Oral evidence: Beyond Aid: The Future UK Approach to Development, HC 663Tuesday 28 October 2014
Oral evidence, 28 October 2014.
Witnesses
Gustavo Martin Prada, Director, EU Development Policy, DG for Development and Co-operation, European Commission, and Félix Fernández-Shaw, Vice‑Director Multilateral Relations & Global Issues, European External Action Service, gave evidence.
Chair
Apologies, gentlemen. I understand you have to leave at 12 sharp. Is that correct or do you have a little bit of flexibility? You have some flexibility. That would be helpful, because obviously we do want to give it some time. We have some difficulty with holding our quorum, but I think we will be alright. It is really important that we get to it. First of all, thank you very much indeed for coming; we do appreciate it. I wonder, for the record, if you could just introduce yourselves.
Gustavo Martin Prada
Good morning. I am Gustavo Martin Prada. I am Director of EU Development Policy in the European Commission.
Félix Fernández-Shaw
Good morning. I am Félix Fernández-Shaw, the head of division for development in the European External Action Service.
Chair
First, I wonder if I can ask you some questions about Ebola. It is very topical and, as you will know, our Prime Minister came back from the European Summit with an agreement that more should be done. What is your role in trying to ensure that we get both people and resources mobilised and quickly, so that the EU optimises or maximises its response?
Gustavo Martin Prada
I think both Felix and I are not directly involved in that, but let me tell you generally that, since the crisis started, there has been intense co‑ordination in Brussels, both between different European Commission services, because it is the humanitarian aid department that is in the lead, and also our colleagues in the External Action Service and member states. You may have seen recently different meetings taking important decisions, including the foreign affairs Ministers’ meeting last week, and the European Council a few days ago. Most of the work that has been done was, on the one hand, to try to put together the enormous funds that we are now devoting to try to cope with this crisis. Our European leaders indicated a few days ago that we are going to put together around €1 billion for this crisis but, apart from that, there is a lot of operational co‑ordination going on. The Task Force Ebola has been working in Brussels already for several weeks. This is hosted by the emergency response co-ordination centre, which depends on the humanitarian aid department in the Eur opean Commission. Last but not least, the last European Council decided to appoint a new European Commissioner for humanitarian aid as a co‑ordinator of the whole EU and member states’ effort in this crisis.
Chair
I do not know if you were aware that, when we did our report on Sierra Leone and Liberia, there was an issue about EU money that was supposed to be going into the health budget in Liberia but had not been passed through. Are you aware of that issue and, if you are, is action being taken to try to resolve it? Our understanding was that the money was given to Liberia to put into the health budget, but the finance Minister decided he had other priorities. In the circumstances, obviously we would expect health to be the priority.
Gustavo Martin Prada
I am not directly aware, but my information is that this is a sectoral health budget support operation and indeed part of it was paid. The other part was pending when you made that report, because several of the conditions of this budget support operation were not fulfilled. Taking into account the crisis, we had decided that all the money that still has to be disbursed in 2014 and 2015 is going to be advanced and is going to be paid before the end of this year.
Chair
It will be sent to the health sector.
Gustavo Martin Prada
Yes. Of course, in each budget support operation, there are different rules about how each Government Minister, finance Minister or sectoral Minister—in this case health—manages the money. Ultimately, we have to make sure that, if is money destined to the health Minister, it has to reach the health Minister—and quickly.
Chair
Thank you for that; that is helpful. On the more generic inquiry about looking beyond aid, how do you perceive the way that different member states approach it? What are the most effective approaches? You can name names, if you wish. For example, is legislation important, whether it is legislation to deliver on 0.7% or legislation focusing on poverty reduction, which we have here? When people are looking beyond aid in terms of policy co‑ordination, who do you think does this well?
Félix Fernández-Shaw
There are many models in the member states. You have seen some of the evidence submitted on the different ways to categorise or classify these models. It is difficult to speak about who is more successful or who is better at doing things. What all the models try to do nationally is avoid a silo approach and silo thinking, and try to bring together experts and departments from different strands of government that can work together in trying to do successful and efficient aid spending, but also going beyond aid. We have a particular model in the European Union, which so far has not been replicated. Just because it is original, it does not mean that it is better. It is a bit of a different kind of model, because we have a mix between the European Commission and the External Action Service. Whereas the European Commission and DG DEVCO, which is more the equivalent of DFID, is competent for development policy and the implementation of aid, the External Action Service helps DEVCO in defining development policy and in partnering development policy with foreign policy. Also, the European External Action Service is not the lead when it comes to country programming and, together with DG DEVCO, works together when defining the overall priorities in the next seven years to come. That is a particular joined‑up approach between the foreign policy people, who I represent, and the development policy people, who Gustavo represents. At the same time, both of us are diplomats.
Chair
At the moment, you are being too diplomatic.
