[Recorded by Electronic Apparatus]
Thursday, March 20, 1997
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[English]
The Chairman (Mr. John English (Kitchener, Lib.): I'd like to call the meeting to order.
I'd like to welcome all of the members of Parliament and also our two guests today, James Michel and Bernard Wood from the OECD. They'll be talking to us today about the development assistance committee and the development cooperation report. I'd like to welcome Mr. Michel to our committee, and Bernard Wood, who is an old acquaintance of mine many years. I'd also like to welcome Mr. Wood back to Canada. He said he prefers Ottawa to Paris, and had some interesting commentary on weather and strikes and many other things. Welcome back to Ottawa, albeit briefly.
Having made that very questionable assertion, I would like to begin with our guests making their presentations. Mr. Michel.
Mr. James Michel (Chair, Development Assistance Committee, Organization for Economic Cooperation and Development): Mr. Chairman, thank you very much. I can honestly say it is both an honour and a pleasure to be before the subcommittee this afternoon accompanied by Mr. Wood and to share with you some of our enthusiasm for what we see as expanding opportunities for effective international cooperation in support of international development.
The 1996 development cooperation report, the report on the work of the development assistance committee, which has been made available to the committee, describes a strategy that was adopted in 1996 by the development assistance committee in a report called Shaping the 21st Century: The Contribution of Development Co-operation.
[Translation]
The title in French is: Le rôle de la coopération pour le développement à l'aube du XXIe siècle.
[English]
This document also has been made available to the committee and individual copies given to the members.
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The strategy document is in turn based on an earlier policy statement adopted by the committee the previous year called Development Partnerships in the New Global Context. The idea of development partnerships is not in itself a new idea. Indeed, a distinguished Canadian, Mr. Pearson, shared a commission that used this term in 1969. But in fact and in practice we have seen development cooperation not necessarily following that notion of partnerships, and it is an idea that needs to be re-emphasized, we believe, in the lead-up to the 21st century.
The 1995 statement reinforced that idea, with the concept of partnerships having two outstanding characteristics. First, they must address development through a comprehensive and integrated policy and strategy framework that embraces stability and security, sound economic policies, social development and investment in people, good governance in participation, environmental sustainability, and other key factors.
Secondly, there must be a division of labour in which the primary responsibility for formulating and carrying out these comprehensive policies and strategies rests with the developing country. The role of the external actors is not to develop somebody else's country - they have to do that for themselves - but rather the external actors' role is to provide coordinated support for local self-help efforts that strengthen capacity for carrying out those locally owned strategies.
Starting on that premise then, the aid agency heads and development ministers from the21 countries and from the European Commission, the 22 members who make up the development assistance committee, undertook themselves to guide and to do a lot of the writing of this report on the shaping the 21st century. They took a year to do that, from 1995 until 1996. There were at least six, maybe more meetings, of very senior officials who provided written contributions in between the meetings, and at the end we had this report that was adopted at the high-level meeting of ministers and agency heads in May of last year, and that was endorsed by the OECD ministerial council a few weeks later. So this is official OECD policy now. The report has been welcomed and endorsed in a variety of international fora, including the G-7 meeting in Lyon last year and the Commonwealth finance ministers meeting in September.
I'd like to describe the strategy, because this is what is the basis for my statement at the outset that I think we are in a much stronger position and we have a remarkable opportunity for advancing development in the 21st century. It has three elements. First of all, there's a vision. The vision is framed in terms of measurable goals of economic well-being, of social development, and of environmental sustainability. The second element is a concept of effective partnership that respects local ownership, strengthens local capacities and fosters participation and self-reliance. The third element is a more effective system for international cooperation, with adequate resources, enhanced coordination, improved monitoring and evaluation and an expanded base of participation so that it is not just a few OECD countries but a broader international priority all within a framework of coherent policies. It is so that we do not have agriculture policies, or trade policies or fiscal policies in conflict with development policies.
Of these three elements, the goals have attracted the most international attention. They are in the economic area. First is the idea of reducing by one half the proportion of people living in extreme poverty by the year 2015. This comes from the idea of eliminating extreme poverty that was put forward at the Copenhagen social summit. What we have tried to do is set an interim target within a specified timeframe, so that we go from 40% of the people living in the developing countries to 15% who live and subsist on $370 a year. It's an ambitious target but one that research suggested was doable.
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Second, in the social area, rather than one target, the ministers and agency heads chose four - all from the Beijing, Copenhagen, and Cairo meetings of the United Nations: first, universal primary education by 2015; second, gender equality, and as an indicator of that the elimination of gender disparity in primary and secondary school enrolment by the year 2005; third, dramatic improvements in infant, child and maternal survival by 2015; and finally, universal access to reproductive health services, including family planning, by 2015. So you see 2015 is the outer edge of these goals.
Thirdly, in the environmental area, the ministers and agency heads chose as an indicator the national strategy for sustainable development that was recommended by the Rio Conference in 1992. Rather than just say everybody should have one, again they tried to put some measurable quality to this by saying there should be one in operation in all countries by the year 2005 with a result that reversal of trends in the loss of environmental resources could be identified by the year 2015. Again, 2015 is the outer timeframe.
I'd like say three things about these goals, because I think they're very important, shifting the focus of development cooperation to results. But they could be misunderstood. I want to make clear that while these are global goals representing a global vision, the intention is not to impose goals from the outside. Remember that the second element of this strategy is partnership with an emphasis on local ownership and local capacity. So we see these goals as a basis for dialogue with developing country partners who need to set their own national goals in light of existing circumstances. They provide a vision.
