2002 ORDINARY SESSION
Tuesday 25 June 2002 at 3 p.m.
PLEASE NOTE THAT THIS IS A PROVISIONAL VERSION OF THE REPORT OF THE DEBATE OF 25 June 2002 AT 3 P.M. WHICH MAY STILL BE CORRECTED BY THE SPEAKERS
In this report:
1. Speeches in English are reported in full.
2. Speeches in other languages are summarised.
3. Speeches in German and Italian are reproduced in full in a separate document.
4. Corrections should be handed in at Room 1059A not later than 24 hours after the report has been circulated.
1. Minutes of proceedings
2. Alteration to the order of business
3. Organisation of debates
4. Contribution of the European Bank for Reconstruction and Development (EBRD) to economic development in central and eastern Europe
Presentation by Mrs Kestelijn-Sierens of report, Document 9482, on behalf of the Committee on Economic Affairs and Development
Mr Lemierre (President of the EBRD)
Mr Rakhansky (Ukraine)
Mrs Calner (Sweden)
Mrs Pericleous Papadopoulos (Cyprus)
Mr Wikiński (Poland)
Mr Rigoni (Italy)
Mr Dhaille (France)
Mr Škrabalo (Croatia)
Mr Seyidov (Azerbaijan)
Mr Podobnik (Slovenia)
Mr Kirilov (Bulgaria)
Mrs Zapfl-Helbling (Switzerland)
Amendments Nos 1 and 2 adopted.
Draft resolution contained in Document 9482, as amended, adopted unanimously.
5. The International Monetary Fund and the World Bank: challenges ahead
Presentation by Mr Gusenbauer of report, Document 9478, on behalf of the Committee on Economic Affairs and Development
Mr Lloyd (United Kingdom)
Mr Braun (Hungary)
Mr Guardans (Spain)
Mr Walter (United Kingdom)
Ms Ferić-Vac (Croatia)
Mr Gubert (Italy)
Ms Gülek (Turkey)
Baroness Hooper (United Kingdom)
Mr Galoyan (Armenia)
Ms Yarygina (Russian Federation)
Mr Van den Brande (Belgium)
Mr Zhirinovsky (Russian Federation)
Ms Zapfl-Helbling (Switzerland)
Amendments Nos. 1 to 4 adopted.
Draft resolution contained in Document 9478, as amended, adopted.
6. Parliamentary scrutiny of international institutions
Presentation by Mr Toshev of report, Document 9484 and addendum, on behalf of the Public Accounts Committee, and by Mrs Zapfl-Helbling of opinion, Document 9485, on behalf of the Committee on Economic Affairs and Development
Mr Bühler (Germany)
Mr Danieli (Italy)
Mrs Ragnarsdóttir (Iceland)
Mrs Mintas-Hodak (Croatia)
Mr Schloten (Germany)
Mr Loutfi (Bulgaria)
Mr Andican (Turkey)
Mr Van den Brande (Belgium)
Mr Jakić (Slovenia)
Amendment No. 1 adopted.
Draft resolution contained in Document 9484, as amended, adopted.
Draft recommendation contained in Document 9484 adopted.
Draft order contained in Document 9484 adopted.
7 Date, time and orders of the day of the next sitting
Mr Schieder, President of the Assembly, took the Chair at 3.05 p.m.
1. Minutes of proceedings
THE PRESIDENT. – The sitting is open.
The minutes of proceedings of the previous sitting have not yet been distributed. They will be considered at the next sitting of the Assembly.
2. Alteration to the order of business
THE PRESIDENT. – I have been informed that Mr McNamara, Chairman of the Sub-Committee of the Committee on Legal Affairs and Human Rights on the election of judges to the European Court of Human Rights, has requested that the election of a judge to that Court in respect of Spain be removed from tomorrow afternoon’s order of business. This is because the sub-committee has not been able to complete its work in advance of that election.
Under Rule 25.8, the only members who can contribute are the mover of the motion, one speaker against and a spokesman of the committee concerned. I remind the Assembly that we have to have a vote and that any change to the order of business requires a two-thirds majority.
Mr McNamara, you have the floor for one minute.
Mr McNAMARA (United Kingdom). – This is the position. Yesterday, the sub-committee was unable to complete its business regarding the nomination of a judge for the Spanish nation to the Court of Human Rights, as only two candidates appeared. The normal procedure in such circumstances is for the candidate who does not appear to be approached and given a fresh opportunity to appear before the committee or for the nominating government to nominate a third person. However, the sub-committee meeting took place while the Assembly was sitting, so the question of the selection of a judge appeared in the standing orders for tomorrow afternoon, which makes it necessary to ask the Assembly to agree to this step. That will enable the Assembly to have a proper list from which to select a judge and the Spanish people to have three candidates properly considered.
THE PRESIDENT. – Thank you. Does anyone wish to speak against the proposed change? We will have a vote in any case, but such a speaker may have one minute. There is nobody. What is the opinion of the Committee on Legal Affairs and Human Rights? Has this question been discussed?
Mr McNAMARA (United Kingdom). – Yes, it was discussed in full this morning, and the committee was unanimous in its request to the Assembly. It is in favour.
THE PRESIDENT. – We will now proceed to a vote on the motion for an alteration of the order of business, moved by Mr McNamara.
The voting is open.
The proposed alteration to the order of business is agreed to.
The election of judges to the European Court of Human Rights will therefore take place tomorrow afternoon in respect only of Poland. The election of a judge in respect of Spain will take place at a later date.
3. Organisation of debates
THE PRESIDENT. – This afternoon the business is very full, with a total of fifty-one speakers, and seven amendments to consider.
It is proposed to interrupt the speakers’ list in the first debate at about 4.15 p.m., so that the debate on the International Monetary Fund and the World Bank can start at around 4.30 p.m. The speakers’ list for that debate will be interrupted at around 5.30 p.m., and the debate on parliamentary scrutiny of international institutions will begin at 5.45 p.m. This debate will be interrupted at 6.45 p.m. to allow time for replies and votes before 7 p.m.
Are these arrangements agreed?
They are agreed.
4. Contribution of the European Bank for Reconstruction and Development (EBRD)
to economic development in central and eastern Europe
THE PRESIDENT. – We now come to the debate on the report on the contribution of the European Bank for Reconstruction and Development (EBRD) to economic development in central and eastern Europe, presented by Ms Kestelijn-Sierens on behalf of the Committee on Economic Affairs and Development, Document 9482.
During the course of the debate we will be addressed by Mr Jean Lemierre, President of the EBRD. I am very happy to welcome him to the Assembly. He has addressed us before and it is important to have him here.
The list of speakers closed at 12 noon today. Twenty names are on the list, and two amendments to the draft resolution have been tabled. I remind the Assembly that we have just agreed that in order to finish by 4.30 p.m. we shall interrupt the list of speakers at about 4.15 p.m. to allow time for the reply and the votes.
I call Ms Kestelijn-Sierens, the rapporteur, who has eight minutes.
Ms KESTELIJN-SIERENS (Belgium). – First, let me say how sorry I am for those who, being present, must miss the football game. I intend to speak in Dutch, my mother tongue, so many members may wish to put on their headphones.
(The speaker continued in Dutch.)
The mission of the European Bank for Reconstruction and Development was to work with the CIS countries and those of central and eastern Europe to oversee their transition into western-style economies and to encourage entrepreneurship. These countries needed pluralistic democracies and strong legal and financial institutions. The European Bank for Reconstruction and Development was established in 1981 and had over sixty members including the European Investment Bank and the European Union. It was active in twenty-seven countries. The Council of Europe exerted democratic control over the European Bank for Reconstruction and Development. It was a forum for discussion and set priorities. In January the committee had met Mr Lemierre in London and it had been possible to have a very informative discussion with him. She had taken part in the European Bank for Reconstruction and Development’s AGM in Bucharest in May 2001, which had been attended by 2 000 people. She had met representatives not only of the Bank but of other banks and industry as well as NGOs. The report had been adopted in Baku, Azerbaijan, in June. A seminar on energy development in the Caspian Sea region had been held.
The European Bank for Reconstruction and Development had performed well over the last year creating €152 million profit and investing €3.7 billion. The investment was the most important part of the Bank’s work. Each euro invested by the Bank was matched by two euros from the private sector, and 71% of investment went into private projects. It was important for a country to have a good financial sector in order to attract investors and stimulate SMEs. The Bank had also invested in strengthening telecommunications systems. It was willing to take risks where others were not. It was busy helping to restructure state-controlled countries. The environment was important and was taken into account. There had been less growth than usual but this was due to the downturn in the world’s economy. Trade was due to increase as more countries joined WHO. The Bank urged governments to invest internally as well as abroad.
Each year the Bank published a transition report on a certain sector and this year it was the energy sector. There was great potential in oil and gas in the Caspian region, but this had not been effectively developed. The committee approved the Bank’s work in relation to nuclear energy, especially in the field of safety. It had overseen the dismantling of nuclear plants and had insisted that two new power plants in Ukraine could open only if Chornobyl were closed. Russia was considered separately to other countries because of its specific needs.
The challenge facing the Bank was to assess and prioritise needs. Positive progress had been noted at their annual meeting in Bucharest. However, the challenge of privatisation remained acute. Other negative developments of concern were crime and corruption. The Bank was determined to increase its dialogue with the Council’s monetary committee. She thanked the Assembly for discussing the report, and congratulated the Bank on its work: it was hard to make profits and take risk.
THE PRESIDENT. – Thank you. I now call Mr Jean Lemierre. Although the room is not full, this time he will be speaking to forty-four delegations. Bosnia and Herzegovina are represented here and we have Special Guest delegations from Serbia and Montenegro, as well as Canada, Mexico and Israel – all members of the European Bank for Reconstruction and Development. We are proud to serve for the tenth year running as your parliamentary forum, Mr Lemierre. We want to thank you and we are looking forward to your presentation. You have the floor.
Mr LEMIERRE (President of the European Bank for Reconstruction and Development) thanked the President and the Assembly and reminded them that this was not the first time that he had the pleasure of speaking to them. Most of what he needed to say had already been dealt with in the excellent report presented by the rapporteur. He would simply add a few concerns.
The European Bank had invested over €10 billion. There had been progress in many areas such as the growth of democracy and the spread of the market economy. Some problems remained. With respect to the political aspects of the Bank’s work it was essential that it received feedback from the Assembly. The Bank needed the Assembly’s views and its reflections on their work. For example, the Bank had been forced to take a political position on loans to Belarus. They would have welcomed the views of the Council of Europe in arriving at this position. Their decision in Belarus was to confine themselves to lending to small and medium-sized companies.
Back in 1999 the Bank had decided to hold its forthcoming conference in Tashkent in Uzbekistan. This decision had been taken to send a strong message of commitment to that region. Post 11 September, it was even more important for the Bank’s shareholders to send a clear message of support to the region. However, holding a conference in a particular region was not an endorsement of the policies being pursued in that region, it was an incentive to further progress.
The Bank had re-thought its lending strategy and had consciously decided to focus more resources in the east. Many of the countries in the new priority area wanted to be closer to the European Union. There was a considerable amount to be done in Russia, the Caucasus, and in east Asia particularly in sectors such as energy. The Bank had already been active in electricity projects and was now targeting gas projects. There was a general need for support of the private sector in countries such as Ukraine, and more general support was needed for peace and democracy projects in the Balkans. The new focus on eastern countries involved a significant sharing of risk. Over the coming two or three years there would be a major shift of lending to east and Southeast Asia.
The development of SMEs was vital and some 70 000 had been supported in the region. It was also important to support medium-sized firms in central and eastern Europe so that they could compete. This was a vital priority for the Bank and for the European banking sector. The EBRD was co-operating with the Russians in the process of creating a Russian state bank. This would allow further progress in that country.
The development of infrastructure and services, such as water, transport and urban heating, were essential for efficiency and the environment but also for the larger social good. It was important that this social element should be taken into consideration when discussing reforms and policies.