Félix Fernández-Shaw
He is a European diplomat from the European Commission and I am a Spanish diplomat, temporarily seconded to the External Action Service. In that sense, we try to bring both models together with some efficiency, I would say. It is to measure whether we are better than others. This is a model that is not replicated elsewhere but again tries to do what other member states are doing, which is to try to join up the Nordic model of many cabinet members with one single supporting service, but with a responsible cabinet member for development, which is different from Germany or the UK, which have a Department with a Minister. Regarding efficiency and success, it is difficult, but we are struggling with putting together people to mix and to try to join up efforts from both sides.
Gustavo Martin Prada
If I may add, there is clearly a wide variety of models, and not only in terms of structures—whether you have a separate ministry or whether you have development policy into the foreign affairs ministry and then another body that is implementing it. You also have models where you have development not with foreign affairs but with trade policy, as is the case with the Netherlands. There is a great variety of possible structures. When it comes to looking beyond aid, which is the subject of your inquiry, and what we call in the development world “policy coherence for development”, there again it is not only so much a question of how many departments or ministries you have, or whether you have someone at cabinet level representing development, but also the many other issues that influence how much whoever is in charge—be it foreign affairs or development—can influence all the other departments in a government in order to produce policies that are hopefully positive for developing countries and certainly do no harm. There are issues of legal commitments there. In eight out of the 28 EU member states, there is a legal obligation to pursue policy coherence in this area. That means that in the vast majority there is not such a legal obligation.
Chair
Which countries have that?
Gustavo Martin Prada
It is in one of the submissions. I have the list; I can give it to you. By the way, in the European Union as a whole, we have in our treaties—so in our constitution—article 208, which obliges us to put in place a system to ensure this policy coherence. It is not only a legal obligation but, for us, a constitutional one. Then there are many other cases where, instead of having a legal obligation to do that, you have a political commitment. There are different ways: it can be in development law; it can be in development statements that are made by governments. There you already have more than half of European member states where there is, in one way or another, a very clear political statement whereby, be it the Minister of foreign affairs or the Minister of development, when it is separated, they have the obligation to put in place a system to ensure this coherence. There are many other ways of trying to ensure that this happens in reality. You have many member states, around half of them, where there are obligations to report to parliament and also to civil society about how effectively they are putting in place a mechanism to implement this coherence. Whether we are talking about legal political commitments, structures or mechanisms, whether they are permanent or ad hoc, it is always a struggle, an uphill task, to try to bring together not only different ministries but different policy approaches that do not necessarily go in the right direction. Just to give you an example from the EU, it can make eminent political sense or eminent development sense to provide trade advantages to a particular country, but then there are international legal commitments in the WTO that would not allow you to do so. It is not that people lack the will to co‑ordinate and try to strive to get the best possible policy; it is that there are different policy objectives and different international commitments. Therefore, back to your question of whether there is an ideal structure, I do not think it is something that can be solved just by a structure or a particular mechanism. It is a continuous process of negotiation. Someone, at the end, has to arbitrate, which is unavoidable, contrary to the objectives.
Chair
It is just politics.
Sir Peter Luff
I can understand the reluctance of a diplomat to rank member states in order of performance and highlight particularly weak or good performers, but I must press you on the British performance. How good do you think the UK is at using a broad development approach? How coherent is our approach?
Gustavo Martin Prada
I am not going to give you my answer, but rather there are many peer review exercises being done, by the DAC, by measuring transparency, by measuring overall commitment to development in the Government. It is clear to me that DFID ranks very highly in all these comparative indicators and rankings. It is one of the most transparent bilateral donors and it has made, in the last few years, a lot of progress in trying to ensure coherence not overall but for different important issues in the development agenda. It is fair to say that DFID is considered one of the very good donors in the development field.
Félix Fernández-Shaw
If I may, not only in terms of efficiency but also in terms of co‑ordination, DFID and in general the UK are always regarded as a very strong partner in bringing people together flexibly and responding flexibly. Gustavo just explained about the Ebola co‑ordinator in Brussels. Of course we are in a pre‑adoption position; the new Commission will take up its office next week, but what is important—and this is the way in which the new President of the Commission wants to structure the whole work—is to create not only big structures that work on their strands but also are able to promote flexible project teams that can work on projects and can get together to try to solve the same kinds of problems from different angles. That is where the UK and DFID in particular, on many things, such as the work we have read and learned on the integrated approach in the National Security Council and others, does this very well in order to bring the development angle into the discussion, wherever that is needed.
Sir Peter Luff
All is for the best in the best of all possible worlds. There are no problems.
Félix Fernández-Shaw
We always have problems here and there. There are many, so we can always throw a nice little stone or have one thrown at us. One of the things on which we are also working together is not only flexibility inside administrations but also flexibility to work across administrations. This is something on which the European Union and its member states are working together, and they are also out there in-country working together with the donors to try to bring together the Europeans and other donors to bring more added value. That is another flexibility test that we need to put, not only inside administrations but across administrations that share different ways of working into different countries.
Sir Peter Luff
We heard from our last witnesses that, where there is conflict in a country, we are good at bringing a whole‑country approach—to Afghanistan or Pakistan; we were quite good at that. When there is not conflict, we are not. On some specific issues like climate change and corruption, we are pretty good. On issues, we are not. Do you really think that the British Government gets off as lightly as your last answer suggests? Is it doing as well as it could?