Also, I think it's important to point out that they are merely representative of a vision. They are not intended to be comprehensive or to set aside any of the existing goals that have been developed in the whole series of UN conferences. These were selected from among those to give a coherent picture of what the future could be like, but they are representative, not intended to be complete. Part of the problem is there were so many goals that if you try to be comprehensive you sometimes lose the understanding and you inhibit communication by trying to communicate too much.
A second point I'd like to make about these goals is you will note that they all address the situation of the very poor. That's most obvious when you look at the poverty reduction goal. But I think it holds true for all of them that you cannot achieve the reduction of poverty by one half, nor can you achieve the significant progress in infant, child, or maternal survival without addressing the most poor and most disadvantaged populations in this world. You cannot have a development strategy that is only at the top. It has to take into account and address the problems of the very poor.
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A final point I want to make about the goals is that in adopting them the ministers and agency heads made quite clear, and emphasized in bold type in the report, that these goals must be pursued against the backdrop of qualitative measures and that issues of democratic accountability, the protection of human rights, and the rule of law will continue to be an integral part of the development cooperative agenda, as being necessary to more accountable, transparent, and participatory societies that are conducive to development.
Beyond the goals, the second element calls for effective partnerships in which the emphasis is on each developing country as the starting point. The cooperative efforts seek to encourage local commitment and participation and strengthen local capacities. That means there is no single model for this partnership but rather a whole series of dialogues and compacts coming out of those dialogues that reflect the needs, the commitments, and the capacities of individual developing countries, which are very different.
The ideal is a locally owned development strategy that emerges from that dialogue and can attract coordinated international support and displace multilateral and sometimes confusing donor-driven strategies for cooperation.
Since this has been adopted, we are working at the implementation, which was largely the responsibility of the DAC members, not of the OECD as an organization. Those elements are the dissemination and dialogue of the strategy; the definition of these partnerships from dialogue with individual developing countries; and the development of a capacity for monitoring, reporting, and evaluating.
That work is going on right now and will be a big part of the ongoing work of the development assistance committee and the OECD secretariat. It will engage not only development cooperation, parts of the OECD. We also look forward to working with colleagues in the fields of trade, environment, public management, agriculture, and so forth, in this effort to encourage a comprehensive approach to sustainable development.
Mr. Chairman, the environment for development cooperation is growing increasingly complex. We do not have the confines of a Cold War, bipolar world. We have a much more diverse array of countries. We have a much more complex picture of development finance. We have a much more complicated array of institutions on the multilateral side. We need to find ways in which we can bring this together.
It is our hope that this strategy will be one that can contribute not to another competing way of looking at things so that there's a DAC strategy, a World Bank strategy, and a UN strategy, but rather so that we can move towards a shared vision and a common framework for dialogue and agreement on roles and contributions to achieve locally owned development.
In that spirit, we look forward to working with our members. We hope that we will have the support of our members' parliaments, because this is an area in which we cannot go to developing countries and say that we have a new idea but we're cutting back on our own effort and expect them to receive that message with enthusiasm.
We look forward to communicating and working with colleagues within the OECD and in other parts of the international community. Again, I think we have an unprecedented opportunity to build on a shared vision of how to achieve an improved quality of life for all in the 21st century, and we are convinced that we must act now if we are to see that vision become a reality in the 21st century.
Thank you very much for listening to this presentation. Mr. Wood and I are at your disposal to engage in any dialogue or respond to any questions you may have.
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The Chairman: Thank you very much, Mr. Michel.
I should have said before, in introducing Mr. Michel, that for some time he was with the Agency for International Development in the United States and was for a while the acting administrator of the agency. He is of course very familiar with these subjects.
Mr. Wood is known to many of us as the founding director of the North-South Institute, which has appeared before this committee in the past and before the full committee on foreign affairs. He's familiar with parliamentary committees and I'm sure will have lots to contribute to our discussion.
Having made those comments, are there questions?
[Translation]
Mr. Philippe Paré (Louis-Hébert, B.Q.): I am very happy to welcome you to the Subcommittee on Sustainable Human Development. I listened as you listed the objectives you have set for the next few years in international development and I cannot help drawing a parallel between these objectives, which seem quite laudable, desirable and necessary, and the means that would make it possible to achieve this development. I'm going to list a certain number of elements, and I think that the report you submitted to us shares the same view.
I believe that the only way to eliminate poverty is to truly focus on sustainable development and to invest more in meeting basic human needs. If we agree on this premise, we must then take a good look at what is happening in all develop countries. There's a clear downward trend in ODA; this is true in Canada and in the OECD countries.
It is apparent more or less everywhere that there is an emphasis on trade relations to the detriment of several other factors. At the WTO, there is little or no interest for social provisions that would help sustain development. Just about everywhere, and it is true here as well, the percentage of development assistance earmarked for basic human needs is less than 20%.
I assume that, in developed countries, in the other OECD countries - you may have some good news for me, or tell me something extraordinary - , 90% of assistance goes to meeting basic human needs, but I am afraid that you won't tell me that. We continue to see excessive amounts of money in developing countries being spent on defence budgets. There is widespread refusal to tie development assistance to human rights. Globalization, by emphasizing competition, is exerting strong downward pressure on working conditions, not only in developing countries, but also in industrialized countries like Canada.
My question is this: How can you be optimistic? Are you optimistic out of necessity, or can you show us reason to be optimistic?
[English]
Mr. Michel: Thank you very much.
I suppose, first of all, I am optimistic by nature. Maybe that is a necessary attribute for working in the development field. But I'm also optimistic by the conviction that we do have a growing convergence on how to approach these issues and that we are finding an increased resolve, within the developing countries, the multilateral institutions, and the industrialized countries, to work together. The need to invest in human needs is certainly one of the things that has been recognized.