All this was possible if a number of considerations were taken into account. First, it was essential that the EBRD developed sound co-operation with other institutions. The Bank already had excellent and exemplorary relations in this regard. Secondly, it was essential that a good dialogue was established with civil society, especially with NGOs. The Bank had good links with such organisations and was exploring with them proposals for greater transparency. Thirdly, the Bank should not invest in environments where there was an absence of stable institutions. Stable institutions were imperative to the delivery of sustained progress. The Bank therefore engaged in dialogue with recipient countries and donors, such as the EU, the United States and Japan, to ensure that this was the case. Another fundamental consideration was respect for the rule of law. This meant not just approval of appropriate laws but their actual implementation. Implementation was key and required political and social will if progress was to be achieved.
THE PRESIDENT. – Thank you, Mr Lemierre, for that helpful contribution.
The first speaker on the list is Mr Rakhansky.
Mr RAKHANSKY (Ukraine) congratulated the President of the EBRD on its tenth anniversary. The report showed that the Council of Europe understood the importance of the Bank and its role in helping central and eastern Europe. Dialogue in the Assembly helped both recipients and donor countries. In the case of Ukraine, co-operation was being dynamically pursued. Ukraine’s priority at the moment with regard to the EBRD was to seek help in dealing with the consequences of the Chornobyl disaster. Because the plant had been shut down, there were those in some European institutions and in the European press who thought that the problem had been dealt with. However, this was not the case. Firstly, there was a need to find alternative sources of electricity to replace that which had been lost when Chornobyl was closed down. Secondly, there was also the important question of maintaining the sarcophagus surrounding the plant. Projects that sought to deal with these problems were a priority and required appropriations from the Bank. This was a Ukrainian but also a European problem. Ukraine therefore sought help in acquiring the loans necessary to deal with these matters.
He concluded by thanking the rapporteur for her excellent report.
THE PRESIDENT. – Thank you. I call Ms Calner on behalf of the Socialist Group.
Ms CALNER (Sweden). – In Resolution 1129 some years ago, the Assembly said, “The EBRD should give special attention to financing projects in which women are involved.” That is the case today, as we can read in the report. An increasing number of loans to small and medium-sized enterprises from banks are helping to improve the situation of women entrepreneurs in particular. The Socialist Group appreciates that development, as experience shows us that when women are involved in education and entrepreneurship, economic development takes place. For instance, there are many concrete results from the United Nations’work in Africa.
The Bank's efforts to diversify its services to non-banking financial institutions and offer insurance, pensions, leases and mortgages help and encourage women's entrepreneurship and their role in economic development. The rapporteur welcomes the Bank's efforts to increase access to financing for women engaged in business endeavours, as does the Socialist Group. Funding for businesses owned by women ranges between 20% and 30% in most countries, and in some the figures occasionally rise to 50% to 60%, which is good and in keeping with the Assembly's early decision.
The Bank also offers so-called micro-loans for women entrepreneurs, which have achieved good results. When we visited the European Bank in London, I talked to an enthusiastic clerk who dealt with development and he found good ways to encourage and help the participation of women in enterprise. I appreciate such efforts and I hope that in the next report we read more about women's entrepreneurship. Hopefully, we will hear good results. Thank you, Ms Kestelijn-Sierens, for a good and interesting report.
THE PRESIDENT. – Thank you, Ms Calner. The next speaker is Mr Van den Brande on behalf of the Group of the European People's Party. He is not here, so I call Mrs Pericleous Papadopoulos on behalf of the Liberal, Democratic and Reformers’ Group.
Mrs PERICLEOUS PAPADOPOULOS (Cyprus). – On behalf of the Liberal, Democratic and Reformers’ Group, I congratulate the rapporteur on her informative report on the mission, vision and opportunities of the European Bank for Reconstruction and Development in central and eastern Europe. This debate is one of the session's highlights and indicates the Assembly's concern about the performance of the Bank in twenty-seven countries over the past ten years. The rapporteur and the Assembly are aware that the EBRD's main challenge lies in the duality of its mission. On the one hand, it is to foster the transition towards open market-oriented economies and promote private and entrepreneurial initiatives in countries committed to applying the principles of multi-party democracy and a market economy. On the other, it aims to do business as a profitable lending institution.
The Bank aims to assist recipient member countries to implement structural and sectoral economic reforms, including de-monopolisation, decentralisation and privatisation, to help their economies become fully integrated in the international economy. To achieve that complex mandate, threats and obstacles must be overcome and opportunities exploited. In Russia, more EBRD funding is needed, together with an overall investment strategy for the development of the private sector. In the republics of central Asia, the EBRD must ensure that there is a better climate for investment by increasing the pace of democratic change. Transparency in public affairs, reform of the banking sector, the granting of loans in disadvantaged regions and rural areas, giving loans to women entrepreneurs, and in-depth structural reforms may decrease the widening income gap.
In south-eastern Europe, the Stability Pact has not been utilised to the full. Its implementation pre-supposes strict compliance with long-term strategies, major political, economic and social reforms and allocation of more resources by national parliaments, institutions and the EU. A free investment climate and an open regional trading system must go hand-in-hand with the development of infrastructure for transport, communications, energy supplies and waterworks. The vitality of economic development also depends on the implementation of European principles of pluralistic democracy, human rights and the rule of law. Social inclusion, crime prevention, strengthening civil society, developing the media and improving institutional capacity, governance structures and anti-corruption measures, are essential for poverty reduction and sustainable growth.
The EBRD has performed strongly in its ten years of operation. Despite the global economic slowdown, the difficult conditions in 2001 and the events of 11 September, the transitional economies of central and eastern Europe and the Commonwealth of Independent States are well-placed to sustain, if not increase, their access to international capital markets. Country-by-country assessments can provide valuable information on progress in all key areas of reform. In central and eastern Europe, the Baltic states, south-eastern Europe and several countries in the CIS including Russia, private domestic demand was the main engine of growth. Improved prospects for accession to the EU for a number of countries were the key driver behind progress to successful transformation.
The challenge is to maintain that momentum, assist the less advanced countries with their economic transformation and address the need of the region and its people. The EBRD should be encouraged to intensify its current efforts to incorporate standards on democracy, good governance and the rule of law in its projects and make funding to recipient countries conditional on their acceptance of those standards.
THE PRESIDENT. – Thank you. The next speaker on my list is Mr Pollozhani on behalf of the European Democratic Group. Unfortunately, I cannot give him the floor because, according to our papers, his delegation missed a deadline to nominate him as a replacement for a titular member. No such nomination was received, so according to the regulations I cannot let him speak. I beg his pardon. We are trying to sort the matter out. If we receive something from the delegation, he will be allowed to speak in the debate, but I cannot allow him to speak now. I am sorry, but that is the rule. I therefore call Mr Wikiński.
Mr WIKIŃSKI (Poland). – Agriculture is one of the most important elements in Poland's negotiations with the European Union. The modernisation and restructuring of the Polish milk sector is a long-term project requiring constant modifications and improvements. The national programme for the adoption of the acquis devotes much attention to that and says, “The improvement of the Polish milk sector is necessary to strengthen the competitiveness of production, as well as the whole marketing channel, to ensure adequate benefits for milk producers and to implement hygienic and sanitary requirements of the European Union.” With that in mind, the EBRD and the European Commission set up a joint project, which aims to modernise dairies in Poland and upgrade their products, quality and production facilities to EU standards. The project combines loans, including one for €24 million provided by the EBRD, and grants, such as the €8 million provided by Phare. Some dairies have already benefited from this scheme.
I should like to find out about the EBRD’s plans for countries such as Poland from 1 January 2004. What assistance does the EBRD foresee for new members of the EU? It goes without saying that there will still be a considerable gap between the EU’s “founding fathers” or even those who joined later and the “infants”, especially those from the eastern boundaries of the continent.
It seems highly probable that we will need more time and broader practical experience before we can profit fully from the assistance instruments put at the disposal of EU countries, namely structural funds and the cohesion fund. Can candidate countries count on the Bank making a further contribution to economic development in central and eastern Europe through preferential treatment, loan conditions and assistance schemes? The opportunity to learn more about a matter of such consequence would be highly appreciated by those involved. Thank you for your attention.
THE PRESIDENT. – Thank you. I call Mr Rigoni.
Mr RIGONI (Italy) agreed with the report. Co-operation between the EBRD and the Council of Europe was very important. The EBRD had faced challenges over recent years, including major political changes and policy developments between EU and central and eastern Europe. All countries faced problems of social cohesion. As the market economy had risen and the rich had become richer, the poor had also become poorer. The new spirit of co-operation in central and eastern Europe should be stressed as it would help countries in those regions to become members of the European Union. This was the Council’s second report on economic and social cohesion. It put forward a policy for encouraging social and economic cohesion post-enlargement and convergence with the EU. Disparities between member states had been reduced by one third, and between regions by one fifth. There was an important social and economic role to be played by the Council of Europe at a local level. Local development drew on resources, using local resources, local autonomy and small businesses to improve the democratic process. The EBRD should promote local development to create sustainable development. The Council of Europe needed to develop a policy of disseminating good practice in order to add momentum to development.
THE PRESIDENT. – Thank you. I call Mr Dhaille.
Mr DHAILLE (France) congratulated the rapporteur and thanked Mr Lemierre for his work. He emphasised the need for the EBRD in the transition period, but argued that financial development should not destroy social structures and social support such as pensions. The reforms should not shock people or they would be blocked, and democracy would be discredited. He approved of the priority given by the EBRD in fighting organised crime and monitoring credit lines. The emphasis on mafia networks and fiscal havens was important. It was unfortunate that financial problems encouraged corruption. When people were badly paid they were more likely to look to the black market. The anti-globalisation movement served as a reminder of the need for democratic discussion of policy. He was glad that the Council of Europe was a suitable forum for such discussion.
THE PRESIDENT. – Thank you. The next speaker is Mr Škrabalo.
Mr ŠKRABALO (Croatia). – I express my pleasure that today’s debate is an opportunity to mark the tenth anniversary of our Council’s engagement in monitoring the remarkable activities of the European Bank for Reconstruction and Development in twenty-seven countries in transition. I also compliment our rapporteur, who has prepared a most informative report that will help us to put the Bank’s recent achievements into the perspective of its long-term efforts.
Based on the facts and the analysis presented in the report, I can only repeat and reinforce the compliments that I paid the EBRD last year for its consistent conceptual approach and quality of implementation. Perhaps that contradicts the proverb that is popular in my country, which is, “Whom you praise, you spoil,” because the EBRD has only improved over the past year, obviously despite my praises.
The fact that, by the end of January 2002, the Bank had 1 421 active projects of a total net value of €20 billion is convincing proof of its leading position among foreign investors in south-eastern Europe and central Asia.
The EBRD’s record of supporting and co-operating with my country, Croatia, is a good example of how the Bank’s long-term approach and grounded responsiveness to diverse national and local needs produce positive results.
As one of the first investors, the EBRD has provided invaluable support to Croatia’s post-war recovery and reconstruction, especially in infrastructure. The Bank has also provided timely support to the emergence of a market economy by helping to profile and strengthen the Croatian financial sector.
The EBRD has also given a helping hand to several key Croatian companies, the current business results of which give us hope that prosperity could become the predominant Croatian reality. By the end of April 2002, the EBRD input to Croatia was more than €1 billion via its fifty-four projects, 60% of which have targeted the private sector.
Croatia’s priorities include restructuring and privatising hotels and shipyards on the Adriatic coast, and we expect that the EBRD will help us to identify suitable investors for those enterprises. Croatia is also most eager to extend its co-operation with the Bank in supporting the successful growth of small and medium-sized enterprises through partnerships with business banks and the EBRD’s Croatian counterpart – the Croatian Bank for Reconstruction and Development.