Félix Fernández-Shaw
We are all learning a bit. When the bell rings and you have to run, like with Ebola or other things, we all pay a lot of attention to the pressing issues. The countries you mentioned, the Afghanistans and Somalias, have pressing issues that all of us understand, both at the politicians and civil servants’ level. We have to run, be efficient and be efficient quickly. It is precisely in the countries you mentioned, where there is a more medium‑to‑long‑term approach to many other policies, that we need to be very careful. I was just listening to the previous panel. Everybody these days talks, and rightly so, about China, India and the BRICS, which is the right thing to do. Gustavo and I are also working on the post‑2015 framework, together with DFID and with other member states, and we see every day in New York a host of other UN member states that are not the biggest and are not the poorest. They are well on their way out of poverty, like Chile, Colombia, Indonesia, Vietnam, the Philippines and Ghana, which are basically in the middle. The kind of approach that you are suggesting would certainly be beneficial for all of us. Our approach with them, not only from the development but also from the security angle—because there is no security angle to be had in Chile—is rather from the perspective of a more global discussion. That global discussion is to be had in New York and elsewhere, where these countries can also make a difference in terms of UN democratic legitimacy, because they can work, vote and work with us together to try to shape the medium to long‑term approaches. That is about the combination of working in-country but also working globally with some of these countries that may help our approach.
Gustavo Martin Prada
If I may add something: of course, the main topic of this hearing is about trying to get coherence within the UK Government. It is our job, both for the European Commission and for the External Service, to try also to bring more coherence at the European level. To give you an example, we have spent many years discussing how European and national institutions like DFID could work together in providing development assistance. After so many decades of discussion now, for the first time we have reached a point where the EU and member states, including DFID, are doing joint programming. We are devising the label, choosing different sectors, trying to have synergies and complementarities in over 40 recipient countries. In the past, each of us was working in 12 different sectors spreading scarce resources quite thinly sometimes, whereas now we have engaged. It was not easy at the beginning, but now it is starting to work and, in most important African countries, you will see that DFID, the European Commission and many other member states are doing a division of labour, trying to increase not only the coherence of what we do but also the impact.
Chair
Thank you for that. We are the only country in the OECD that has a separate development ministry and a separate cabinet Minister in charge of it. Do you see a difference in that? We operate first of all under our International Development Act, which has a focus on poverty. We have an Act of Parliament that has a focus on women and gender issues, and we have legislation going through enshrining 0.7% in law. From your perspective, is that something that you have noticed? Does it give Britain a different approach and different impact? You make the point that there are all kinds of different structures but, given that we operate in this way, does it give you a different sense of engagement from the UK compared with other member states?
Gustavo Martin Prada
As I said, I have no opinion on whether this structure is better than the other, but I can say that, with the current structure, DFID not only has a development policy that is considered one of the best in the world but also quite a lot of influence in other debates, for instance at the level of the European Union. We just mentioned the discussions on the post‑2015 agenda; we may discuss later the Global Partnership for Effective Development Co‑operation, which was agreed in Busan. We are now preparing the financing for the development conference in Addis Ababa. In all these fields the UK has a leading role. Although I do not want to say that this structure is better than the other, clearly the current structure is doing no harm in making the UK play a leading role in development issues.
Chair
Just added to that, since this Government came in, they set up the National Security Council to try to co‑ordinate these things. The development Minister is a permanent member of that. Do you get any perspective of whether this kind of system helps improve co‑ordination? From your point of view, do you get any sense of that?
Félix Fernández-Shaw
The other member state that I believe has a separate department with a separate Minister is Germany, which has the BMZ. Creating across‑government structures like the National Security Council is always a good idea. We are in the Union, from next week, going to start recovering an old habit of the Commission— which is now joined by the High Representative Vice‑President Federica Mogherini and the other Commissioners—to try to create a project team of Commissioners for climate change, for trade, for relics, for development, etc. As your colleague was just asking, the National Security Council is a very security‑oriented structure. It is very good in terms of approaching the needs of the UK and other needs, in terms of countries where there is a security issue and where security and development need to work together. That by the way is one of the things in which the European Union and DFID specifically are partnering, in trying to get peace and security into the post‑2015 sustainable development goals, which would be a very important policy achievement. However, there are other countries where security is not the main worry. There are others relating to climate change and trade, so other strands of government, where you do need to talk politically coherently across the foreign office, climate change, trade, migration, etc. These are words that need to be handled possibly in the same way as you handle them in the National Security Council, which is trying to merge. The Ebola co‑ordination system that we have set up in Brussels is one of those; it is bringing people together. This is where we have to learn in an increasingly complex world—we the politicians, we the civil servants—to pull everybody together to be able to deliver to you the best kind of information possible, so that people can take an informed decision. If you take a silo approach to the problems, you only get one angle on the issue. The right way of handling it in modern administration is partly to get people around the table with a pertinent angle or point of view to contribute to the discussion, so that the result of that discussion focuses on the right solutions. In the Ebola example that Gustavo just gave, the Humanitarian Commissioner is going to be the Chair or the EU co‑ordinator on Ebola, possibly because it looks like the humanitarian emergency kind of response is the core centre in Ebola. You would not just confront the Ebola issue with a humanitarian emergency response. Like you said, there are more long‑term issues: to work on health systems in these countries; there are internal European, UK or whatever health issues you need to look into; and there are foreign office military possibilities that you need to work on. They need people who know about that and not only just the emergency people or the development people.
