AA14CR26

AS (2014) CR 26

2014 ORDINARY SESSION

________________

(Third part)

REPORT

Twenty-sixth sitting

Thursday 26 June at 3.30 p.m.

In this report:

1.       Speeches in English are reported in full.

2.       Speeches in other languages are reported using the interpretation and are marked with an asterisk.

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.

The contents page for this sitting is given at the end of the report.

(Ms Brasseur, President of the Assembly, took the Chair at 3.30 p.m.)

      The PRESIDENT* – The sitting is open.

1. Challenges for the Council of Europe Development Bank

      The PRESIDENT* – I welcome Mr Rolf Wenzel, Governor of the Council of Europe Development Bank – in other words, our Bank. Thank you for being with us, Governor. We had the pleasure of meeting in Paris to exchange our views. It is important to continue these contacts to ensure that the parliamentary dimension is taken on board.

      I am therefore delighted to open the first item of business this afternoon, which is the debate on the report entitled “Challenges for the Council of Europe Development Bank”, presented by Mr Tuur Elzinga on behalf of the Committee on Social Affairs, Health and Sustainable Development. After the rapporteur has spoken, we will have the pleasure of hearing from you, Governor. Subsequently, there will be interventions by members.

      I call Mr Elzinga, rapporteur. You have 13 minutes in total, which you may divide between the presentation of the report and the reply to the debate.

      Mr ELZINGA (Netherlands) – I, too, welcome the Governor of the Council of Europe Development Bank, Mr Wenzel, and the vice-governor, Mr Ruiz-Ligero, to our Assembly. We had the pleasure of hearing from the vice-governor when I presented my last report.

      I thank the Governor and vice-governor for the good co-operation that I had with the Bank, its management and its staff in preparing my report, and for the exchange of views that the Committee on Social Affairs, Health and Sustainable Development had with the Governor earlier this year. I also thank the governing board and administrative council of the Bank, as well as the secretariat of the partial agreement, for their fruitful co-operation. I am pleased to see a number of ambassadors, as members of the Bank’s governing board, taking an interest in this debate.

I am very pleased by the interest that the Assembly has in debating this report. We have already had good discussions on the Bank in committee meetings. I am convinced that these discussions are necessary to increase our knowledge of our Bank and its visibility to its member States’ parliamentarians. The discussions will help the Bank to get even more involved in the Council of Europe’s priorities that are being discussed in the Assembly.

Even more importantly, this debate underlines the democratic accountability of our member States’ multilateral development bank. I call it “our Bank” because the Council of Europe Development Bank (CEB) is a multilateral development bank that is closely linked to the Council of Europe. It has a unique social vocation that is in line with the Council of Europe’s values.

Although the Bank has its own separate legal personality and full financial autonomy, it is a partial agreement of 40 member States, the shareholders, and thus has a large overlap with the geographical area of the Council of Europe. All members of the Council of Europe may become members of the Bank and I highly recommend that the countries that are not yet members of the Bank utilise that privilege.

Furthermore, the CEB comes under the supreme authority of the Council of Europe and all projects must be in conformity with its political and social aims. Therefore, the members of the administrative council, who as representatives of the Bank’s shareholders have to approve all project loans, need to receive an opinion from the Secretary General of the Council of Europe first. Unfortunately he is not present, but I know that he takes an interest in the Bank. Through you, Madam President, I congratulate Mr Jagland on his re-election. I am confident that the Bank is looking forward to its continued close co-operation with him.

Let me give a couple of examples of the social added value of the Bank through its loans. Just two weeks ago, the administrative council approved loans to the Government of Albania in favour of Tirana University Hospital; to the Government of Bosnia and Herzegovina to facilitate access to housing for young graduates; to banks in Bosnia and Herzegovina and in Bulgaria to finance productive investments by micro and small businesses throughout both countries in order to stimulate employment creation; to a department in France to co-finance an investment programme in the areas of family affairs and education; and to the Government of Lithuania in the form of a public sector financing facility – a new financial instrument developed by the CEB – to co-finance a public investment infrastructure programme in the areas of culture, sport, health and education, as well as for administrative and judicial buildings. As you can see, all the projects are very much in line with the social aims and values of the Council of Europe, with the people in its member States benefiting directly.