With the success story of the EBRD’s work in Croatia and the findings of this year’s report in mind, I am certain that a great many of you could describe similar experiences from your own countries regarding the activities of that unique organisation.
Speaking from my Liberal point of view, I must stress the importance of some points in the resolution for all countries where the EBRD is involved. Point 3 of Document 9482 draws our attention to the immense importance of our joint efforts against organised crime and corruption in the context of achieving foreign investments and development. Point 4 supports the Bank’s direct investments to regions and local communities, which can create more opportunities for disadvantaged social groups, especially women entrepreneurs and people in rural areas. Point 5 stresses the Council’s full support for the Bank’s effective, down-to-earth strategy on south-eastern Europe, under the aegis of the Stability Pact and in co-operation with the Council of Europe Development Bank.
I express my personal support for the Bank’s strategic decision to hold its next annual general meeting in Tashkent to seize the opportunity to contribute to the much-needed improvement to the state of democracy, the rule of law, human rights and civil society in Uzbekistan. I see that as a new effort in the framework of the Bank’s purpose to be a trailblazer for economic and democratic development in various countries in transition, even those further east than eastern Europe. Thank you for your attention.
THE PRESIDENT. – Thank you. I call Mr Seyidov.
Mr SEYIDOV (Azerbaijan). – First, I say many thanks to the rapporteur for this excellent report, which was prepared in the Committee on Economic Affairs and Development. It is thorough and well prepared, and I also thank the chairman. I also congratulate Mr Lemierre on his report and on doing his job as president of this very important institution.
On the threshold of the third millennium, Azerbaijan entered a new stage of economic development. Our government’s main goal at this stage is to raise the living standards of the population and to reduce the problem of poverty. The basis of the economic reforms that have been successfully implemented in recent years stands in the application of the mechanism of the market economy, the involvement of external and internal investments and learning contemporary management methods.
Between 1995 and 2001, the real increase of total internal product was more than 40%. At that stage, average annual inflation was between 1% and 2% and the manat, our national currency, underwent, on average, a 2% to 3% devaluation against the US dollar.
In general, Azerbaijan takes one of the leading places among Commonwealth of Independent States countries in increased total internal product, investments and export volume. An open-door policy is enforced in Azerbaijan relating to the involvement of foreign investments in our country. Between 1995 and 2001, foreign investment involved with our economy constituted $7 billion. The main goal of the investment policy implemented by the government lies in increasing the competitive force of local products and their export potential and the development of local products, which may replace imported goods.
The Government of Azerbaijan endeavours, in all its efforts, to win in the existing competitive world capital market. In that sense, our main goal is to establish the best environment for profitable investment. To pursue all those goals, a new tax code was adopted and economic activities have been liberalised.
Azerbaijan is implementing a joint project with the International Monetary Fund, the European Bank for Reconstruction and Development and other prestigious international economic and financial organisations. In that context, we may specifically stress the issue referred to in respect of our country’s acceptance by the World Trade Organisation.
In 1997, Azerbaijan gained Observer status at the WTO, prepared a memorandum on the foreign trade regime and submitted it to that organisation’s Secretary General. In that direction, our country is conducting joint efforts with the specialists of the WTO working group. We hope that Azerbaijan will be accepted as a full member of the WTO in the coming years. At the same time, the major problem facing Azerbaijan is privatisation, which is the main priority behind economic reform in the republic. Azerbaijan is presently in transition but has declared an open door policy, which is why the activities of the EBRD in Azerbaijan are very important.
THE PRESIDENT. – Thank you, Mr Seyidov. I call Mr Podobnik.
Mr PODOBNIK (Slovenia). – I offer many thanks to the rapporteur for the excellent report. The main aims of the European Bank for Reconstruction and Development are as follows: financing projects in the private sector; developing non-bank financial institutions, such as those that offer insurance, pensions, leasing and mortgages; investment in the private sector for lasting development; promotion of commercially viable infrastructure projects; and reaching a more decentralised structure in municipal services. Those aims have been realised and continue to be pursued in Slovenia.
We are well on the way to meeting the political and economic criteria for European Union membership and the EBRD has a part to play in preparing us to face the hard competition and other challenges that will follow from EU membership. As the single largest institutional provider of foreign capital to Slovenia, the EBRD will concentrate on private sector initiatives in the industrial and infrastructural sectors.
Slovenia is one of the most advanced transition countries and enjoys the highest credit rating in the region. Slovenia still faces significant challenges including industry restructuring, privatisation of our largest bank – that has begun – liberalisation of foreign capital regulations and development of a local capitalist market. However, a large number of companies needs to be transferred from public to private ownership giving every citizen a chance to participate.
The EBRD aims to undertake investments that promote Slovenia’s transition towards a market economy. The EBRD plays an important role in the origination and monitoring of a growing number of projects, particularly in the local private sector. The EBRD supports good and transparent corporate governance for newly privatised companies in Slovenia and will contribute to the mobilisation of private capital to finance public infrastructure by developing suitable concessions and project finance structures. Particular attention will be devoted to municipal infrastructure.
As at 31 December 2001, the EBRD had signed twenty-eight projects in Slovenia. The EBRD began its activity in Slovenia in 1993 by making a DM 142.6 million loan for the upgrading of three hydro-electric power stations and five switchyards, and to build an automatic control centre that formed part of the Drava river hydro-electric power chain. In July 1993 the EBRD made a second public sector loan, to Slovenia railways. In 1994 the EBRD extended the loan to one of Slovenia’s largest banks, SKB Banka d.d.
The EBRD extended a subordinated loan to Nova Ljubljanska Banka, the largest bank in the country. In September 2000 NKBM and the bank Koper, Slovenia’s second and fourth largest banks, each received a credit line from the EBRD. In June 2001 the EBRD made an equity investment in Hermes Softlab, one of the leading independent software developers in engineering and development services to western European companies. In December 2001 the EBRD, as part of an international syndicate, extended a long-term loan to Mobitel, the largest mobile operator in Slovenia. We must draw attention to the evolving role of the EBRD in preparing countries for their accession to the EU and to the need to explore new and innovative approaches to financing projects in countries such as Slovenia.
THE PRESIDENT. – Thank you, Mr Podobnik. The next speaker is Mr Kirilov.
Mr KIRILOV (Bulgaria). – I express our sincere gratitude for the great work done by Ms Kestelijn Sierens. I also want to respond to the statement made by Mr Lemierre. He gave us an open and frank statement. A tradition has developed over the years of co-operation between the Committee on Economic Affairs and Development and the EBRD. Every January, members of the committee feel very much at home at the EBRD, and I hope that Mr Lemierre felt at ease during our open and frank discussion. That constructive approach makes us work together.
Let me go further. That co-operation provides a good example of how the democratic deficit in our institutions can be overcome.
We are grateful for all that the EBRD is doing for the countries of central and eastern Europe, as most of my colleagues have emphasised. Today will provide further examples of what has been done in our discussions on parliamentary scrutiny of international institutions and on the role of the International Monetary Fund and the World Bank. I hope that, one day, the leaders of those institutions will take as constructive an approach as those of the EBRD and take part in our debates. Co-operation is vital not just for the Council of Europe but for the world at large. One further example is our co-operation with the Organisation for Economic Co-operation and Development, which is constructive, which is why we have a substantial debate on that during the Assembly’s sessions.
Because I am short of time, I shall focus on paragraph 4 of the draft resolution. Granting loans on a non-sovereign basis to regions or to local communities is something new, and we should encourage it. Secondly, and vitally for the democratic development of the countries in transition, is the successful policy of the last few years aimed at developing small and medium-sized enterprises. That policy is financing real democracy. A great deal of effort is required and there were difficulties when the EBRD first discussed those matters, but for the sake of democracy and of consolidating people’s faith in democracy, initiatives involving the individual citizens of those countries are vital.
I hope that partnerships with local companies and financial institutions will continue to develop and be even more effective. However, the partners in the countries in transition need to be less conservative and more open to a political approach. I would not mind some enlargement in that area.
I have one more mildly critical point which perhaps concerns the EBRD less than it does the other institutions involved in Stability Pact projects. I would appreciate it if, given its experience in our countries, the EBRD would push more strongly on projects to do with infrastructure which would connect us more fully, allow people to see what is happening and allow people to believe more in the goals of the Stability Pact.
THE PRESIDENT. – Thank you. I must now interrupt the list of speakers. I remind you that members who are on the list and present in the Chamber but who have not been called may submit their speeches in typescript to the Table Office in Room 1083 within twenty-four hours of the end of the debate for publication in the official report.
I now call Mr Lemierre to respond to the debate.
Mr LEMIERRE (President of the European Bank for Reconstruction and Development). – I shall be brief.
I would say to Mr Škrabalo that you do not spoil us. You create expectations and those are good for the managers because they are an incentive for us to move forward, to do better and go further. So, you do not spoil us but you do create expectations. That is the good partnership that we may have. Tell us the key questions and we have to try to deliver and report back to you.
(The speaker continued in French)
He thanked the Assembly for its support. The debate would serve to encourage the Bank in its work. It had raised a number of important issues. He accepted that the Bank had to deal with individual situations on an individual basis. His Italian colleagues were also right to stress the need to develop co-operation with the European Development Bank, and this was a message he would take back to London.
Several speakers had asked what would happen to the EBRD after 2004. The shareholders’ decision on the matter had been simple: the Bank’s resources and support would be available before and after 2004 to all those who needed it. The extent and nature of its future work were dependent on the needs of the private sector; if they needed the Bank, it would be there to help them. However, it was important to stress that the Bank would never compete with the private banking industry. The Bank would respond to the need for further investments in the countries of eastern Europe, especially in areas such as agriculture. He had noted the comments in the debate on the Bank’s support for projects supporting women. The Bank had recently organised a colloquy in Bucharest on the involvement of women in small and medium-sized enterprises. The Bank could help not only through financial support, but also by providing incentives and examples. The situation in the Ukraine was definitely not a thing of the past and a number of questions remained to be answered relating to Chornobyl. The Bank had held a number of meetings with the Ukrainian Government, and it was hoped that the work on the erection of a new shelter could be resumed as soon as possible. On the question of new nuclear plants, the Bank was awaiting the green light from the Ukrainian Government before proceeding. He shared the analysis of the Stability Pact given by one of the speakers in the debate. There was a lot still to be done in this area and this issue would be discussed again when he returned to London. He thanked the Assembly for its invitation to speak and its continued support. He also thanked the rapporteur and expressed his hope to return the following year for a similar debate.
THE PRESIDENT. – Thank you for those kind remarks. I call the rapporteur to reply. She has four minutes.
Ms KESTELIJN-SIERENS (Belgium) thanked the members who had made many interesting speeches. She was very pleased that the President of the EBRD could be present. He had said in his introduction that the Bank had a political responsibility to support democracy, as well as an economic one, and it was important for this to be publicly demonstrated. Members had correctly emphasised the Bank’s future and the important role it would play, especially in those countries expecting to join the EU shortly. Members had raised a number of specific problems, which the President had dealt with. It was also good to hear of the Bank’s successes.
She thanked the President of the Bank and his staff for their hard work and wished them success.
THE PRESIDENT. – Thank you.
Does the chairperson of the committee wish to speak?
Mrs ZAPFL-HELBLING (Switzerland) thanked the President of the Bank for facilitating the committee’s visit to its headquarters. During the committee’s visits to regions it had benefited from full co-operation from Bank authorities. Transparency had been the hallmark of its work. The EBRD had its work cut out for it and a long lease of life. Its role would develop as political situations developed. The importance of the rule of law and of democracy and stability in institutions had been emphasised. She thanked Ms Kestelijn-Sierens.
THE PRESIDENT. – Thank you.
The debate is closed.
The Committee on Economic Affairs and Development has presented a draft resolution in Document 9482, to which two amendments have been tabled.
I remind you that speeches on amendments are limited to one minute.