Jeremy Lefroy
In 2005, the EU made a solemn pledge that, by 2015, 0.7% of the GNI of the EU would be devoted to official development assistance. It seems quite clear that that is not going to happen. Has that pledge been torn up? Is it being ignored? What is the Commission doing about it? By my calculations, every year, Germany would be contributing an extra €9 billion; France would be contributing about €4.5 billion and other countries obviously more. The UK has taken that pledge very seriously. Other countries have not. Especially given what has happened over the past few days with the matter of a bill of £1.7 billion, are we going to expect the European Union to take as seriously these much larger sums that are being pledged and not coming forth?
Félix Fernández-Shaw
The first easy way out of the question is that the pledge for the 0.7% ODA commitment was of course a European pledge made by the European Council in 2005, but it was pledged by the member states. What we do, and this is probably what Gustavo will explain to you, is that we push, we corner, we kick. We can get aggressive or nice and tender, but what we try to do is have member states live up to their responsibilities. If I may say so, you have done a great job in the UK in getting to the 0.7%. Others have. I think the Belgians have a law that obliges them to get to 0.7%, and the French are thinking about it too. What I have to say from the other side of the story, which is the global accusation that the European Union is not collectively living up to its commitment, is that by far we are the best performer. We are collectively above 0.4%, which is a pretty good score if you look at it in global terms. We are by far the largest donor in terms of GNI per capita, compared with the US, Japan, etc., which by the way do not have a pre‑ODA commitment. They spend the money externally, and then they look at it to see how much of that was ODA, which is a completely different approach from what we Europeans take.
Gustavo Martin Prada
I can add that of course you are right that we are not going to fulfil that commitment at EU level. There are a few member states, including the UK, that have achieved that. It is not going to happen overall. On the one hand, as Felix was saying, we are the best in the world in terms of development effort. We have increased to 0.43% in the midst of the most severe economic and financial crisis that we have seen in Europe probably this century. In addition, every year, because you were asking what the EU is trying to do in order to push our member states to fulfil their commitment, we have imposed on ourselves an exercise that we call the accountability report, whereby we publish all details of not only what member states are doing or not doing in terms of official development assistance but also in many other areas that are linked to the financing of development agenda, which includes many other things apart from ODA. We impose this exercise, which is public, which then leads to member states at the highest level, at the European Council level, reaffirming every year that they intend to fulfil their pledge. Of course, this is not happening in reality, but I have no doubts that, when we all go to Addis Ababa for the Financing for Development conference in July next year, there is going to be the solemn commitment of the EU to reach this level of 0.7% as soon as possible, although it will not be in 2015.
Jeremy Lefroy
What reliance will anyone place on that, given that there was a solemn commitment in 2005? France made the commitment to reach it by 2013; it is at 0.43% or something at the moment. Germany is actually even less than that. They said by 2015 and other countries have made similar commitments. I just wonder whether this does not derail the EU. I accept what you say about it being well above the US, which is 0.21%, or Japan and so on, but they have not made those pledges. We have as the European Union. Do you not think that it derails us or, in fact, that it was a stupid commitment to make because it was never going to be fulfilled? What sort of impact does that have? Are we going to get some transparency about it? Are we going to get the EU saying, “Yes, we made this pledge. We have not fulfilled it. That is a real problem, but we are definitely going to do something about it. We, or our member states, will fulfil it”?
Gustavo Martin Prada
I certainly understand your concern about our credibility when we face the new negotiations. Let me tell you, when you speak in the UN and in other international forums with developing countries about this, you would be surprised to see that most of them would tell you privately that they expected that, under the current circumstances, we would have reduced our aid. Of course, in public negotiations everyone is there to score points and we are going to be named and shamed for not having reached our commitment, but there is a clear understanding that, taking into account the circumstances, we have done rather well. Secondly, we have remained committed to do even better. Thirdly, and this is part of the explanation of this, ODA has become less important for most developing countries. For most developing countries, perhaps with the exception of the poorest of the poor or the least developed countries, ODA has become a very small part of the story of their financing. For most of them, what the European Union has done in terms of trade policy, which we call Everything But Arms—full access, tariff‑free, quota‑free, for all products coming from the least‑developed countries—is far more important than having reached 0.43% or 0.54%. I mention trade policy just as an example. If we manage to implement the commitment we are taking in the G20 to reduce the cost of remittances, just a reduction from around 12% today to an objective of 5% in the G20, and even less—3%--in the post‑2015 framework, represents probably as much money as the total ODA from Europe, out of a volume of around 500 billion. There are many other things that are on the table and, therefore, although we accept that we did not deliver on the promise, I do not think our credibility has suffered so much because, in the meantime, we have done many other things that are as important as ODA, and also because we continue to commit to that goal. It is not that we have abandoned it or that we are now saying that ODA is no longer so important; therefore, this commitment is not important anymore. We are not saying that.