At the administrative council meeting, to which I had the pleasure to be invited, the Bank also showed that it has the flexibility to adapt to emergencies. Discussions were held on the situation in Bosnia and Herzegovina, Croatia and Serbia following the recent devastating floods in the region. The council approved the restructuring of loans to those countries to help them cope with the impact of the floods. Additionally, a donation to International Trust Fund Enhancing Human Security was approved. The donation will be used for the resurveying and mapping of areas in Bosnia and Herzegovina where land mines were displaced by the floods.

I hope that members have read my report and studied the draft resolution. I will give you an idea of the main findings and recommendations. I found that the Bank is in good shape and is adapting to fast changes in the financial markets. Despite being downgraded by the ratings agencies from AAA to AA+ with a stable outlook because of the downgrading of many of its shareholders and borrowers, the Bank can still access capital on the most favourable conditions and all loans are still being repaid.

The Bank has adapted by putting more emphasis on the social added value of the projects coming from all of its members and by diversifying the emphasis that is put on the country that is applying, recognising the varying effects of the financial and economic crisis on different countries and regions. The demand for new loans dropped initially because of the unwillingness or inability of members affected by the crisis to take on new loans, but the interest in new projects is picking up again.

The recommendations concentrate on three main themes. In order to further increase project quality and its alignment with the Council of Europe’s social aims and values, the Bank should invest in even stronger co-operation with the Council of Europe, the Assembly, the Congress of Local and Regional Authorities of the Council of Europe, and the Commissioner for Human Rights. In order to further increase project quality, the Bank should invest in increasing its visibility to governments, but also to parliaments and regional and local authorities. In order to increase its flexibility to adapt to rapid changes in its environment, the Bank should invest in streamlining its governance, since the current governing structures and procedures date from a time when the economy was more stable, capital markets were much less volatile, and the Bank had only eight countries as members, rather than the current 40.

      I am confident that the suggestions made in the report and the draft resolution will help the Bank to advance its agenda to become even stronger in its niche activities. I hope of course that you will agree. I again thank the Bank and its organs and the staff of the committee for their valuable inputs into the report. I am looking forward to the address of the Bank’s Governor to our Assembly and to the comments of its members

      The PRESIDENT* – Thank you, rapporteur. You have six minutes left. I now have the pleasure of giving the floor to the Governor.

      Mr WENZEL (Governor of the Council of Europe Development Bank) – I thank you, Madam President, for inviting me to address the Parliamentary Assembly during this debate on the Council of Europe Development Bank. It is a great pleasure to be here today. In recent months, I have had separate bilateral meetings with the President of the Parliamentary Assembly and with the Committee on Social Affairs, Health and Sustainable Development in a spirit of constructive and frank dialogue. Those meetings and my presence at the debate today reflect the importance that the CEB attaches to its relationship with the Council of Europe.

      I listened carefully to the presentation of the report by the rapporteur, and I thank the Committee on Social Affairs, Health and Sustainable Development, and Mr Tuur Elzinga in particular, for their continued interest in the CEB and its work. I welcome the report and its observations about the Bank. I am especially pleased that it recognises the concrete steps that the CEB has taken since the committee’s last report in July 2010. I share the sentiments of the rapporteur’s concluding remarks about the remaining challenges for the Bank. I am also happy that the report acknowledges and supports my long-term vision for the CEB. It will make a significant contribution to the modernisation process that the Bank is undergoing.

      Since the previous report of the Committee on Social Affairs, Health and Sustainable Development in 2010, and following my assumption of duty as Governor at the end of 2011, important developments have taken place relating to the structure and function of the Bank. In my statement, I will refer briefly to some of those developments and to their consequences for the work of the Bank, by way of response to the committee’s recommendations addressed to me in paragraph 7.2 of the report’s draft resolution.

      As the only international financial institution with an exclusively social mandate, the CEB has an important role to play. Through its activities, for several decades now, the CEB has established itself as the social development bank in Europe. Co-ordinated action to address social disparities is key for the Bank, so that it can support the most vulnerable populations across the continent. To give you a recent example, responding promptly to the floods in Bosnia and Herzegovina, Croatia and Serbia, the CEB, in close co-operation with the Council of Europe and the permanent representatives of the three States, expressed its solidarity to the three countries and extended a package of support measures to them. In addition to emergency financial assistance, the measures offer support for long-term reconstruction. Specifically, the Bank approved a €100 000 grant to Bosnia and Herzegovina to finance the resurveying and mapping of areas where land mines were dislocated during the floods, now posing a threat to the lives of local populations. Throughout the process, I kept the Secretary General of the Council of Europe and the head of the secretariat of the partial agreement informed about our course of action.