We come to Amendment No. 1, tabled by Mr Rakhansky, Mr Oliynyk, Ms Gamzatova, Mr Neguta, Mr Baburin, Mr Seyidov, Mr Rogozin, Mr Kostenko, Mr Klympush, Mr Rybak and Mr Hladiy, which is, in the draft resolution, in paragraph 8, line 3, after “in Russia” insert “, Ukraine”.
I call Mr Rakhansky to support the amendment.
Mr RAKHANSKY (Ukraine) said that because of the complex situation in the Ukrainian power sector he wished to insert a mention of Ukraine after that of Russia.
THE PRESIDENT. – Does anyone wish to speak against the amendment?
That is not the case.
What is the opinion of the committee?
Mrs ZAPFL-HELBLING (Switzerland) (Translation). – In favour.
THE PRESIDENT. – The voting is open.
Amendment No. 1 is adopted.
We now come to Amendment No. 2, tabled by Mr Rakhansky, Mr Oliynyk, Ms Gamzatova, Mr Neguta, Mr Baburin, Mr Seyidov, Mr Rogozin, Mr Kostenko, Mr Klympush, Mr Rybak and Mr Hladiy, which is, in the draft resolution, after paragraph 8, insert the following new paragraph:
“Taking into account that in December 2000 Ukraine, irrespective of its energy shortages, met its Ottawa memorandum commitment with regard to the closure of the Chornobyl nuclear plant, the Assembly urges the Bank to start financing the projects for the transformation of the Chornobyl ‘shelter’ facility into an ecologically safe system and for the completion of the construction of compensating facilities, which are of the highest priority and of vital importance for the energy sector of Ukraine.”
I call Mr Rakhansky to support the amendment.
Mr RAKHANSKY (Ukraine) said that he was proposing a new paragraph to appeal to the EBRD to start financing projects for the transformation of the Chornobyl “shelter” facility.
THE PRESIDENT. – Does anyone wish to speak against the amendment?
That is not the case.
What is the opinion of the committee?
Mrs ZAPFL-HELBLING (Switzerland) (Translation). – Again, the committee is in favour.
THE PRESIDENT. – The voting is open.
Amendment No. 2 is adopted.
We will now proceed to vote on the whole of the draft resolution contained in Document 9482, as amended.
The voting is open.
The draft resolution in Document 9482, as amended, is adopted unanimously.
5. The International Monetary Fund and the World Bank: challenges ahead
THE PRESIDENT. – The next item of business is the debate on the report on the International Monetary Fund and the World Bank, presented by Mr Alfred Gusenbauer on behalf of the Committee on Economic Affairs and Development, Document 9478.
The list of speakers closed at 12 noon today. Fifteen names are on the list and four amendments have been tabled. I remind you that we have agreed to interrupt the list of speakers at about 5.30 p.m.
I call the rapporteur, Mr Gusenbauer.
Mr GUSENBAUER (Austria) said that the World Bank and the IMF faced new challenges. Even as the report was being written, constant changes had been taking place. The committee had had conversations with the President of the World Bank and the Governor of the IMF. The prospects for the world economy were not good. The US did not have strong growth, the Eurozone had flat growth, Japan was in stagnation and the situation in Argentina had shown that there was turbulence in the emerging markets. This had led to nervousness and a drop in employment and investment. The forecasts for 2003 showed some relief but the economic situation would not change by itself. Economic institutions had a role to play and the World Bank and the IMF were two of the principal institutions. Much had changed since they were established over fifty years ago. They faced pressures from anti-globalisation movements. The Assembly needed to have a self-critical view of globalisation and institutions. Globalisation was one-sided: it demanded changes from the Third World which it was unwilling to make itself. Policy in the northern hemisphere, whether it was agricultural or steel policy, was protectionist.
It was evident that the world was not a humane place. Current economic strategy actually destabilised the developing world. In the Roman Empire the dictum had been “divide and rule”. This was inappropriate today. Now the dictum should be “divide and grow”, where “divide” meant sharing opportunities and chances. It was no longer appropriate simply to think about the share of GDP that should be devoted to the poor. Resources for health and education were as important in development as purely economic factors. Ideological dogma had to be confronted. An examination of the Asian economic crisis in 1997 revealed the fact that those countries which had performed worst were those which had followed IMF advice the most closely. This suggested that the rules were wrong. The United States had shown that it was better to be flexible in such matters. The Federal Reserve had a responsibility for fiscal and business matters. It did not respond in the same way as the EU or the IMF. The IMF had recently started to review its rules and remedies and was now much more pragmatic in the way it suggested countries should escape from debt.
The two Bretton Woods institutions had differing objectives. The World Bank had a development focus whereas the International Monetary Fund was more concerned with macro-economic stability. What was needed was a new Bretton Woods conference and a review of the voting system. Both those countries which provided the money and those that needed it should have a say in the distribution.
THE PRESIDENT. – Thank you very much, Mr Gusenbauer.
(Mr Puche, Vice-President of the Assembly, took the Chair in place of Mr Schieder)
THE PRESIDENT. – I call Mr Lloyd on behalf of the Socialist Group.
Mr LLOYD (United Kingdom). – I congratulate Mr Gusenbauer on an extraordinarily good and well thought-out report. He produced an excellent review of the Bretton Woods institutions and a well-written account of the current debate. He has brought into sharp focus many of the issues that we need to address.
The Bretton Woods institutions were founded when people were determined that economic chaos in the developed world would never be experienced again. If we measure the performance of those institutions – the International Monetary Fund and the World Bank – against that standard, the fact that 1.2 billion people live in poverty and 2.8 billion people live on less than €2 a day suggests that there is something drastically wrong with the world’s economy, especially as the gap between rich and poor is widening. Given the panic about refugees in Europe and the capacity of the poor to wreak environmental damage, which leads to the destruction of the globe that we all inhabit, we cannot be unaware that poverty affects all of us.
It would be ridiculous and unfair to hold the IMF and World Bank responsible for the world’s problems, but we must consider how far historically they have contributed to the making of those problems rather than their solutions. Mr Gusenbauer drew attention to the fact that those institutions have been strongly driven by ideology. Not only are they affected by the prevailing economic conditions of the developing world, but their ideologies are magnified in the weakest and most fragile economic systems of the world, mainly affecting the poor. In the 1970s and 1980s and even now, trade liberalisation has been regarded as an unequivocal good. Trade liberalisation certainly makes sense: a 1% increase in African trade would be worth about US$70 billion – an enormous sum which is one and a half times the aid budget for Africa. However, tariffs cost the poor about US$100 billion, twice the aid budget. Whose fault is it that developing countries do not take advantage of those opportunities?
The answer is, ironically, that it is not the fault of those poor economies. They were driven to make huge cuts in tariffs. Sub-Saharan Africa has halved its import tariffs, and both Latin America and Southeast Asia have cut their tariffs to one third of what they once were. There is no country in the EU or, more widely, in the Council of Europe that can claim to have made cuts on such a scale.
I turn now to the ideology of regulation. At the moment, the IMF’s drive is towards privatisation and getting rid of the role of the state. In a world where 2 billion people have no access to low-cost medicine, it is almost inconceivable that the private sector will ever have the capacity to generate care for the poor. We need to challenge the basic ideologies that have suppressed the thinking of the IMF and, perhaps to a lesser extent, the World Bank.
Those ideologies are not absolutely wrong. Free trade has a role, as has privatisation, which has worked in different parts of Europe. However, those ideologies have been misapplied in a way that has done serious damage to the most fragile economies and communities.
We need to put an end to the fashion for ideology. We need certainty, and we need the World Bank and the IMF to concentrate their policies on being pro-poor, pro-women, pro the environment and anti-conflict. In the report, Mr Gusenbauer drew attention to the degree to which the World Bank and the IMF will be ideology-laden as long as they are in the control of a small minority. The real issues are accountability and transparency, not only for us in the north but for the whole world.
THE PRESIDENT. – Thank you. The next speaker is Mr Braun.
Mr BRAUN (Hungary). – On behalf of the Group of the European People’s Party, I congratulate the rapporteur on this valuable and comprehensive report. It is not only about the Bretton Woods twins or their activities; it demonstrates a great deal beyond that. It describes the events and problems faced by the world economy at the beginning of the twenty-first century, the solutions that the two institutions must find and the role of the Council of Europe.
The EPP group suggests that the Assembly supports the efforts of the World Bank and the IMF in pro-poor policies for heavily-indebted poor countries, particularly in the sub-Saharan region. We welcome the shift in the support policy from loans towards grants in the case of those countries. We think that the Bretton Woods institutions have a large democratic deficit because only the finance ministers make decisions. Whoever provides the money makes the decisions. The countries that benefit are not real partners in the process. Decision-making is not transparent and there is no democratic control, although this mechanism is of prime importance for millions of people in developing countries.
I turn now to the changes in the World Bank’s policy towards countries preparing for accession to the EU. I shall use my country as an example. Hungary has been a member of the World Bank since 1982, when the country was critically indebted and hard currency resources were exhausted. By 1998, the World Bank had financed twenty central development programmes. The World Bank played a serious role in the transition of the Hungarian economy, helping it to form the institutions for a market economy and granting loans for individual projects.
Today, the World Bank’s loan conditions are relatively unfavourable for Hungary, so some loans were repaid early. We have maintained our relationship with the World Bank, and it continues to support Hungary’s early accession to the EU in many ways. In 2001 a framework for World Bank group support to EU accession candidate countries of central and eastern Europe was prepared.
The World Bank does not concentrate on loans during the accession period because of the level of development of our economy; it puts the emphasis on professional and technical support. Possible fields of co-operation include regional development, the liberalisation of energy supply, transport, social projects, pro-poor policies, health care, environmental protection, the knowledge-based economy and the creation of an IT society.
The IMF and the World Bank have often been criticised for their activities in various countries. Hungary and other central and eastern European countries, however, are among the positive examples of IMF and World Bank policy and practice. As I said, Hungary was heavily indebted when it joined the World Bank. In 2000, it volunteered to be involved in a project initiated by the World Bank and the IMF to grant interest-free credits to the poorest and most heavily-indebted countries of the world. Thank you for your kind attention.
THE PRESIDENT (Translation). – Thank you. I call Mr Guardans.
Mr GUARDANS (Spain). – It is an honour for me to address the Assembly on behalf of the Liberal, Democratic and Reformers’ Group. I agree with most of the comments made by the previous speakers. I congratulate the rapporteur on his strong, in-depth report, which although short has been successful in telling the whole story of the two Bretton Woods institutions and their transformation from their establishment at the beginning of the cold war to the twenty-first century, when more and more citizens are successful – although not as successful as they deserve to be – in contesting the gap between rich and poor countries, between ideological, political speech and social reality and between institutions and real problems.
Of course, in the twenty-first century there is also a digital divide because of the creation of the society of information. That is even more important than the issue of wealth. The report describes that information revolution. It describes very well the extent to which the World Bank and the IMF have been successful in recent years in changing their image. That is particularly true of the World Bank. Changes in attitude are happening simultaneously. I congratulate the rapporteur on the fact that the report does not hide the criticism that the Bank and the IMF have received and still deserve.
I want to concentrate first on the most important criticism of the IMF, underlined by the report, and stated in the world development report of the World Bank, which concerns the simple translation to some countries of morals that may have been useful or successful in other countries or in other times. Joseph Stiglitz recently expressed strong criticism of that. The World Bank has been criticised for having too much ideology, particularly political ideology. Obviously, in this Assembly nobody is against politics, but we are against pure ideology leading economic decisions, and both institutions have to change that.
The second point that I want strongly to underline concerns the need to change the basis of the balance of votes from the money given to both institutions to take account of other elements.
Another point is support for transparency, which is very important. During the evolution towards transparency, the World Bank must, through the Internet, obviously, make much more public how such decisions are taken, where they come from and which elements were considered before decisions were finally reached.