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Again, I would go back to the point of the need for comprehensive strategies that pay attention to the policy environment, the physical environment, and the human environment, and for the capacity of people and institutions to work together in the social capital dimension or capacity development dimension of development.
For example, I think the World Bank, with its structural adjustment programs that focus on the policy environment, has come increasingly to recognize that this is not purely an economic issue. You have to deal with the political and the social sustainability of policy reforms and these programs need to take into account the needs of people. Development is not about policies or statistics, it's about people. I think that recognition is growing.
The funds for development aid are declining. Our statistics are always one year behind because it takes a year to collect the information and process it, but for 1995, although in current dollars it's about the same, about $60 billion, when you take into account exchange rate and inflation adjustments, it's a decline of between 8% and 9% globally of all of the DAC members' contributions and disbursements to the multilateral agencies and to the bilateral programs of aid.
At the same time, that $60 billion has been a pretty consistent base over the years. In the report that was compiled this year there are some very interesting charts that show the trends of development assistance and other flows to the developing countries. One of these charts shows that while the development assistance has been between $50 billion and $60 billion over the last 10 years, private flows have increased substantially.
I think we have to recognize that complexity that has occurred and has changed the make-up of flows to the developing countries. We have to use the concessional resources that are available to us for development assistance in ways that help countries improve their capacity to gain access to the private flows and in ways that help them be better able to marshal their own saving and not have it leave the country as flight capital but be invested at home in ways that help those countries cease to be dependent on aid.
The excessive spending on defence is an issue, and we've spent two days discussing that here in Ottawa. I want to take this opportunity to commend the Government of Canada for having put forward the initiative for the development assistance committee to look at this issue of military expenditures. This was not something that was high on our agenda.
It was Canada's foreign minister who first wrote to the Secretary-General of the OECD and it was Canada that then organized the whole series of informal discussions that led to this conference. I think this conference is going to make a difference in international cooperation on this issue of military expenditures, not just as an amount of money but also in terms of the processes by which countries reach decisions on how they balance development and the security necessary for development to be possible and how they seek to achieve more development and more security at lower levels of military expenditures.
One of the things we see is that there is a decline in gross terms in military expenditures, which has been going on in the developing countries as in the industrialized countries in the past several years. This is not to say the problem is not a serious one. The problem remains serious, and it is more serious in some countries than in others. But in a number of countries we also see processes under way, in which civil society and governments are coming together and looking at these issues of security and development and how they interrelate in a more participatory and democratic process.
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I think we have learned some things about some of those processes from developing countries that were engaged in it - countries such as South Africa and Ethiopia, which were represented at and participated in the conference here in Ottawa this week - and we will be able to work with them more effectively now through development cooperation in fostering their efforts to have greater security and development at lower levels of military spending.
Of course, globalization and competition can operate in ways that cause pain and difficulties for individuals. At the same time, globalization and increased trade offer opportunities for faster expansion of the global economy. It seems to me that the challenge for all of us is to devise policies that assure that this process of globalization proceeds in a way that keeps the focus on people and that people at the centre of the development processes become a watchword for all of our efforts, whether we're speaking of domestic or of international processes. I guess I have confidence that, in a world of increased communication, of increased opportunity for people to participate in political processes, which is one of the great phenomena of the last decade - especially in the developing countries - we will make progress towards a more people-centred approach to development.
For all of those reasons, I remain an optimist. I guess that's about all I can say.
[Translation]
Mr. Bernard Wood (Head of Development Assistance Committee Secretariat, Organization for Economic Co-operation and Development): Mr. Chairman, if you can take a little more optimism, I will add a few words in response to the member's challenge. I can address two other elements to complete Mr. Michel's comments.
I just received your subcommittee's report on the exploitation of child labour. I am very, very happy to see that in your work, you found the work accomplished by the OECD in this area useful. The box on page 10 of your report clearly shows several areas where co-operation for development could reinforce the trend toward a much more human-based approach to development.
I think I can tell you that during this debate at the OECD, on labour and exchange issues, our colleagues from various areas found that in several respects the positive contributions that could facilitate development assistance were a major element in resolving these issues which are, as you just said, very, very difficult and very complex.
I am also thinking about the connection with the issue of military spending. We saw that the positive steps that can be taken by reinforcing the ability of institutions in these developing countries to monitor, discipline people and control expenditures in this area to a certain extent are not a priority for the people and prevent funding activities of a social nature. These are still positive measures, and even with the sometimes very limited spending, a lot can be done in this area. You will see in reading the future reports in this area that there is a lot to be said about it.
Another point I would raise and that I also find encouraging is the fact that two months ago in Mexico city, we held a meeting co-sponsored by the Mexican government and the Development Assistance Committee where our member countries met with about 20 developing countries that are now in a position to make their own contribution to development assistance in neighbouring countries and in other developing countries, by using their own recent experience in development as well as concrete measures for co-operation programs.
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The meeting was fascinating. The representatives of these other countries came from all over the world and we discussed the philosophy of cooperation. Honestly, we all learned quite a lot from their experience, that was very practical, often limited in terms of money spent, but very well targeted in many cases, resulting in a broader contribution. That means that the world is changing. The traditional distinction between donor countries and recipient countries is much more interesting now that we have countries that are acting both as donors and recipients.
The Chairman: Thank you, Mr. Wood. Mr. Paré, do you have any other questions?
Mr. Philippe Paré: I would like to point out that in a recent report on development the North-South Institute analyzed Canadian development assistance and examined what Canada gains from Canadian development assistance. The numbers are not very encouraging; it was discovered that the level of Canadian ODA is roughly $2 billion and that Canada gets back roughly $4.8 billion from developing countries from a variety of sources, including interests, returns on tied aid, etc. That is my first comment.