Jeremy Lefroy
I understand that, but the problem with you making these other points, which are absolutely vital and important—about trade having, in many ways, a much greater impact on other things—is it is therefore taking the heat off countries to live up to their commitments. I was just getting the sense from what you were saying that, yes, 0.7% is something but, actually, these other things are more important and, therefore, the 0.7% does not particularly matter. It would be a great concern to the United Kingdom if that was what was coming out of the European Union: “Actually, we are about other things that are very important. We are going to concentrate on them and let countries off the hook from their pledges.”
Gustavo Martin Prada
Be reassured that this is not what I am trying to say. We still believe that reaching 0.7% is important and it is an obligation we have. We will continue, from the European Union point of view, to push our member states in this direction. We are certainly not planning to abandon or to downgrade this commitment in the future.
Jeremy Lefroy
Finally, from some of our visits to developing countries, we sometimes have the impression that DFID and the EU do not necessarily work together in-country as well as they might do. Is that something that you perceive or is that a false perception? If it is correct, how do you think we could do better?
Félix Fernández-Shaw
We started talking a bit about the issue of joint programming. We have launched, together with DFID and other member states, a joined‑up approach in certain partner countries, whereby we try to sit together with the partner country or the European donors and talk to each other, so that we avoid risks of duplication and we look at each other’s portfolio, which is something that surprisingly did not happen before. It is happening now rather case by case, but we are very happy to promote that case by case. It happens locally at country level, where it has to happen, because people who work there know better what is happening or what is going on—the political, economic and social issues at local levels. It is happening a bit more. Of course, in some places, DFID has a very important presence as probably the first or the second European donor in most of the places where DFID works. Therefore, we have to work with them, because the European Commission or European Union is also, in most of the places, the first or second European donor. Yes, there is sometimes a little competition. When you are at the top, you have a little competition, but that is not necessarily wrong. It happens and it just needs a lot of people to get used to working together locally. So far, we are quite happy with the advances that we have had. If I may just bring you back to the question you were asking before about credibility and Gustavo’s reply, Gustavo and I are working together on the post‑2015 negotiations. Sometimes we see things from the tactics of the negotiation, rather than the substance. The substance of the negotiations is, yes, the European Union will promote and defend 0.7%. It will try to push the member states. Some of them are in a reasonable economic situation; others are in a more difficult economic situation. What we also have to realise is that the world of 2005, when we made that pledge right after the 2000 millennium declaration, right after the millennium development goals, is a bit of a different place. All the submissions that we have read have witnessed that. It is a different place from the one we have today. We have big emerging economies that can contribute, not ODA, but a lot of other things that are completely different but as influential and as determinant in the world’s development as the ones we provide. From a tactical point of view but also from the situation of universality, which post‑2015 also promotes, we are looking together at how these other emerging economies, these upper‑middle‑income countries, which are a good way out of poverty, can contribute and contribute globally. We have gone through this crisis. We have seen that we are not as a group the richest. We are probably the richest in veteran richness, but we are not the richest anymore, and then we need to mobilise funding from across the world without undermining our own pledges for financing.
Gustavo Martin Prada
If I can give you an example that our colleagues from the OECD know very well, in the past we used to have, in successive conferences in Rome, Accra and Paris, a growing agenda on aid effectiveness. We continue to think it is very important. However, since Busan, so that is three years ago, when you see the discussions that we are having in these forums on development effectiveness, it is a completely different world, and not only because you have new actors, new donors and new instruments; it is just that the agenda has changed. Justine Greening was co‑chairing this global partnership, and there was another co‑chair from Nigeria and another one from Indonesia. The whole discussion we had there was about how to help developing countries increase domestic resource mobilisation, not only in taxation but illicit flows, recovery of stolen assets, the role of the private sector, south‑south co‑operation and knowledge transfer. There was very little discussion about ODA. Of course, ODA can be useful for other things and it certainly has a catalyser effect. We should be devoting more ODA for instance to help developing countries increase domestic resource mobilisation, but the world has changed and the priorities in the discussion have shifted.
Félix Fernández-Shaw
An additional point on what we are going to do for 0.7% is I would probably ask you. You would be very useful in going to development committees similar to yours, in Paris, Berlin, Madrid or Rome, and telling them what you are doing for this commitment.
Chair
We have tried that.
Félix Fernández-Shaw
This is what we are also saying to the parliamentarians in Brussels. Budgets are voted in parliament. If these five countries did only 0.5%, we would see €50 billion a year in ODA, which is not unreasonable. The UK holds a very legitimate position to say, “It is not an easy world out there; we are struggling to do that. What are the rest of you doing?” What is the Spanish development or the Italian development committee doing with the finance or budget committee of their parliaments to spur some sentiment around the 0.7%?