Obviously, we share the agreement absolutely – both institutions need to survive in the twenty-first century, whether there is a new Bretton Woods conference or not. Perhaps there will be one, but they have a role in any case, although they must clarify their functions so that they do not overlap.
Each institution has its own functions. The World Bank is a much more long-term development bank while the IMF takes care, in a much more preventive manner, of macroeconomic stability.
I congratulate those who compiled the report on making the distinction between the different elements that comprise the so-called anti-globalisation movement. We must all make a distinction between its violent elements, which deserve no respect at all, and those others, which are very respectful and which are asking for answers to certain problems. As the report says, they deserve attention from the World Bank and the IMF, which must explain and justify their decisions and, eventually, change certain policies.
We cannot turn our backs and think only in terms of security at meetings when we are dealing with the anti-globalisation movement. Many different people with many different ideas are involved. Most of them deserve our attention and that of both institutions.
THE PRESIDENT. – Thank you. The next speaker is Mr Walter, on behalf of the European Democratic Group.
Mr WALTER (United Kingdom). – It gives me great pleasure to speak on behalf of my group on this most important subject. I congratulate the rapporteur on his extensive and well researched document and on the thoughtful and valid recommendations in his draft resolution. I have reservations on the draft resolution, but the basic thrust is good.
Before dealing with my reservations, it is worth recalling the history and the nature of these two organisations. They were born out of Bretton Woods and the priorities of rebuilding the industrial economies of the combatant nations. I believe that both, in their own way, have been a success, although not a total success. Their roles have now changed, especially in the past twenty or thirty years.
The IMF in particular still occasionally finds itself involved in the affairs of richer nations whose economies have got into trouble, but the role and function of the World Bank have greatly expanded, and its focus has been adjusted particularly to the developing world. In that it has been joined by other development banks – the Inter-American, the African, the Asian and the Islamic as well as, most recently, by the European Bank for Reconstruction and Development.
During our debate, we must not lose sight of the fact that the World Bank group and the IMF are banking institutions that are very much part of our official development assistance programmes, but their role should not be confused with the other bilateral and multilateral aid programmes of our member states, nor should they compete with them.
In that respect, as I read the draft resolution, I have a particular difficulty with paragraph 7, which “supports a shift in funding from loans to grants”. I would be the first to support and encourage member states to honour their obligations to increase their aid budgets, and I would be the first to make speeches and say what is necessary to persuade even my own government to increase its aid budget to 0.7% of gross domestic product. However, I believe that there is a role for a bank such as the World Bank as a lending institution. Even if it lends through the International Development Agency at zero interest, we should encourage that role.
Let us not forget that, even last year, the World Bank group lent about $17 billion, bringing its total loan portfolio up to some $360 billion. In building or in rebuilding economies we need financial discipline in addition to direct aid. The lending programmes of the World Bank and others can bring that discipline to all but the poorest countries.
That leads me to my second reservation about the resolution, which concerns voting rights. I sense a little of the rapporteur’s socialist credentials in paragraph 5, which says, “Voting rights should mirror the needs and wishes of those with no say over the inequitable distribution of wealth that accompanies globalisation.” That could equally apply to even the richest nations, as well as the poorest.
The serious issue here is that the necessary disciplines of a banking transaction will be absent if the borrower can determine the conditions of his loan to the detriment of the lender. If such an example occurred, I believe that the flow of funds to the World Bank would soon dry up. Of course the developing world should have a strong voice in both institutions and there should be some change in the voting rights, but the priorities of the developing world must be to rebuild their economies and not to junket through the multinational institutions.
This is a good report. Although I have reservations, I congratulate the rapporteur. We should support the basic thrust of the resolution.
THE PRESIDENT (Translation). – Thank you. I call Ms Ferić-Vac.
Ms FERIĆ-VAC (Croatia). – The Committee on Economic Affairs and Development faced a challenging task in preparing the report, not only because its title refers to challenges ahead, but because it is daring to make predictions in respect of the challenges ahead for the International Monetary Fund and the World Bank. For fifty years those Bretton Woods institutions have played crucial financial roles for most of the world’s population.
I praise our rapporteur, Mr Gusenbauer, for producing such an exciting and brilliant report, which, besides envisaging the future work of the IMF and the World Bank, presents such an enlightening overall picture to many of us, who are not so well acquainted with the topic. It also offers a concise draft resolution that is utterly understandable and up to the mark.
My country, Croatia, has been an IMF member since 1992, and we have been allocated 0.17% of the total IMF quote. The new stand-by arrangement was approved in March 2001 for fourteen months, but we had no intention of withdrawing the granted sum, so the arrangement was treated as precautionary. That means that the money is not drawn, although access to it could be gained in case of need.
After revising the arrangement twice and after certain shifts regarding economic measures and limits to realisation criteria, the arrangement was successfully concluded last month. The Financial Sector Assessment Programme mission visited Croatia twice last year. It concluded that Croatia is successfully maintaining macroeconomic stability and the stability of the banking system, but it also encouraged us on more pronounced monitoring of all parts of the financial sector and to undergo relevant structural reforms.
Croatia is a party to the IMF and World Bank initiative to reduce poverty and has agreed to participate by offering eighteen-year loans. We decided willingly to participate in that initiative and in numerous other projects. The World Bank is the most important international financial institution that supports Croatia’s shift towards a market economy through its investment and structural loans which provide the most favourable financial conditions available to Croatia in the international finance markets.
During our nine years of co-operation, Croatia has signed sixteen long-term loans, two grants and an advancement to a loan. Last month we had talks with World Bank representatives on investment in the pension system and we expect to sign an agreement on a loan very soon. For the project of modernisation of our land books and catastar, the negotiation procedure has begun as a result of a decision of the Croatian Government this month, and we expect to start negotiation itself at the beginning of July.
Regarding protection of the environment, we are to receive a substantial sum for a project on the protection of ecological systems for which we are internationally famous. The agreement was signed just a few days ago after the board of executive directors had given their approval.
I stress the fact stated in the report that no two countries are exactly alike. Considerable efforts should be made both by the Bretton Woods organisations and by individual countries to achieve the best possible financial arrangements when negotiating certain issues. Apart from the broader macro-economic framework, one has in mind the fact that particular, perhaps endemic, and intricate circumstances in the partner country may play a role in the success of a joint venture. Such things should be taken into consideration, although that can be a painstaking job for both sides. I am sure that such action will pay off in the end, bringing mutual satisfaction to the partner country and to the IMF and World Bank.
THE PRESIDENT. – Thank you, Ms Ferić-Vaċ. I call Mr Gubert.
Mr GUBERT (Italy) said that often the main aim of the foreign policies of developed countries was to safeguard the national interest. This was not what had lain behind the establishment of the Bretton Woods institutions, the International Monetary Fund and the World Bank. It was important to ensure that the less developed countries built up their economic capabilities, as their economies were mostly based on agriculture and they had a low consumption capacity. Under current policy, developed countries had diverted resources from the less developed countries and this needed to change. Government classes in developing countries who tried to help their countries should be supported, but events in South America had shown the impact of globalisation and government social spending. Liberalisation had taken a back seat and there were inherent risks in this strategy. The World Bank and the International Monetary Fund had responsibility for promoting social equity. The aim should be to reduce poverty by a half by 2015. The working of multilateral institutions should be reviewed as part of the effort to build a new economic order. Countries should continue to build a global system underpinned by values of fraternity and democracy. The financial interventionist policy of the World Bank and the International Monetary Fund should be reviewed. The US government preferred giving grants to loans. A new credit system was needed, based on redistribution. The continuing existence of the Bretton Woods institutions should not necessarily mean interventionism in economic decision-making. People should redefine the notion of cultural citizenship and back the report.
THE PRESIDENT. – Thank you, Mr Gubert. I call Ms Gülek.
Ms GÜLEK (Turkey). – I congratulate the rapporteur on a very thorough report and especially on packing in so much information on and a history of the institutions that we are discussing. I hope that the Committee on Economic Affairs and Development will continue to provide the Assembly with such interesting topics for discussion that are of importance to us all.
The rapporteur rightly and eloquently points out the importance of the roles that those institutions can continue to play, provided that they adapt to current conditions. The report makes further suggestions about another Bretton Woods conference and draws our attention to the possibility of giving voting rights to recipient countries as well as to donor countries.
One could perhaps emphasise further the point that “ownership” must be secured in the countries in question if we are to maximise the success of the IMF’s and World Bank’s assistance programmes. By that I mean that the governments of countries in which programmes are implemented must feel that they can play an active role in their design and implementation. In that sense, they would own the programmes, which is essential both if the programmes are to succeed and in dealing with public reaction to some policy changes, which can be quite radical.
How can such ownership be achieved? First, we should pick reformers and reformist governments. It is essential to have serious governments with the necessary political will if we are to be able to implement swiftly necessary economic reform. Secondly, the concept of ownership can be developed further by encouraging and ensuring feedback and contributions from the countries concerned. That is why design and implementation are just as important as the decision to implement the programmes. It is in design and implementation that the greatest problems arise. For that reason, mechanisms that would ensure successful policy co-ordination and that would maximise the benefits of the programmes should be emphasised when economic assistance programmes are being designed.
Turkey’s track record on recent structural reforms is a case in point. Since the last IMF stand-by loan agreement was signed, many structural reforms have been implemented. Those reforms were essential to the success of the economic programme launched in 1999, not only because they were interrelated and formed a whole programme for restructuring the economy, but because they emphasised transparency and accountability. Among those many reforms are a major reform of the banking system, to align the Turkish regulations with international norms enabling much stricter monitoring of banking activities; a borrowing law, to co-ordinate the loans of all ministries, agencies and municipalities with budgetary constraints; and a social security law, which increased to international standards the retirement age for both men and women and enabled an incremental transition for the present work force.
Of course, not all those reforms were encouraged by the IMF. There were many others, such as making entry into the civil service conditional on passing an examination. Turkey greatly appreciates the support of international financial institutions such as the IMF and the World Bank. Their support has been essential not only for implementation of the necessary reforms, but to enhance overall confidence in the economic programme both domestically and internationally.
In conclusion, it is also important to prioritise with respect to programmes and policies. It is essential to recognise that all of a country’s problems cannot be solved by a single economic programme. Since there tends to be overload in terms of structural reforms within a given time frame, it becomes all the more important to choose reformist governments. The more overstretched that a country becomes through implementing many reforms at one time, the more interest groups will be against them, thereby making it more difficult for it to accomplish the very reforms that it is aiming at. Therefore, sustaining the policies becomes all the more challenging.
The rapporteur seems to favour grants over loans, but with grants policy conditionality should be encouraged – that is, being very selective and insistent about certain policies. Again, it becomes all the more important to pick reformist countries when choosing which countries will receive the loans.
We welcome the recent changes in World Bank policy, which place more emphasis on poverty alleviation and ensuring sustainable growth. We also welcome the increased emphasis that the IMF has begun to place on crisis prevention since the Asian crisis.
Once again, I congratulate the rapporteur on a detailed and thorough analysis. Thank you for your attention.
THE PRESIDENT (Translation). – Thank you. I now call Baroness Hooper.
Baroness HOOPER (United Kingdom). – I too welcome this report and support its recommendations. It is a very valuable part of the Council of Europe’s role to provide a forum for regular debate on institutions such as the IMF and the World Bank. On this occasion, the well-researched basis and the constructive spirit of the Mr Gusenbauer’s report plays an important part. It recognises both the need for openness and transparency in all the activities of the two institutions and the fact that, fifty years on, the IMF and the World Bank need to adapt their activities to the new realities and pursue internal reform. Therefore, I particularly support the call for a new Bretton Woods conference.
My purpose in speaking today is to concentrate on the crisis in Argentina – a country that I know well – and the dilemma that faces the IMF as to how best to deal with it. The rapporteur has given extremely helpful background in paragraph 4 of his introduction, but I wish to add some further considerations.