You talked about the flow of private funds, Mr. Michel. You say that that development assistance keeps decreasing but that private capital flows are on the rise. I have a very specific question on that. What impact will this flow of private capital have on a country's level of debt?
[English]
Mr. Michel: Private funds go where they are going to be well treated. That is a part of the competitive process of globalization to which you referred. There are private funds flowing to developing countries, and while they are still highly concentrated and the funds tend to go to the larger and more dynamic countries, they're also going to many of the smaller and poorer economies as well.
I think that helps to create an environment in which the developing countries will seek to attract more. It is the private investment and the technology that comes with it that creates the jobs that pay the taxes and support the human development dimension and the infrastructure of the country so that these countries do not remain permanently dependent on the generosity of others.
If you talk to the people in any developing country, they don't want to be dependent; they want to be independent. They want to be able to stand on their own feet and participate and contribute in this global society. We see this, for example, in the Mexico meeting, to which Mr. Wood referred. There are countries that are still recipients but are engaged in cooperation where they are the donors.
I think the private capital flows are an essential part of the development process. They are an increasingly important part of the global economy. Canada's economy probably derives more from its position in the world than was once the case, and I think that's true for just about all the OECD countries. Global trade is growing faster than economic growth is growing. It's growing especially faster than economic growth in any of the OECD countries.
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While this flow of private resources is one that places challenges and demands on countries, especially the developing countries that do not have well-developed institutions, that development cooperation can help them be better able to have financial systems that work, to have regulatory systems that work, to have environmental systems that protect against the irresponsible investor who may come into a country seeking to avoid environmental constraints elsewhere. We have to use the development cooperation and the concessional resources in ways that contribute to that capacity of the developing countries to be a part of this global economy. So I see the two as complementary, not as in competition.
[Translation]
The Chairman: Mr. Wood.
Mr. Wood: I will briefly address the issue of the debt and say that everyone is now very careful not to increase the debt load of LDC's. These problems were dealt with in multilateral and bilateral institutions. In almost all cases, our official flows to the poorest countries are now mainly in the form of donations; so there is no additional debt load.
[English]
The Chairman: Mrs. Gaffney.
Mrs. Beryl Gaffney (Nepean, Lib.): Thank you.
My comments are probably along the same line as the previous questioner. World population, as someone described it yesterday, I think, is increasing by one China per year or one Toronto per week, and that scared the living daylights out of me. Putting it right down to a city in our own province makes you realize just how much the world is growing.
In the Cairo conference, the UN Conference on World Population and Development, you realize the differences in nations around the world and the different kinds of problems they have. I'm so glad you're optimistic, because it certainly allows me to think back to a long time ago when you're putting the few pennies you have as a child in to help the children of Africa. We seem to be still doing that. Nothing seems to have changed in all those years of putting our pennies into a country and our millions of dollars into a country. Nothing seems to have changed in some countries, in Africa in particular.
I see hope in the Central American countries where the peace process certainly is under way and we're talking about defence. The defence seems to be moving under control we hope in Guatemala, and it has in El Salvador, but I don't see it happening in some parts of the world. It really is very discouraging for me, and I want you to comment on that.
I'm also interested in your optimism on gender equality by the year 2005. My goodness, we're still trying to get gender equality here in this country. Your goals are very noble, but I wonder how realistic they are with getting planned parenthood or family planning under control by 2015. You said that in your opening statement. I don't know. I don't have your optimism. I just think you need to have goals, you need to head in that direction.
You're getting $60 billion a year. Is that just your organization? Are you sharing that with the IMF or the World Bank?
Mr. Michel: That's all of it.
Mrs. Beryl Gaffney: That's the whole thing? That covers a whole multitude of organizations on development?
Mr. Michel: Yes. When I say $60 billion, that represents somewhere around 95% or more of all of the official development assistance in the world. It comes from the treasuries of the countries that happen to be members of the development assistance committee, and it covers their contributions to the multilateral organizations and their bilateral programs.
Mrs. Beryl Gaffney: Mr. Paré mentioned that the benefit back to Canada was greater financially than the financial benefit we were putting into it. Could you expand a little, please?
Mr. Michel: I'm not familiar with the statistics he is citing. I wonder if perhaps they refer...
Mrs. Beryl Gaffney: Do you have the $2 billion as opposed to the $4 billion coming back in?
Mr. Michel: I think the $2 billion is a part of the capital that flows from Canada to the developing countries from official sources, and the $4 billion is the total of money that flows to Canada from a whole variety of sources. I would guess that the total... Well, I could do more than guess, I could look it up here. There is a net flow of private capital from DAC countries to the developing countries. In the case of Canada, the private flows from Canada to the developing countries are about $2 billion. And the official flows are about $2 billion. So if you take the private flows and the official flows together - and I'm assuming that those inflows are not only official, but official and private - then you don't have that discrepancy.
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Mrs. Beryl Gaffney: How much has the $60 billion been reduced over the last five years? Where was it five years ago?
Mr. Michel: In constant dollars, adjusted for inflation, it was about $60 billion. The $60 billion was all official.
Mrs. Beryl Gaffney: Yes, I know.
Mr. Michel: That in current dollars fluctuates a bit. If you flatten it out in 1994 dollars, if you adjust it for exchange rates and inflation, five years ago it was about $60 billion, ten years ago it was about $60 billion, and this year it's about $60 billion. That is declining as a percentage of the economies of the donor countries, because those economies are growing but their budgets are shrinking. Their budgets for development cooperation in many cases are shrinking faster than the overall rate of budget austerity. In terms of the amount of money available for development cooperation, it fluctuates from year to year.