Jeremy Lefroy
I fully understand that and appreciate what you are saying. I very much agree with it. The European Union often makes a mountain out of a molehill, as we have seen in the last week. A massive amount is made out of this budget issue and not enough is made out of these much more important global issues. You say that ODA is not the main thing anymore, and I understand that. I chair the all‑party parliamentary group on malaria and neglected tropical diseases. The amount of money that we need to tackle malaria and probably eliminate it by 2030, as far as we can, is $5.1 billion a year. At the moment, there is a total going into it, including from endemic countries, of about $1.9 billion. That is a huge increase on where it was 15 years ago, thanks to the Global Fund, the US, the UK, France and many others, but there is a gap of more than $3 billion a year. You just mentioned €50 billion just by a few countries getting up to 0.5%. These are the things that ODA is needed for. I mentioned in the previous panel antibiotic resistance—a huge threat. It would make Ebola seem minor, however tragic Ebola is. This is a real massive problem that we have to overcome. For instance, a fund like the Medicines for Malaria venture, which has been extremely successful in bringing forward new antimalarials, has depended on ODA. It has not depended on trade liberalisation. It has not depended on new forms of financing. It has depended on ODA. These are the kinds of things where we need that additional money and where the European Union can play a major role. That is why I am a bit concerned if the rhetoric coming out of the EU is somehow that the ODA thing is not quite so important. Actually, without hard ODA money that subsidises things the market will never do—the market will never produce something for malaria or something for Ebola and antibiotics—these things will not happen.
Gustavo Martin Prada
I think we absolutely agree. When I say that in these international discussions we are spending much more time talking about other things, that does not mean to say that ODA has become a non‑issue at all or is irrelevant. On the contrary, the most difficult development challenges ahead of us are going to be in countries that are least developed, fragile and in conflict. For all these countries, ODA will remain essential for decades to come. To use your example, when it comes to funding public goods, including vaccines and many other things, ODA can simply not be replaced. There is no alternative. It is not going to be trade and investment or private foundations that are going to deliver the amounts of money that are required for many of these issues. There is no disagreement. I am just saying that more and more ODA will be channelled to global public goods and fragile countries. It is not going to be channelled to the Chinas, Indias and Brazils of this world, but it will remain vital for those countries and, therefore, we need more ODA and not less. We also need ODA that is spent more effectively.
Jeremy Lefroy
Just moving on to the new Commission and the fact that the new Commission has established a new cell of EU officials on external policy and the five priorities—trade and finance, climate change, food security, migration and security—what do you see as the value‑added of the European Union as a beyond‑aid actor compared with bilateral donors? For instance, if I take one example, we have seen ECHO being quite an effective organisation in the past. Are there any other areas in which you think that EU aid can add value in a similar way?
Gustavo Martin Prada
If I understand correctly, when you referred to these five priorities, these are the priorities that have been identified as key for our domestic internal procedures for policy coherence. It is not that they are priorities overall.
Jeremy Lefroy
They are absolutely core to development policy.
Gustavo Martin Prada
Absolutely. I have to say that, when it comes to policy coherence for development, the system we have put in place at the EU level—it is fair to say that I speak under the control of my colleagues from the OECD—is one of the most developed and sophisticated systems that you can find. I mentioned before that we have included in the treaty a legal obligation for us to screen any initiative, legislative or otherwise, which goes to our Council of Ministers. At the very beginning, we have to do an impact assessment to see whether it is going to have an impact on developing countries or not. That is at the beginning. Of course, to do that properly you need sufficient research and evidence‑based analysis. I am not going to claim that we have reached a satisfactory level there, although we are working very hard to change our toolbox to do that better. The second step is that we have a whole set of inter‑service groups within the Commission and with all member states to see different initiatives, different new policies and all of them being discussed with a policy-coherence-for-development lens. We have quite serious reporting, and some of you have commented on our report, which we do not only for the EU but also for our member states. Our European Parliament is extremely vigilant in the area of PCD. In that framework, because there are so many things going on in the EU and member states, we have decided to put emphasis on these five priorities that you mentioned. When you look at the report, we carry out many other things besides these five priorities, and I think we can all agree that trade finance, climate, migration, security and food security are very relevant development issues. The system is not perfect. We have all the machinery there to do it. We spent a lot of effort and time trying to perfect the system, but we have one of the most ambitious systems in the world.
Félix Fernández-Shaw
Let me add an additional point. We also have one of the biggest diplomatic networks in the EU delegations. We are present in many countries. I am not sure I know the exact data, but it is over 130 or 140. In those countries, we have a very co‑ordinated approach, because Commission officials work all together under the head of delegation, which is the ambassador, and they also have strict instructions from us, because it is basically Gustavo and I instructing them, also to look at policy coherence for development at country level and to try to join up all these strands of European Union work in that country, including by working with the member states. By virtue of the Treaty of Lisbon, the EU delegations were also given the role of the local presidency. They are the ones chairing the groups, co‑ordinating the meetings and getting requests and demands from member states to introduce certain issues. They are the ones in charge of putting together all the strands of development locally. That is another piece that contributes to that.
Jeremy Lefroy
Just one final thing, Chair, if I may: given what has happened in the last few months and the real concentration on global public goods in health particularly, would the EU be considering including that as another strand or does that come as a very important part of the existing strands? It is something that affects EU countries and affects countries around the world.