In the first place, the underlying wealth of Argentina still exists. Since it depends largely on agricultural exports, however, it is not helped by the common agricultural policy of the European Union, which unfairly competes against developing countries such as Argentina, which does not subsidise its produce. The rapporteur also referred to that fact and it should be drawn to the attention of the relevant authorities of the European Union.
Furthermore, Argentina was greatly affected by Brazil’s devaluation of almost 30% in 1998, particularly as it had been developing its export markets with Brazil. That is when preventive action could and should have been initiated by the IMF – it was a sort of chapter 11 situation. To make matters worse, that shock was followed by the wider world recession and the events of 11 September.
We should also remember – the IMF should take this into account – that Argentina is part of Mercosur, the regional organisation made up of Argentina, Brazil, Uruguay and Paraguay. So, the present problems are having repercussions in all those countries and in others such as Chile, which has special agreements with Mercosur.
I will end on a more optimistic note by reminding colleagues that Argentina beat the galloping inflation and other economic problems that beset its economy in the 1980s. Only a few years ago, Argentina fulfilled the Maastricht criteria rather better than some European Union countries. There has been considerable development of the infrastructure as well as much overseas investment, in particular in the banking and energy sectors.
With the right support now, Argentina can become a stable economy again with a strengthened democracy. Buenos Aires will continue to be one of the most sophisticated and delightful cities in the southern hemisphere. I hope therefore that colleagues will support the amendments, which could help all that to happen. Thank you.
THE PRESIDENT. – Thank you. The next speaker is Mr Galoyan from Armenia.
Mr GALOYAN (Armenia) said that the legend above the World Bank building was “We dream of a world in which there is no poverty”: clearly they had got nowhere near that yet. Armenia could only join that world without poverty if it could develop, receive foreign investment and develop effective legal and commercial systems. To raise the standard of living required grants for medicine and educational services as well as access to basics such as water and power. The decision had been taken in Armenia to develop the economy on liberal economic market lines. But mistakes had been made. Shock therapy had failed and a systemic reform of the economy had failed too. The neo-liberal economy was unbalanced, with too few regulatory structures in place. Productivity had fallen, lame-duck industries were supported, resources had fled the country, and there was a lack of banking and investment control. Development projects were welcome, but it took a long time from approval to commencement with little control over them once they had begun. The IMF and World Bank had a potentially important role to play as auditors of such projects. The IMF and the World Bank were still the most important international institutions for restructuring economies, as they had proved in the case of Armenia.
THE PRESIDENT (Translation). – Thank you. I call Ms Yarygina.
Ms YARYGINA (Russian Federation). – I join other speakers in congratulating Mr Gusenbauer on an excellent report, which provides a comprehensive and detailed picture of both the historical role and the modern aspects of the workings of the World Bank and the International Monetary Fund.
Among the rapporteur’s conclusions, we attach the greatest importance to two. The first is that it is high time to review the functioning of the Bretton Woods institutions in a world in which the economic agenda is now determined by movements of private, rather than public, capital. The second is that those renewed institutions should pay particular attention to strengthening crisis prevention and crisis management. Another aspect of paramount importance, which is mentioned in the report but is often neglected in the programmes of financial organisations and especially the International Monetary Fund, is the social consequences of the programmes undertaken.
Despite the efforts of the world community to combat poverty, despite the creation of special programmes to support disadvantaged countries, despite the search for sustainable development, poverty remains the crucial reason for terrorism, extremism, xenophobia and intolerance. The ideologists of the anti-globalisation movements use the problems of poverty to destabilise the world situation. That is why programmes of liberalisation and financial stabilisation cannot be regarded as successful if they lead to massive impoverishment.
To underestimate the social consequences of financial programmes may produce yet another effect. People are losing their trust in reforms, and that narrows the basis of economic transformations. That is why the principle of social cohesion should be included in the strategies of the Bretton Woods institutions. Only then will we be able to speak of their new status and their adequacy to deal with the realities and the tasks that face them in the new world.
THE PRESIDENT. – Thank you. The next speaker is Mr Van den Brande.
Mr VAN DEN BRANDE (Belgium) congratulated the rapporteur on his excellent report. Passages in the report relating to poverty reduction and indebted countries should receive particular attention. More action was needed on debt reduction. For example, even though funds had been set aside for forty-three countries in this respect, only twenty-four had benefited. It appeared that the criteria and conditions for the receipt of such funds were too strict and undermined the very aim of the funds in the first place. Indebted countries needed to be more involved in the programmes. A genuine partnership had to be created between recipient countries and these two institutions. There was a need for more transparency.
THE PRESIDENT (Translation). – Thank you.
I must now interrupt the list of speakers. I remind you that those who are on the list and present in the Chamber but who have not been called may submit their speeches in typescript to the Table Office in Room 1083 within twenty-four hours of the debate for publication in the Official Report.
I call Mr Zhirinovsky on a point of order.
Mr ZHIRINOVSKY (Russian Federation) said that this was the second day running that the Assembly had violated the principles of democracy. Thirty-three people had put their name down on the speakers’ list. However, once again, the same old people were called to speak. All those who wanted to should be allowed to speak. He had put himself on the list for the debate about Kaliningrad that morning, but had not been allowed to contribute. This brought into question whether all members were being given an equal chance to participate in the debates. How could the Assembly talk of democracy if it did not follow such principles in its own deliberations? He had placed his name on the speakers’ list for today’s debate on 18 June. He asked whether in future it would be necessary for him to place his name on the list one or two years in advance of a debate. No country could seriously contend that it had benefited from an IMF or World Bank intervention. Such countries had only been given bad advice. He would speak against every amendment as a protest against the failure to call him in the main debate.
THE PRESDIENT said that rules were rules and that the speakers’ list had been determined on the basis of political groupings. He called Mr Gusenbauer, the Rapporteur, to reply to the debate.
Mr GUSENBAUER (Austria). – Apart from the last contribution, I am grateful for the cross-party support from colleagues for the report that I have submitted. I shall quickly respond to the points that have been made.
I am pleased that Mr Walter noticed a paragraph in which he could see my socialist credentials. In fact, paragraph 5 calls not for socialism but for a change of attitude - from shareholder values to stakeholder values. An increasingly important role for countries that receive loans or grants from the World Bank and the IMF does not mean that they have the same importance or weight as donor countries. However, they need more say than they have today; that is fair enough.
I share entirely the view of Ms Gülek on ownership, which is of the utmost importance. For many years, the World Bank funded projects in countries in which ownership was not well established. Indeed, projects in some countries faced severe opposition from local groups in some regions. Without ownership, you can forget about all the projects.
I agree that there is a deficiency in the Bretton Woods institutions. Our discussion of the performance of those institutions is the first step in bringing democracy to them. It is not enough, but it is a first step. Even more important is the issue of transparency – not only of political decisions by the two institutions, but of our economies. The Enron case in the United States puts the role of institutions in business and our economy on the agenda. In a deregulated, liberalised economy in which the state does not play its traditional role, public and private institutions have to play a much more important role. The Enron case showed that if institutions do not co-operate properly, economic disaster can result.
Finally, I share Baroness Hooper's appreciation of the position of Buenos Aires and Argentina, which is why an additional amendment has been tabled.
THE PRESIDENT (Translation). – I call the chairperson of the committee.
Mrs ZAPFL-HELBLING (Switzerland) said that the committee had carried out its job in being a forum for debate on international issues. It was important to discuss not only the financial roles of these two institutions but their wider role in the field of international development. The review of the Bretton Woods institutions was to be welcomed. Issues such as openness needed to be emphasised even further.
THE PRESIDENT (Translation). – The debate is closed.
The Committee on Economic Affairs and Development has presented a draft resolution, contained in Document 9478, to which four amendments have been tabled.
We deal with Amendment No. 3, tabled by Mr Wielowieyski, Mr Rogozin, Mr Kroll, Mr Davis and Mr Jaskiernia, which is, in paragraph 3 of the draft resolution, after the words “and the IMF”, add the word “especially”.
We shall also deal with Amendment No. 4, tabled by Mr Wielowieyski, Mr Rogozin, Mr Kroll, Mr Davis and Mr Jaskiernia, which is, at the end of paragraph 3 of the draft resolution, add the words:
“…, but also in the event of severe changes on the financial markets in a given country where IMF assistance may prove necessary and effective.”
Mr Wielowieyski has proposed a modification to this amendment.
We shall also deal with Amendment No. 1, tabled by Mr Gusenbauer, Mr Elo, Ms Akgönenç, Baroness Hooper and Mr Walter, which is, in the draft resolution, after paragraph 13, add the following new paragraph:
“As regards Argentina, the Assembly remains deeply concerned about that country’s worsening financial crisis. While recognising the major short-comings of Argentinean policies that led to the crisis and hoping that corrective action will be taken without delay, it asks Council of Europe member states to work in favour of continued IMF and World Bank efforts to help the country out of its difficulties, not least by linking further assistance to the implementation of fundamental reform of Argentina's political and economic structures.”
We shall also deal with Amendment No. 2, tabled by Mr Gusenbauer, Mr Elo, Ms Akgönenç, Baroness Hooper and Mr Walter, which is, in the draft resolution, after paragraph 13, add the following new paragraph:
“Finally, the Assembly views favourably the recent proposal by the IMF for a more orderly procedure for the rescheduling of debt by countries in financial difficulties, including the possibility of adjudication by an international panel. It sees such a procedure as one means of avoiding precipitate reaction by international financial markets and calls on Council of Europe member states to support the IMF in carrying the proposal to fruition.”
I call Mr Wielowieyski to speak to the amendments.
Mr WIELOWIEYSKI (Poland).- There was a misunderstanding in the Table Office and the word “changes” was included in Amendment No. 4, but the word used should be “disruption” or “trouble”. We discussed that formula in committee. The amendment should read, “but also in the event of severe disruptions on the financial markets in a given country where IMF assistance may prove necessary and effective”. Essentially, the amendment is based on Amendment No. 2 in which Mr Gusenbauer emphasised that the IMF had important tasks, which are to introduce an orderly procedure for the rescheduling of debt by certain countries and to look at the establishment of an international panel. As I support the amendment, I hope that the Council of Europe will support that proposal and the IMF in bringing it to fruition.
If we support Amendment No. 2, we must make my amendment to paragraph 3 of Amendment No. 4. We are discussing only the control function of the IMF. However, I want to emphasise that the IMF should actively take preventive action. The IMF must take action to prevent financial crises.
We cannot avoid the second tax, the aim of which is to assist countries in difficulty in solving their financial problems.
THE PRESIDENT (Translation). – Thank you. Does anyone wish to speak against all the amendments?
That is not the case.
What is the opinion of the committee?
Mrs ZAPFL-HELBLING (Switzerland) said that the committee had agreed to all four amendments.
THE PRESIDENT (Translation). – We shall vote first on Amendment No. 3.
The voting is open.
Amendment No. 3 is adopted.
We shall now proceed to vote on Amendment No. 4 in the modified form proposed by Mr Wielowieyski.
The voting is open.
Amendment No. 4, in its modified form, is adopted.
We shall now proceed to vote on Amendment No. 1.
The voting is open.
Amendment No. 1 is adopted.
We shall now proceed to vote on Amendment No. 2.
The voting is open.
Amendment No. 2 is adopted.
We shall now proceed to vote on the draft resolution, as amended.
The voting is open.
The draft resolution in Document 9478, as amended, is adopted.
6. Parliamentary scrutiny of international institutions
THE PRESIDENT (Translation). – The final item of business this afternoon is the debate on the report on the parliamentary scrutiny of international institutions presented by Mr Toshev on behalf of the Political Affairs Committee (Document 9484 and addendum) with an opinion presented by Mrs Zapfl Helbling on behalf of the Committee on Economic Affairs and Development (Document 9485).