That chart that I mentioned in our annual report, chart 3.1, shows that it is fairly stable as a base, while the private flows are where you see the dynamic change. And the private flows used to be less than half of the total. The official flows used to be the bulk of resource flows to developing countries. That has reversed: private flows are now about two-thirds. There's a small amount, then, of what we call ``other official flows'', which are not concessional but they come from official sources, and the development assistance is still about $60 billion. But that's only about one-fourth of $240 billion in total flows to the developing countries.
So I think there is a change that shows a more complicated picture. We have to take that complication into account and try to deal with development issues in a way that recognizes that developing countries are now attracting, in many cases, private money that hadn't been there. So I think that suggests that how we use our resources...
There was talk about the World Trade Organization. At their Singapore meeting the World Trade Organization decided to have a special high-level meeting later this year on the issue of the risks of marginalization of the least-developed countries in a globalizing trade system. We in the development assistance committee just recently had a joint meeting with the World Trade Organization and UNCTAD and the International Trade Commission, a third of the family of trade agencies in Geneva. It was on what the development cooperation agencies were doing to strengthen the capacity of developing countries in this expanding trade that is going on in the world so that they will be less threatened by marginalization and better able to participate in the global trade system.
We've had the same kind of interest shown by organizations like the Global Coalition for Africa. The Global Coalition for Africa's policy forum last fall was focused on the supply response to economic reform: where's the private sector after the reforms are adopted? Again, it's frustratingly slow, but my own background and experience is in Latin America, and I can see occurring in a number of African countries some of the things we saw happening in Latin America during the 1980s that have contributed to the progress they're making now.
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There's always a lag. We had twelve countries in sub-Saharan Africa last year that reported growth rates in excess of 5%. That's better than we're doing in most of the OECD countries. It's one year, and part of the explanation is that there was a little bump in commodity prices, but it's also a reflection of policy reforms; it's a reflection of strengthened human capacities. We're finding that countries that used to be very thin in terms of their institutions are showing increasingly impressive human capacity in their ability to manage issues.
On populations, I have a report here that an optimist might carry around. The headline says ``World is less crowded than expected, the UN reports''. In large measure, you ask what has changed. One of the things that has changed is that the growth rate of the population has declined. I suggest that decline is attributable in large measure to the effectiveness of development cooperation. Some of those pennies you gave are now making a difference, because we're seeing projections that world population is not going up as fast as it was just a little while ago. It may very well level off in the latter part of the next century - still very high, more crowded than it is now.
Another thing we've seen and another reason to be an optimist is that during this period of population growth, which has been extraordinary, there were two billion people inhabiting this planet in 1927. In 1997, it's 5.5 billion. That's a spectacular change. Despite this, agricultural production has gone up 20% faster than population and people are consuming about 20% more in calories than they were back in the early part of this century when we had only two billion people.
Again, the research that has gone into productivity and agriculture has contributed to development cooperation.
Yes, I continue to be an optimist. We do have reason for hope, reason to care and reason to act.
Mrs. Beryl Gaffney: Thank you, Mr. Chairman.
[Translation]
The Chairman: Ms Debien.
Ms Maud Debien (Laval-East, B.Q.): First, I would like to follow up on Ms Gaffney's comment. I would like to put the DAC in context. If I've understood correctly, you are an OECD body responsible for coordinating and discussing the issue of development assistance. You do not provide development assistance or subsidies and you do not assist developing countries. A certain number of countries are members of your organization and the OECD, the broader organization.
In the documents you distributed, you mentioned that the development assistance committee member countries devote roughly $60 billion to official development assistance on a yearly basis. I was under the impression however that this year, member countries contributions decreased by roughly 9% in real terms, so there was a 9% decrease in ODA, which confirms what Mr. Paré was saying earlier, namely that ODA is generally decreasing in all countries. Is this 9% decrease only for 1996 or does it cover a longer period of time?
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You set very broad general objectives for DAC member countries and here again I am referring to Mr. Paré's question earlier regarding military spending. Does the DAC set very general objectives that member countries can decide to comply with or not? Are there any criteria? Is the DAC authorized to set criteria for member countries, by saying for example that development assistance must be tied to military spending in a given country, or are they simply broad objectives and pious wishes that you issue to member countries which are free to take them into account or disregard them? Your answer will enable us to question the relevancy of your organization, to start with.
In addition, if I've understood correctly, you decided this year to make gender equality a vital objective for development and development assistance efforts. I would like you to talk about a process or a formula that we have been hearing a lot about recently in Canada and the United States, I believe; I'm referring to microcredits. There is an awful lot of talk about using the microcredit formula to help women primarily. I think that at least in its original form, microcredits were designed to help women. In your capacity as head of the DAC, I would like you to give us your impressions of microcredits and their current popularity, as a result of the summit in Washington. I would like to hear your opinion on that topic.
Those are my three questions, observations and comments.
[English]
Mr. Michel: Thank you very much.
First of all, I'm pleased to confirm your understanding that the development assistance committee itself has no operational program. It is a forum in which the members, who are the principal donors in this world - when I say ``principal'', as I said before, I mean that over 95% of the assistance comes from the members of this committee - find it helpful to come together to compare experiences and to draw up common guidance for their programs in pursuit of shared objectives.
The committee does four things. It does prescribe guidance. The strategy I was describing earlier is a very high level of generality that was adopted by the members, by the ministers and by the agency heads who are represented in the committee. That provides this vision of measurable goals and reinforces the notion of partnership.
The committee also adopts a number of guidelines in particular areas, by consensus of the members. For example, there are guidelines on participation and good governance that were adopted by the committee.