Gustavo Martin Prada
I cannot make any promises, but what I can tell you is that we review these priorities periodically. It is not something that the EU decides in itself; we discuss and agree this with member states and with the European Parliament. There is nobody out there denying the growing importance of health issues in developing countries. Clearly health issues will continue to be monitored. Whether they will make it to the five priorities or not, I do not know. Maybe in the future we will have more than five priorities. I do not really know, but we are all aware of their crucial importance. Unfortunately, the Ebola crisis is just the last reminder of their importance. By the way, we are now concentrating on coping with the urgency of the humanitarian and health crisis, but we all agree, as was said before by previous speakers, that what the Ebola crisis shows is a lack of long‑term investment in the health sectors in these countries. Therefore, all of us who are in the business of providing development assistance will have to pay special attention, not only in these three countries but many others, to building resilient and universal health services. There is still a lot that remains to be done there.
Chair
It has also forced co‑ordination across a whole range of Government Departments, from health, development, foreign affairs, defence, transport and the Home Office. In one sense, there might be a legacy, both in policy coherence and in ensuring that what we do leaves better health systems behind than were there before.
Félix Fernández-Shaw
If I may, one of the temptations we all have in modern administration is we have a health issue in West Africa, we have Ebola, and then we have long‑term health system development. One of the problems we would have is that we all now rush to do health in West Africa. What we would probably try to foster from the European Union is a bit of light co‑ordination to make sure that, all of a sudden, not everybody jumps into health in West Africa. We have done our programming; DFID has done their programming; others have done their programming. All of a sudden, you need to change all your education experts. The French have education experts in West Africa; now they need to change them to health experts. That takes a long time. Maybe some of us are already present in health and some of you are not present in the health sector. It does not help if DFID is not present in health in Guinea-Conakry and all of a sudden jumps off the boat and goes to health in Guinea-Conakry. They may or may not have been there; I do not know, but say they do not have health experts. Maybe the Germans and the Dutch have health experts in Guinea‑Conakry; it is better that we help them with technical assistance to do a better job in Guinea Conakry’s health system. That is the bit that we try to do at local country level with the joint programming. We can do it also with Ebola. We try to see who is best placed to work in health. We all agree there is a need for long‑term development assistance in health in this region. All of a sudden, we are not all going to learn French, learn English or go to countries that we ignore as donors and jump into a health sector that we possibly do not know a lot about in that particular country.
Chair
That is eminently sensible, I would say. Can I just reinforce the point that Jeremy Lefroy is making about the 0.7%? It is just worth making. We made this commitment at a time when our economy was in much the same state as other economies are, and when our deficit was worse than anybody else’s. I do not think people should turn around and say, “The UK’s economy is looking quite good.” These commitments were made and delivered when it did not. I do not think that would be a valid excuse for any other country, to be honest.
Jeremy Lefroy
Just to come back on that last point, I entirely agree and accept what you say. That is absolute common sense. What I think I am trying to get at is that, in the previous panel, Mr Barder produced an article from 2005, from Nature Medicine, saying basically that there is an Ebola vaccine that could have been developed by 2010, but it was not because the money was not available. We need to make sure that those kinds of warnings are heeded and that we never allow this situation to happen again. That is why I am talking about a much longer term approach to global public goods in health, which seems to need to be within one of these priorities of the EU, because it affects all member states, or a separate priority because it is so important. We have been given clear warnings on antimicrobial drug resistance by a lot of people, not least our own Chief Medical Officer, Dame Sally Davies, and many others. This is an area where, in talking about beyond aid, the new Commission could really make a difference, if they made this something that the EU was going to work together on, in the same way as we have done globally on, as I said earlier, Medicines for Malaria and other diseases. That is what I was trying to get at.
Chair
I think that was a comment.
Sir Peter Luff
I think we have started moving into the area I was going to ask a question about anyhow, but with the representatives of both the External Action Service and the DG for Development and Co‑operation, I wanted you to have an opportunity both to boast and to look into your hearts deeply and examine your failings. Where do you think you have been particularly successful in achieving EU policy coherence between your two areas of activity and where have you particularly failed? Can you give me a specific example for both? You can start with the good news or the bad news.
Félix Fernández-Shaw
We have succeeded in coming together today on the same train. I had to change my train to join his.
Sir Peter Luff
Transport is a big failure, okay.
Gustavo Martin Prada
Let me tell you frankly I have been dealing with these issues for the last three or four years. Let me give you what I think are good examples. I have gone through all this machinery that I described before, and the outcome was better for developing countries than at the beginning. One is what we call country‑by‑country reporting. There was a long discussion about the reporting that multinationals have to do in the EU about their financial dealings with their partner countries. The end result was much more ambitious than at the beginning of the discussions. We have managed to match the level of ambition of the American legislation there. That was a direct result of this policy coherence mechanism that we have, whereby the development people—us—have to impress upon our colleagues dealing with financial and corporate matters the necessity for these companies to report all their financial dealings with developing countries, which of course has to do with tax evasion but also with corruption and others. That result was pretty good. Another recent example, where we had a long discussion, has to do with conflict minerals. There we have managed, together with our colleagues dealing with trade issues, to put in place a system to report operations on conflict minerals that, although voluntary, includes a commitment that this system will be reviewed after three years and may become compulsory. These are examples of small victories, technically, that when you see from the inside have been, in some cases, an uphill struggle in order to reform these policy initiatives to make them more development friendly.