The list of speakers closed at 12 noon today. Sixteen names are on the list, and one amendment has been tabled. I remind the Assembly that we have already agreed that, in order to finish by 7 p.m., we shall interrupt the list of speakers at around 6.45 p.m. I call Mr Toshev, the rapporteur. You have eight minutes.
Mr TOSHEV (Bulgaria). – The resignation of the European Commission on 16 March 1999 and the street demonstrations in Seattle during the third ministerial conference of the World Trade Organisation show that it is time to have a serious debate to address the problem of the functioning of international institutions.
Most people are not aware of the purposes and work of the organisations or the reason for their existence. Some deputies, despite being directly elected representatives of the people, are not paying sufficient attention to the organisations’ work. In some cases, it is difficult for them to gain access to information concerning international institutions. Obviously, that is unacceptable.
Those problems mean that the gap between international institutions and society is increasing. The lack of transparency leads to a lack of understanding and of public support for the institutions’ activities. A number of problems on a continental and global scale, which call for co-operation and the effectiveness of national policies to be increased, make the success of the existing institutions in addressing this issue a matter of paramount importance.
Parliamentary scrutiny and involvement in the work of international institutions, as well as their openness to the media and NGOs, could make the institutions more accountable. That could make the decision-making process more transparent and promote public interest in their work, leading to further support for their aims.
Some time ago, I discussed the issue with Ms Marta Ruedas from the United Nations Development Programme. Her opinion is that parliamentarians could achieve those general goals if they strengthened their control over those who exercise power – the representatives of their Governments in the institutions. I entirely agree. It is both a right and a duty for MPs to hold regular debates in their national parliaments and committees on the various aspects of the work of international organisations. The Deputies have the right to receive information and to consider the work of their national representatives there.
The next aspect on which I would like to touch is the direct involvement of parliamentarians in the work of international institutions through parliamentary assemblies. This report and that of Mrs Severinsen underline the importance of and the need to achieve a parliamentary dimension of the United Nations through the inclusion of parliamentarians from the government majority and from the opposition in national delegations to the UN General Assembly. Few member states, even of the Council of Europe, have deputies in their delegations to the General Assembly.
I must say that there is a need to improve the interaction between national delegations to the parliamentary assemblies and the committees in their national parliaments. In that respect, I must refer to the initiative launched at the sixth conference of the Mediterranean and Black Sea basins – the so-called Varna process. It was proposed that, under the auspices of the Parliamentary Assembly of the Council of Europe, committees from the national parliaments of member and even non-member states should meet to debate specific issues. In my opinion, that is a good idea and it should not be forsaken.
The next aspect is that some international organisations, such as the World Trade Organisation, do not have a parliamentary dimension. At a joint meeting in Canada in 2001, the common position of the representatives of the Parliamentary Assembly of the Council of Europe and of Canadian deputies was that it is a good idea to support the Inter-Parliamentary Union in respect of the establishment of a WTO parliamentary assembly.
The Committee on Economic Affairs and Development regularly considers the work of the Organisation for Economic Co-operation and Development and the European Bank for Reconstruction and Development, and the Assembly frequently debates those affairs, but other organisations, such as the World Bank, the European Investment Bank and the IMF, which the Assembly is debating, definitely need much greater parliamentary scrutiny. We should consider strongly recommending that the work and the budgets of the various international financial institutions be discussed in the national parliamentary budgetary and financial committees.
Returning to continental level, we commend the European Parliament as the first directly elected international parliamentary institution whose powers should be enhanced. We call on the European Parliament to strengthen its co-operation with the national parliaments, which are responsible for adopting national legislation. In that respect, the ideas on creating an upper chamber of the European Parliament representing the national parliaments, or an EU parliamentary assembly to scrutinise the work of European institutions, should be carefully considered.
The amendment proposed today by Mr David Atkinson combines both options by suggesting the creation of an upper chamber of the European Parliament not as an additional, complicating level of the EU decision-making process, but as a parliamentary body to scrutinise EU policy.
Our Assembly should continue consistently to raise those issues. As a follow-up to today’s debate, specific steps and action need to be taken, especially discussions on the matter in the national parliaments. Our recommendations aim at returning international organisations to the citizens to whom they belong. Thank you very much for your kind attention.
(Mr Jurgens, Vice-President of the Assembly, took the Chair in place of Mr Puche)
THE PRESIDENT. – Thank you. I call Mrs Zapfl-Helbling to present the opinion of the Committee on Economic Affairs and Development. You have three minutes.
Mrs ZAPFL-HELBLING (Switzerland) said that her committee had produced an opinion on the report. The committee supported the development of a parliamentary dimension to the activities of EBRD, IMF and other organisations. If members of parliament were willing to appear before international fora so should international organisations. It was important to emphasise democratic accountability if suspicion and distrust of organisations were to be reduced. Organisations such as the Council of Europe had to examine how they could make themselves more accountable. Her committee supported visits by national parliament delegations to places such as the United Nations. She supported the draft resolution.
THE PRESIDENT. – Thank you. I call, first, Mr Bühler, who will speak on behalf of the Group of the European People’s Party.
Mr BÜHLER (Germany) said that the report addressed a topical issue, namely the democratic deficit. Ordinary people felt isolated from, and left out of, the decisions that affected them. This was reflected in voter apathy and a low turnout at elections. The turnout at the European Parliament elections was an example. If this trend was not reversed, extremist parties would prosper. The word globalisation had attained a negative connotation, but globalisation had its positive aspects too. The Assembly should strive for the globalisation of human rights and civil standards. The UN had to find a role for parliamentarians as well as governments. He thanked those colleagues who had been trying to achieve this on behalf of the Council of Europe and the European Parliament. There were various examples of deficiency of parliamentary oversight in relation to Commission policy. For example, the European Parliament had a crisis remit but no effective oversight over matters such as peace-keeping missions. The Dutch Foreign Minister had recommended a policy review; this was progress but greater co-operation was needed between parliamentarians and international organisations. It was necessary to work towards the globalisation of democracy.
THE PRESIDENT. – Thank you, Mr Bühler. I call Mr Danieli on behalf of the Liberal, Democratic and Reformers’ Group.
Mr DANIELI (Italy) thanked Mr Toshev for his report which highlighted the key issue of globalisation and its irreversible nature. The analysis started from a basic premise concerning the growing power of multinational organisations in tandem with a growing democratic deficit. However, it was important to take a differentiated approach to such matters. It was not just a case of power increasing for all multi-national and international organisations. Some organisations were seeing an increase in power while others were seeing their credibility, resources and power questioned. Thus the International Monetary Fund, the World Bank, the World Trade Organisation and the Paris Club were seeing their powers untouched and increased, while the United Nations and many of its agencies were being challenged. Globalisation therefore had to be perceived as a multi-layered issue, involving economics but also the rights of individuals, communities and peoples. What was actually the hub of the debate was the clash between these layers and the complexity that this entailed.
Some commentators attempted to reassert the power of the nation state in terms of the international arena. This was simplistic and a retrograde step.
THE PRESIDENT. – Thank you Mr Danieli. I call Mrs Ragnarsdóttir on behalf of the European Democratic Group.
Mrs RAGNARSDÓTTIR (Iceland). – Mr Toshev’s excellent report deals with a topic of great importance and relevance. The so-called democratic deficit has been a recurrent theme in public debate for many years. To my regret, a debate is necessary. There are many signs on the horizon that international institutions in general and pan-European multinational institutions in particular suffer from a serious democratic deficit. That is why this issue is so pertinent to us as nationally elected representatives.
The sheer volume and complexity of the issues dealt with in institutional settings is such as to put great strain on prudent parliamentary scrutiny and oversight. Not all regional and international institutions are as fortunate as the Council of Europe, in which an army of able and willing parliamentarians make it their business to scrutinise matters effectively. Our constituents expect us to be extremely vigilant on these matters, not least because decisions taken in international institutions increasingly influence the lives of hundreds of millions of citizens. What is often sorely lacking from those decisions is the voices of those people. Those voices should be heard through us – the nationally elected representatives. For that reason I fully concur with the rapporteur’s conclusion that the imbalance between the growing power of international institutions and the absence of democratic scrutiny of their decisions constitutes a major challenge for democracy.
In that respect, I applaud the focus on the need for effective parliamentary scrutiny of intergovernmental financial institutions, which are becoming increasingly globally important as our economies become increasingly interconnected and interdependent. As the draft resolution states, transparency and accountability are necessary requirements if those highly important institutions are to enjoy public support.
I want to add another dimension to the debate. It is equally important that we parliamentarians scrutinise the work of international institutions with the purpose of minimising the duplication of work. In Europe today, there is an alphabet soup of intergovernmental organisations. There is relative competition among those institutions as regards financing, visibility and, ultimately, public support. We could call it inter-institutional rivalry. In that respect, it is pertinent that parliamentarians have oversight to avoid the tendency for work to be duplicated. We must ensure transparency and full productivity for our money - as guarantors of the taxpayers’ money, it is our duty to stand firm, give guidance, add our voices and provide the necessary scrutiny.
Here, it is important to mention the role of the European Union and the introduction of an inter-parliamentary chamber to the European Parliament. I agree with that proposal, but it is of the utmost importance that it does not undermine the work and independent status of the Council of Europe, the principle guarantor of human rights in Europe.
THE PRESIDENT. – Thank you. I call Mrs Mintas-Hodak of Croatia.
Mrs MINTAS-HODAK (Croatia). – First, I congratulate the rapporteur, Mr Toshev, on his excellent work and extensive overview of parliamentary scrutiny of different international political and financial organisations.
I am sure that we would all agree that one of the main features of our times is the existence of many worldwide or regional international institutions and treaty-making conferences dealing with many different issues, which are mainly a result of the accelerating process of overall globalisation. There is no doubt that policy making is tending to shift from a national to an international level.
Since decisions taken by those institutions influence national policy and thus affect the lives of millions of citizens, who are often poorly informed about them and have insufficient or no influence over their creation, the far-reaching implications of this issue should be the core interest of every parliamentarian who is accountable to his electorate and devoted to democratic values.
I strongly support opening up the discussion on the issue in the Parliamentary Assembly of the Council of Europe, as an important contribution to a wider public debate at national and international level on how that so-called “democratic deficit” in the international institutions may be overcome in future.
An extensive analysis of existing parliamentary control mechanisms in major political and financial institutions leads us to conclude that there are a number of deficiencies, which make parliamentary scrutiny deficient. To enhance transparency and accountability and the accessibility of information, the general recommendations contained in this report clearly show that the role of both national parliaments and international parliamentary bodies should be strengthened.
It is useful to suggest that those national parliaments that still do not follow or comment on the work of the international institutions concerned should have regular debates on the policies and activities of different international organisations, or even set up special committees to follow the work of such institutions.
The Parliament of Croatia discusses the activities and decisions of different international organisations and regional initiatives from time to time – through various committees – particularly their relationship with Croatia on the basis of government reports. Furthermore, bilateral parliamentary visits and meetings with other parliaments contribute to more co-ordinated efforts in various multilateral forums.
The problem that we still face is one of the government having a decision-making power while negotiating agreements with various international financial institutions with no parliamentary input or control. For other countries, the problem might be the binding effect of some decisions taken by other international institutions, for example the EU.
It would be useful to recommend that national parliaments should hold regular consultations between parliamentary representatives and the national executive bodies that participate in decision-making processes at an international level. Such a mechanism would be of crucial importance for the preservation of transparency and would contribute to greater parliamentary involvement in the work of the international institutions concerned.
Moreover, with a view to strengthening the controlling powers of national parliaments, our governments should be encouraged to consult our parliaments on early drafts of planned international legislation or agreements.
As guardians of democracy and a means to institute checks and balances on other branches of power, we must find ways further to develop the interaction mechanisms that already exist between executive authorities or citizens. If necessary, we must also put in place new and more effective mechanisms.