Within those guidelines you find there is a section on reducing excessive military expenditures. That talks about the agreement among the members on the appropriate ways to address those concerns. These are global guidelines. They don't say to reduce aid to country X or country Y or give more money to country Z because they have reduced their expenditures. It provides general guidance about support for countries that reduce expenditures, respective roles of military and civilians in economic life, and approaches that development cooperation can take in support of efforts to reduce military expenditures.
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We have other guidelines on private sector development that were adopted by the committee. In these guidelines you will find a section on micro-credit. These guidelines are adopted by the committee by consensus of the members as a common approach to development cooperation so there will be better coordination and greater efficiency and effectiveness of the common effort.
The second thing the committee does is conduct reviews of the programs and policies of its members. We've distributed to you a copy of the last review that was done for the program of Canada in mid-1994. In that review, among other things, we look at what the member country is doing about carrying out the strategy to which it agreed and what the member is doing about observing the guidance formulas to which it agreed.
Two members of the committee are designated as examiners. Working with the secretariat, they prepare a rather exhaustive study. Then all the members of the committee participate in a full-day session of questions and answers. It is much like a legislative hearing, in which the examined member is asked about what it's doing and whether it's effective or not, and it's done against this context of agreed guidance.
Since 1994, as you see in the book you have in the case of Canada, this is published and the whole world has it. It probably gets described in a book called The Reality of Aid, published by a consortium of non-governmental organizations, and it gets written about in the press.
We have a system in which the members agree. We don't impose. We're not a court and we're not a legislature. We can't write laws and tell the members they're bound by them, but we provide that forum for dialogue.
We produce these statistics and reports and bring together the members to seek a consensus on guidelines that are not lowest common denominator generalities, but that have a specific content and that are meaningful. Then we examine the members as to how they're performing against those guidelines. Now we have these goals for the 21st century that provide another measure of accountability.
It is less in the sense of a juridical or legislative power and more in the sense of a consensual arrangement and the publicity given on how that is being carried out that give the committee an influence.
I would suggest, however, that should not be underestimated. I think when we do these reviews, it does focus the attention very much of the member countries and it does have an impact on how programs are conducted.
Among the goals, you asked about micro-credit. I think we did contribute to the publicity for this micro-credit summit. We have participated in the formulation of the consultative group to assist the very poor that is organized by the World Bank, which was a co-sponsor, along with results of this micro-credit summit in February. We had Sam Daley-Harris, the conference organizer, come to Paris and give a briefing for the representatives of the member countries of the DAC and for the secretariat of the OECD.
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It is not the answer. I think it is an important component of accelerating the ability of poor people to participate in their societies and to contribute to the progress of their countries.
We cannot have development that is top-down. You need to have development that is people-centered and participatory. In that context, I think micro-credit has an important role to play. I think it is important, however, that we not set up systems that are not sustainable, that depend upon subsidies, depend upon systems that don't demand rigorous performance by the institutions that lend and don't demand repayment by the borrowers.
You can misuse anything, and micro-credit is vulnerable to good intentions that are not sound economically and that then don't serve the intended purpose. Well-managed micro-credit is an important component of a comprehensive development strategy. We've all seen what it has accomplished in developing countries.
You're right that poor women have often been those who have participated as the borrowers in these schemes and have demonstrated a very strong record of repayment. I think in the case of the Grameen Bank in Bangladesh, they've now reached about eight million borrowers, most of whom are women. As you know, the goal of the micro-credit summit in February was to expand this notion to 100 million families. If you extend to 100 million families credit that helps them lift their status from extreme poverty, you've made a big contribution to that goal. Yes, we think this is important, but it has to be seen in the context of a comprehensive strategy.
The Acting Chairman (Mr. John Godfrey (Don Valley West, Lib.)): How do you do. My name is John Godfrey and I apologize for being late, Mr. Michel and Bernie. I'm temporarily taking over the chair in the other John's absence. I have to confess that according to my list the next speaker is me.
In the way in which these documents are arrived at through a kind of consensual process, what happens to new ideas? This is not a brokering, obviously. Very specifically, I want to pick up on something you said, Mr. Michel, about Latin America. When you were listing reasons to be optimistic, you pointed to the growth rates of a couple of the countries that were exceeding 5%, which was on a year basis.
There is an emerging school of thought, a new growth economics, associated with people like Paul Romer, Elhanan Helpman, and in our own country, Richard Lipsey. They would argue that the most important social policy any country can have is to have a really high growth rate, provided the results of that growth are fairly distributed, that it beats every redistributive mechanism you can come up with, and that understanding those processes is sometimes even counter-intuitive. It involves an openness, for example, to ideas.
I noticed in the annex to the document we have before us that there is a reference to a sound policy framework encouraging stable growing economies with full scope for private sector, and all that. This certainly is consistent with a previous and non-competitive ideology, if you like, of open markets and all the rest of it.
How does an organization like yours first of all deal with what is a fairly challenging set of notions that economic growth is not a total mystery, it's not exogenous, and it's based on innovation and a certain understanding of technologies? How do you incorporate that into your work? How do you make sure in a funny sort of way there isn't a trickle-down effect of new ideas and that by the time this has been absorbed and metabolized perhaps some opportunities have been lost by developing countries?
Mr. Michel: You probably do have some lost opportunities, some opportunity costs of having an organization that operates on the basis of consensus because things do take longer. On the other hand, the consensus mechanism within the OECD is a wonderful thing to behold. Because it is a consensus operation, no country is in a position to dominate because any other country can withhold its participation in the consensus. On the other hand, all countries are reluctant to be the spoilers, so there is an incentive to participate in the consensus.