Sir Peter Luff
Where would you like to achieve more? Let’s put it that way. Where would you like to have done better still? Where frustrates you with that question of greater coherence?
Gustavo Martin Prada
For instance, we have been criticised for a long time, and I think rightly so, especially by developing countries but also by other people, about our trade policy or our agriculture policy. When you look at the reforms that have taken place in our Common Agricultural Policy, we are in a position today so that, in the post‑2015 negotiations, there is a target for the elimination of trade‑distorting subsidies. We can live with it, whereas our friends in the US cannot. Yes, our Common Agricultural Policy has never been very popular, not only in London but in most countries in the world, but it has been reformed, it has been improved and now it is considered to be no longer trade‑distorting against developing countries. It is the same for our trade policy more generally. We had discussions for many years about the wisdom of having what we call economic partnership agreements with African countries, with ACP countries, but we have to do it because we are obliged by the WTO. I am happy to report that, in the last few weeks, we have almost concluded these negotiations and we are now going to have in place agreements that we think are going to have positive effects on developing countries, including promoting their regional integration. As I said at the beginning, it is a long process; it is an uphill struggle. The objectives of trade policy are not necessarily the ones that we would like. They are there because there are important economic interests in our dealings with the countries, for instance in the negotiations now with the United States. This is not about development policy per se, but it is our role and we have put in place all this machinery in order to be able to influence those processes and hopefully the outcomes in a direction that is more development friendly. Are we there yet? Are those results ideal? No, far from that, but we continue to try. At least we have all these systems that allow us to do it.
Félix Fernández-Shaw
One of the places where we need to improve collectively, not only the External Action Service and the European Commission but also the member states, when working on foreign policy or external action is to understand that the European External Action Service is created under what the Lisbon Treaty calls the common foreign security policy, which is an intergovernmental thing, whereas the European Commission and development policy works on what we call the community pillar. We, the European External Action Service, were given responsibility for the overall programming exercise, particularly in-country. There we have worked together; we have done a pretty good job. At the same time, we need to work together better with member states because, as you know, the European External Action Service is made up of diplomats like Gustavo and diplomats like me, coming both from the Brussels institutions and the member states. That is where we need to work a bit better in order to improve the impact of European aid: all that ODA; all those billions that we spend every day. We try to make them leverage a bit more value for money for the policies and the values we stand for, but also to try to improve our relationship with the partner countries. Secondly, I would say that we have done a lot of work in putting together strands in conflict and fragility, in working together between the foreign policy security people and the development people, to try to join up. DEVCO has a dedicated unit for that, as much as the EAS as a whole, the Directorate and the whole administration department for that one. We are not working as formally as the UK’s National Security Council, but we are working in getting people together more. We do not have as yet, and the UK does not either, a more comprehensive approach not only to countries in conflict and fragility but to the other kinds of countries where we have European interests. Part of those are development interests, but we have other interests, and we have to combine those together with the member states in having a European attitude towards those countries, so it is a whole‑of‑government approach.
Sir Peter Luff
Can you give me an example of where that has worked well in practice that you are proud of?
Félix Fernández-Shaw
I was trying to say that I am not proud of anything, because we do not have one. That is where we should tend to go. We have done some of that, for example in the Sahel strategy. We have done some of that in Afghanistan. We are starting to do a bit of that in Myanmar and I think we are starting in Somalia and Ukraine. You see, some of these countries are countries where you have a certain kind of urgency or post‑emergency situation. I would also like to see not only joined‑up approaches between security, foreign affairs and development, but also other kinds of more peaceful‑situation approaches, where we look more at migration, trade, energy, development, health, food security and more global kinds of approaches, which we can share not only at the European level but also with the member states. Much of the feedback we get from our diplomats and from yours is that, when you are abroad sitting in a distant part of the country, as Europeans we tend to look a lot alike. When you look at us in Brussels, London, Madrid or Paris, we all see ourselves as the different members of the neighbourhood. When you go to Africa or to South East Asia, you tend to see the Europeans in a similar kind of boat.
Chair
Thank you very much. I think you have actually demonstrated the value of having co‑ordination, even if it is a struggle to get it. Indeed, the idea of 28 member states not co‑ordinated is not going to be good news for the developing world. However difficult it is and however challenging it is, individually within single states we have to try to be more coherent. Somehow, we have to ensure that that all fits together. Good luck for the job that you have in hand, and thank you very much for coming and giving us evidence. It is really helpful for us to get a perspective, because the aid perspective is changing pretty rapidly. We all need to think about the next five, 10 or 15 years, as Jeremy Lefroy said. It is no longer just about delivering poverty reduction and humanitarian relief, but how you change the rules of the game, so thank you very much indeed. Oral evidence: Beyond Aid, HC 663 2