting
article in the Financial Times recently from one of our
colleagues and a former colleague of yours Lord Patten, where
he pointed out some of the risks of continuing with the blockade,
but that is something which we will be pursuing with him when
he comes to give evidence before our Committee after the Easter
break. I would very much like to thank you, Mr Child, and your
colleagues for having come and met the Committee this afternoon.
In trying to do a study as a Sub-Committee dealing with the European
Union and its foreign policy, it is very helpful to us to be able
to come to Brussels and to have an opportunity to talk to people
who are having to deal with these problems all the time. We realise
what a complicated task you have ahead of you and we obviously
wish you well and hope that one can choose perhaps the more optimistic
option rather than the middle option when things come to be carried
out. We will be preparing our report. We will of course send you
a transcript of this evidence and in due course we will send you
a copy of the report which we make to the House of Lords. Again,
thank you very much indeed.
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