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These two dynamics interact in a way in which ideas are not stifled. They can come back and come back and they are massaged and eventually adopted. There is a competition for ideas in this system. Sometimes it takes a little longer, and, as I say, there are opportunity costs when you do that. But ideas, like the importance of social capital in new institutional economic approaches, are things we have adopted and put into the documents of the development assistance committee on a consensus basis. I think the system does absorb ideas.
This whole 21st century report is really a rather radical departure from the idea of saying that you measure the effectiveness of developmental cooperation by counting how much you invest and how much your inputs are. It says you determine your effectiveness by outcomes and what the results are. Then you look at each country and decide what each party's contribution can be and should be in order to pursue shared objectives. You don't go in with a pre-set idea that it all has to be paid for by the taxpayers of the industrialized countries. That's rather radical. Here it is, adopted by consensus.
The Acting Chairman (Mr. John Godfrey): Mr. Wood, let me just put a little spit on the ball. Canada has received within recent memory another document from the OECD on its own performance, which was talking specifically about an innovation gap relative to other developed countries. That notion carried with it the allied notion of national systems of innovations; that is, a way in which countries organize their resources systematically to produce innovation and hence economic growth at a higher rate.
Just within the OECD, where you've got two different activities, one seemingly more directed at the developed countries, for instance an innovation gap document that identifies Canada as having one, and the kind of work you do, how does that cross-pollination work? Is it thought that developing countries also have innovation systems?
Mr. Wood: The answer is yes, they do, and we do make those links. We make those links increasingly now. What you're citing is another one of the peer review processes. In fact you're giving some evidence of how that process works and feeds back to the country concerned. The other part of that is there's learning in this. We're picking up ideas from each other all the time, as well as exercising some disciplines on some agreed main lines of strategy.
I can also assure you our objective in life is not to ever be the lowest common denominator. The organization sees itself as having a pathfinder function. I think you must judge the products in that regard, but we believe that is happening. Of course it's not done without a sufficient number of interested people among our members pulling it along. There are always some laggards who need to be helped along in that process. But it does happen. Interestingly, when a field is under pressure, it may be that the need to coordinate and share lessons among the members is higher than in good times, when they can afford to be complacent.
The Acting Chairman (Mr. John Godfrey): I'm going to pass it over to Madam Bakopanos with one final observation. In a previous life I visited the OECD, and there's another phenomenon, which is that sometimes the most interesting work gets done in the most neglected part of the shop. I was thinking about work done in labour markets, and so on, and nobody gave a hoot at the part I was visiting. They were really going crazy and having a wonderful time. But that's another observation.
I'm going to allow the chair to recapture the chair before I'm thrown out of it.
Mrs. Eleni Bakopanos (Saint-Denis, Lib.): Thank you very much.
I have a comment, and perhaps you'd like to comment on it. In the document we received on the new strategies for the challenges ahead, what I found most interesting, after some of the discussions we've had in this committee, is the fact that whatever contact you will have with developing countries, you want to also, as you state in your report, strengthen human and institutional capacities - in other words, assure there is a solid basis for respect for human rights, democratic principles, and so forth. But that isn't really - and you can correct me - your objective as such, is it?
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As I said, it's mostly commentary I want, and discussion. I'll give an example: if you go into a country where there is a certain political instability but there is also the need for improvement of the human lot there, what is the final judgment you will pass? This instability may not necessarily be an ``undemocratic'' government in place, but a government that isn't quite fully respecting, let's say, democratically elected members of parliament who are jailed because they belong to a certain political faction. How do you weigh that against what is the need to improve some of the economic development in that particular country?
Mr. Michel: These are the specific kinds of questions individual member countries have to make judgments about, and you will see differences among them. One country may consider there is an opportunity to work to improve the conditions. They sense it's not completely a closed-minded, closed-door situation where it is impossible to work. Other countries may think it's hopeless and they can't and won't work there. In some countries there may be political pressures to get out, or to get in. You find -
Mrs. Eleni Bakopanos: How do you reach consensus?
Mr. Michel: You don't. If you were to look at, again, the statistics in this report, you will see there are some developing countries that get money from some donors and some developing countries that get money from other donors, and some that get technical assistance from some and some from others. Some donors focus on particular countries with which other donors don't want anything to do, and that is a reflection of national policies.
We don't think we can harmonize and homogenize the foreign policies of all of our members so they will have identical policies. We do think where there's a shared interest we can offer the benefit of shared experiences and thinking by a small but very capable staff in the secretariat and by the experts who come from the member countries and participate in these policy dialogues. Through that process we can contribute to the ability of members to be more effective, to share information.
I'll give you one example. We have a bank of evaluations that shows what different aid agencies have found about different kinds of activities. It's managed by CIDA, by the way, by Canada. I think it is now in the process of coming up on the Internet very soon, so that it will be readily available to all of the DAC members to inform their judgments about the kinds of tough questions you're asking. We provide that benefit to them, but in the last analysis we don't make the foreign policy decisions for the members.
Mrs. Eleni Bakopanos: I didn't intend to imply you did. Thank you.
The Chairman: Thank you, Mr. Michel, and thank you, Mr. Wood. I understand you have to catch a plane, and we're going to have to vote in five minutes.
I'd like to thank both of you for the presentations. I know you're here for a meeting on military expenditure and development and there may be a report issued. I think the committee would be most interested in seeing that report, if we can receive it after it is completed.
Mr. Michel: I can assure you that you will receive that.
The Chairman: Thank you again for your help today. Thank you, Mr. Wood and Mr. Michel.
I'd like to hold the committee members for a moment. I have a couple of quick questions to ask.