There is no doubt that scrutiny must start at a national level, but it must also be improved at an international level. International parliamentary bodies should oversee the work of different international organisations. We must be proud that the Parliamentary Assembly of the Council of Europe is setting a good example in that regard.
Finally, to preserve the trust of our citizens in international institutions, it is our responsibility to focus their attention more closely on all our work.
THE PRESIDENT. – Thank you. I call Mr Schloten.
Mr SCHLOTEN (Germany) said that parliamentary control of the United Nations was very important. For a number of years he had tried to bring the UN closer to the world’s citizens, something which national governments had never been able to do. There was no parliamentary dimension to the UN’s work. The Inter-Parliamentary Union had been attempting to exercise greater control over the UN for a number of years, and the current Secretary-General, Mr Kofi Annan, held the view that the IPU should be the parliamentary assembly for the UN. This was the motivation behind his amendment. He regretted that there was a minor error in the wording of the amendment and that was why he would be proposing an oral amendment to it later in the proceedings.
THE PRESIDENT. – Thank you. I call Mr Loutfi.
Mr LOUTFI (Bulgaria)said that the report had not been easy to write. It tackled major issues, because international institutions had a particularly important role, and had more effect than ever on the policies of individual states. There was a constant lack of information on institutions which created a democratic deficit. Citizens did not have enough information and there was a lack of mechanisms to help national representatives have an input into international institutions. A monitoring mechanism was needed to address the balance between important institutions and the scrutiny of them, or lack of it. It was important at this initial stage to enforce the role of national parliaments. Parliaments should be more effective, should reinforce their role, should have views on the proceedings of the institutions and discuss their activities. Better liaison between the Council of Europe and the Committee of Ministers would be an advantage. The European Parliament was scrutinised. There should be committees to discuss particular problems. Greater co-operation between parliaments of different countries and various structures, for example the OSCE and the NATO Parliamentary Assembly, was necessary. Parliaments worked with the UN through parliamentarians. Regional co-operation was also essential. He supported the resolution and was confident that comments made in the plenary session would lead to its implementation.
THE PRESIDENT. – Thank you. I call Mr Andican.
Mr ANDICAN (Turkey). – I congratulate Mr Toshev on his well-prepared and comprehensive report, which gives us an overview of the nature of the problem stemming from insufficient transparency and accountability in the decision-making processes and activities of most international organisations, and presents possible ways of restoring citizens’ confidence in them. Indeed, the more international organisations respond to general public concern in today’s world, the more important it is to ensure a high degree of democratic control.
Since the emergence of global issues has necessitated greater international co-operation, complaints have been made about the lack of transparency and the secret intergovernmental nature of negotiations and meetings in international forums. Parliaments have limited, and sometimes even no say in those processes. That is a real failure in participatory democracy. There is a danger of creating a power vacuum in democracies where the necessary parliamentary input is lacking in the decision-making process, leading to democratic deficit. It is a worrying fact that the link between decision-making bodies and parliaments is less to the fore when international co-operation among countries achieves any progress.
There is an evident democratic deficit in most of the international institutions whose decisions increasingly affect the everyday lives of millions of citizens. There appears to be widespread neglect of the mechanisms to ensure political and social accountability that are necessary to secure legitimacy and public consent.
However, it is also observed that the concept of parliamentary scrutiny is sometimes met with reluctance by some and seen as an interference in the decision-making process, but it should not be forgotten that it is one of the structural requirements of democracies. For participatory democracy to work, parliaments must be involved in the decision-making process.
I strongly support all the recommendations in the report for ensuring effective parliamentary scrutiny of the work of international institutions. We need more transparency and accountability and we must broaden the knowledge and understanding of citizens through enhanced opportunities for access to information. Those are the tools that we need to ensure public support for policies and participation in the activities of international institutions.
THE PRESIDENT. – Thank you. I call Mr Van den Brande.
Mr VAN DEN BRANDE (Belgium). – We must congratulate Mr Toshev on his excellent report, which contains not only intentions but realistic guidelines for strengthening transparency and democratic control. As Mr Bühler said, globalisation is a positive evolution, but are we really becoming a global society, or are we only interested in the light side of the moon, and not the dark one? Is there is a split between the developed countries and those of the south? Is there is a split between decision making and what is in fact needed by the population?
Nevertheless, we can support the report and the resolution and recommendation. There are often great differences between what we intend and the reality. Parliaments must be involved in the international process, but national parliaments often focus more on domestic issues than on international ones. They often lack a logistical or scientific basis.
International decision-making often results not in a last-minute ticket but a last-minute decision, which is not always compatible with the parliamentary agenda. There are good guidelines in the report, resolutions and recommendations for achieving a proactive approach under parliamentary control to achieve transparency in international decision-making. We have previously discussed the parliamentary focus of the United Nations in relation to the important reports on the EBRD, the IMF and the World Bank. It is important that we participate as parliamentarians - not as experts or observers, but as members of delegations. That is the only way in which to achieve global decision-making and decision-shaping. Our discussion on the European Convention also reflects the need for transparency and better international governance. We need a mental conversion and must work to achieve that in our national parliaments, councils and parliamentary assemblies.
THE PRESIDENT. – Thank you. I now interrupt the list of speakers. Of those on the list who are present in the Chamber, I see only Mr Kalkan and Mr Varela I Serra. They have a right to submit their speeches in typescript to the Table Office in Room 103 within twenty-four hours of the end of the debate. I call Mr Toshev, the rapporteur, to reply.
Mr TOSHEV (Bulgaria). – I am grateful to everyone who took part in the debate for their views. I thank Mr Perin, Mr Sich, Mr Chevtchenko and Mrs Entzminger from the Political Affairs Committee for helping me to prepare the report. Taking Mr Bühler’s point about ordinary people feeling that others decide things instead of them, we should do our best to make them believe that everything is in their hands. They should be aware of their rights and respect the rights of others. It is up to us as parliamentarians to achieve that after the debate. I am grateful to Mr Van den Brande, who said that we should begin to pursue that goal. Today's debate is only the start of subsequent discussions.
When we return to our countries, we should try to organise debates in our parliaments to achieve parliamentary scrutiny of international institutions. It is up to us as parliamentarians to take that initiative. We are representatives of the people and should play a responsible role. I am grateful to all the speakers who took part in the debate, especially those who spoke about the organisation mentioned by Mr Danieli. General recommendations are covered by our draft resolution and I hope that speakers will be satisfied with it. I trust that our goal will be achieved.
THE PRESIDENT. – I call Mrs Zapfl-Helbling.
Mrs ZAPFL-HELBLING (Switzerland) said that she had nothing to add to what had already been said.
THE PRESIDENT. – I call Mr Jakič.
Mr JAKIČ (Slovenia). – Since this topical motion was submitted to our committee, we have dealt with it sensitively in trying to work out the balance between the growing power of international institutions and the need for democratic scrutiny. I, too, believe that Mr Toshev, the rapporteur, prepared a good report and congratulate him and his secretariat.
The report provides some answers about how parliamentarians should play a leading part in the implementation of democratic mechanisms to control national institutions and international institutions such as the Organisation for Economic Co-operation and Development, the IMF and the World Trade Organisation. I share the view that should try to restore people's trust in those institutions and a reduction of their sometimes violent reaction to them. I therefore expect positive voting on the report on parliamentary scrutiny of international institutions.
THE PRESIDENT. – Thank you, Mr Jakič. The debate is closed.
The Political Affairs Committee has presented in Document 9484 a draft resolution to which one amendment has been tabled: Mr Schloten has made an oral amendment, which I shall discuss. A draft recommendation and a draft order have also been tabled and will be taken in that order. I remind you that speeches on amendments are limited to one minute.
Mr Schloten has submitted the following oral amendment: in paragraph 8, after sub-paragraph b, insert a new sub-paragraph as follows:
“in the medium term, to make the Assembly of the Inter-Parliamentary Union the parliamentary dimension of the United Nations”.
I remind the Assembly of Rule 34, which enables the President to accept an oral amendment or sub-amendment on the grounds of promoting clarity, accuracy or conciliation. However, I have some problems because the proposed amendment would be an addition to the report and stresses a new possible solution to the problem of parliamentary scrutiny of the United Nations in the report. However, there is no suggestion from the rapporteur that the IPU should play that role.
I wonder whether I can reasonably accept the oral amendment because of the strict rules governing such amendments. It does not promote clarity, and there is nothing unclear or inaccurate about the existing text. I do not see that there is a matter of conciliation to be considered.
Mr ATKINSON (United Kingdom). – On a point of order, Mr President.
THE PRESIDENT. – A real point of order?
Mr ATKINSON (United Kingdom). – You will be the judge of that when I refer you to the draft order on the matter.
THE PRESIDENT. – I shall consider that, but first I ask whether the Chairman of the committee or the rapporteur want to give their opinion.
Mr TOSHEV (Bulgaria). – I shall not oppose the oral amendment. However, I realise that it will be difficult for it to be passed.
THE PRESIDENT. – Mr Atkinson’s remark was very appropriate. Paragraph a of the draft order instructs the Political Affairs Committee “to give detailed consideration as to how a parliamentary dimension can be introduced into the work of the United Nations”. I am afraid that I have to be strict and say that the oral amendment does not confirm to Rule 34, and I cannot allow it.
We come now to Amendment No. 1, tabled by Mr Atkinson, Mr Huseynov, Mr Seyidov, Mr Hladiy, Mr Lomakin-Rumiantsev, Mr Nazarov, Mr Tkáč, Ms Palečková, Mr Telek, Mr Andican, Mr Cerrahoğlu, Ms Tevdoradze, Mr Malgieri, Ms Ragnarsdóttir, Mr Kvakkestad, Mr Dalgaard, Mr Libicki, Mr Goulet, Ms Akgönenç, Sir Sydney Chapman, Mr Rogozin, which is, in the draft resolution, delete paragraph 10, and insert the following new paragraphs:
“Regarding the European Union, the Assembly considers that a role for national parliaments should be introduced to bring the ‘EU closer to the people’. This can be done by introducing an inter-parliamentary chamber to the European Parliament as a body of representatives of national parliaments to form, in due course, a second chamber.
This inter-parliamentary chamber could have responsibility for scrutinising policies that continue to be intergovernmental and areas in which competence is complementary or shared such as foreign affairs and matters concerning the entire continent.”
I call Mr Atkinson to support Amendment No. 1.
Mr ATKINSON (United Kingdom). – In paragraphs 13 and 14 of the explanatory memorandum of his report, Mr Toshev refers to the democratic deficit in the European Union and advocates better representation of national parliaments in the work of the EU. My amendment proposes how that can be done in two new paragraphs that will replace paragraph 10. It proposes the introduction of an inter-parliamentary chamber to the European Parliament which would scrutinise policies but continue to be intergovernmental, such as foreign affairs, defence, security and combating crime.
THE PRESIDENT. – Does anyone wish to speak against the amendment?
That is not the case. It is not surprising that it has been signed by most members of the European Union.
What is the opinion of the committee?
Mr JAKIČ (Slovenia). – The committee is in favour.
THE PRESIDENT. – The voting is open.
Amendment No. 1 is adopted.
We will now proceed to vote on the draft resolution, as amended.
The voting is open.
The draft resolution in Document 9484, as amended, is adopted.
We will now proceed to vote on the whole of the draft recommendation contained in Document 9484.
The voting is open.
The draft recommendation in Document 9484 is adopted.
We will now proceed to vote on the draft order contained in Document 9484.
The voting is open.
The draft order contained in Document 9484 is adopted.
I congratulate the rapporteur and the Political Affairs Committee.
The committee will not meet this evening at 7 p.m. It will meet at 2 p.m. tomorrow.
7. Date, time and orders of the day of the next sitting
THE PRESIDENT. – I propose that the Assembly hold its next public sitting at 10 a.m. with the orders of the day that were approved on Monday.
Is that agreed?
It is agreed.
The sitting is adjourned.
(The sitting was closed at 6.53 p.m.)