Committee members, we've had two requests for meetings and I wanted to have your agreement we would meet with these two groups after the break. The first is the Baha'i community of Canada. They have been encouraged by members of the Department of Foreign Affairs Middle East division and human rights division to meet with our subcommittee to present information on Iran and the situation of Baha'i in Iran.
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[Translation]
Mr. Philippe Paré: I have no objections. However, I remember that about two weeks ago, a Liberal member asked a question in the House and Mr. Axworthy's position seemed quite clear and well stated. What more will be gain from hearing from them, when Mr. Axworthy's position seems to be right in line with their concerns?
[English]
Mr. John Godfrey: I've met with the Baha'i folk, and as Mr. Paré says, they seem to be very satisfied with what we're doing.
The Chairman: Maybe I could just indicate here that several members of the Department of Foreign Affairs, including Mr. Paul Dingledine, director general of the Middle East division, Barbara Gibson, director of Middle East division, and Adèle Dion, director of human rights division, suggested it may be timely for representatives of our community to meet with your subcommittee to brief you on our understanding of the human rights situation in Iran, especially with regard to members of the largest religious minority in that country, the Baha'is. So it is at the suggestion of the department, that part is true. I haven't met with them yet, but -
Mr. John Godfrey: I met with them in January. I don't know, when did you last meet with them?
Mrs. Beryl Gaffney: I think in January, or since Christmas anyway.
Mrs. Eleni Bakopanos: November 15 is the letter. So why don't you answer, Mr. Chairman, and bring forward the minister's answer in the House of Commons to the question? If they're satisfied, then that may solve it. If not, we can come back.
The Chairman: You've all met with the Baha'i?
Mr. John Godfrey: I have.
Mrs. Eleni Bakopanos: I haven't.
The Chairman: We'll respond to them, and ask if they still would like to meet, considering they met with some members.
The second one, and we talked about this group before, is the Canadian Association for Community Living. They want to talk about disability as a human rights issue. They've been doing quite a bit of work in Central America in partnership with NGOs and the Canadian government. They want to talk about their work in Central America. Okay?
[Translation]
Mr. Philippe Paré: I think that is going a bit far.
[English]
The Chairman: This group has been receiving funds from CIDA and also from I think the Department of Foreign Affairs and Human Resources Canada. They want to talk about disability as an issue.
Mrs. Beryl Gaffney: There is a Central American monitoring group or agency here in Ottawa. I don't know who these people are in connection with Central America. Are they an umbrella group, or are they a group unto itself? Who are they?
The Chairman: It's a Canadian group. It's equivalent to something like the Federation of Canadian Municipalities. Their major work is in Canada. They are located at York University. What they've been doing in the last two or three years is presenting disability as a human rights issue and working particularly in Central America.
I talked to our ambassador to Guatemala last night. He happened to be on the plane. He had just met with this group. They're doing quite a bit of work there. They're presenting, I suppose, Canadian work on disability and creating a concept of disability in these countries. That seemed to be what the ambassador was suggesting.
Mrs. Beryl Gaffney: So it's on disabilities?
The Chairman: It seemed it was worth while. In just one meeting, we can perhaps match them with another group.
Mrs. Beryl Gaffney: We have no objection.
[Translation]
Ms Maud Debien: I don't object, but I find we are working on very specific issues.
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We could meet with them nevertheless.
[English]
The Chairman: Could we perhaps get them with another group? Do we have any other requests? We have no other requests at the moment, so this would be the only group.
Mr. John Godfrey: I will say that there is actually a way in which it can be an interesting topic. I remember the disabled games - or whatever they're called - were held in Halifax and I met a group from Argentina who were competing. They were people who were disabled by the Falklands War. It was actually fascinating to hear how they were treated within their own society, what the social values were in a rather macho society towards people who were disabled. It would be more interesting actually to hear from some disabled people from Latin America, but -
The Chairman: I think they will be participating. The ambassador from Nicaragua, I believe, has been involved with this because she has two disabled members in her family and they've been working with it. So there probably will be some representation from the other Central American ambassadors.
Mr. John Godfrey: It's a learning experience.
The Chairman: So we could schedule them and then people can decide whether they want to participate.
Mrs. Beryl Gaffney: If I could just make a suggestion... When was this committee formed, a year ago or so?
The Chairman: No, less than that.
Mrs. Beryl Gaffney: If I could just offer some advice, you might find that after a while you're going to become inundated with requests for people to meet with you. In the previous Parliament, where I sat on this committee, the chair used to use his discretion to decide whether it was a committee thing or whether it was just something that somebody was visiting in town. At that time he would have it in his office and he would notify his committee that we could go to his office and meet with this group. It then became less official and less cumbersome.
The Chairman: In fact we have been doing that. We've been doing it with the full committee for visiting ministers or representatives. We've been trying to do that as much as possible.
Mrs. Beryl Gaffney: Do you usually alert the committee about that?
The Chairman: Of course one of the difficulties we have is a lot of these people arrive on a Monday or a Friday.
Mrs. Beryl Gaffney: Yes, sure.
The Chairman: We've had some embarrassing moments where two of us turn up and we have the Prime Minister of Iceland or something like that. So to some extent we're now not taking those on with the full committee if we can't be certain there will be three or four people.
In this case, they want to appear before the committee. I'll write to the Baha'i community saying that, as we pointed out, some have met with us, that Mr. Axworthy has apparently satisfied them with answers. And as someone pointed out, the letter is from November 15, so we have some time since that's been clarified. If they want to meet, perhaps we could put them together with...although that's certainly a leap from Central America to Iran. Perhaps we could put them both together. With the schedule the way it is, that's probably a good way.
Thank you very much.
The meeting is adjourned.