Promoting social cohesion and solidarity in Europe was never an easy challenge. The financial crisis and its consequences for European countries and their citizens have made the task even more challenging. The pressure is on to remain focused on our goals and to deliver results, while maintaining the financial soundness of the institution. It is important to enhance the visibility of our work, as the report also points out, and to ensure that information about our activities is more broadly diffused. A CEB kiosk has been set up in the exhibition area just outside this Chamber. Some of our recent publications are on display there, including the Governor’s report and corporate responsibility report for 2013, the CEB development plan for 2014- 2016, our latest technical studies and our quarterly magazine. CEB staff are on hand to provide information and to answer questions about the Bank and its work. I hope that all of you will have an opportunity to stop by, if you have not done so already. At the international level, the CEB makes every effort to be present at major relevant events. On such occasions, it is represented by its vice-governors or by me. That said, I also count on our member countries to support efforts to enhance the visibility of our work.

Co-operation between international financial institutions and the European Union is of strategic importance to the CEB. The European Union’s multiannual financial framework for 2014 to 2020 is still an essential reference for IFIs active in Europe and, given the constraints on national budgets, it will remain relevant. In central and south-eastern Europe, structural funds will continue to constitute the major source of public investment. Given our location, sphere of activity and membership, it goes without saying that we work closely with the European Union, for example in the Western Balkans Investment Framework. Strengthening our relationship with the European Union is ongoing, for example through the provision of a combination of loan and grant support for projects with the highest social impact potential. We firmly believe that that is the way forward: working closely with our member States and our partners to encourage public investment in social development, to stimulate growth and, ultimately, to advance social integration.

      As the Committee’s report states, the Bank has remained financially sound, even during the economic downturn. In the appendix to the report there are some key figures for 2010 to 2013. According to last year’s financial results, net profit in 2013 reached €111 million, which was entirely allocated to the Bank’s reserves, thus increasing equity to €2.5 billion, an increase of 9% on 2012. Loan disbursements totalled €1.9 billion in 2013, representing an increase of 16.5% compared with the previous year; 51% of loans were in favour of CEB target member countries, which are located in central, eastern and south-eastern Europe.

At this point, I stress that the Bank receives no aid, no subsidy or nor any budgetary contribution from any of its member States. That is why it is so essential for the CEB to allocate net profits to its reserves, as decided unanimously by the governing board and the administrative council, following my proposal. The necessary resources for the financing of social projects are raised on the international capital markets in the form of borrowing. The CEB’s excellent credit rating means that the Bank can raise funds on favourable terms, which in turn allows it to lend money to its members on equally favourable terms, thereby significantly reducing the cost of financing social projects. Turning to our lending activity, the Bank’s performance remains strong, especially if you bear in mind that fiscal consolidation and deleveraging are ongoing in many of our member countries. Sixteen projects have been approved so far for this year, totalling about €2.3 billion. In line with the objectives of our development plan, 73% of that amount has been in favour of target group countries.

      The committee’s report is right to state that we are proud of the Regional Housing Programme, the most important initiative undertaken by the international community in the Western Balkans housing sector in the past 10 to 15 years. It is noteworthy that the European Commission and other donors have entrusted the CEB with the management of this major programme. I am pleased to report that the first projects are expected to be implemented by the end of this year. Nor is the RHP the only donor-funded programme administered by the CEB. Donors have assigned to the Bank the management of 38 different fiduciary accounts for specific projects and activities. I take the opportunity to thank all Council of Europe member countries for their trust and recognition of our long-standing commitment to social projects.

The committee’s report also mentioned the prospect of CEB membership enlargement. I welcome the rapporteur’s open encouragement to Council of Europe members that are not yet CEB members to consider joining. I join his call to those countries to reconsider the position vis-à-vis joining the Bank.

I am aware of the challenges that lie ahead for the CEB, but I am also glad to see that the considerable efforts made so far to improve the functioning of the Bank and to enhance effectiveness and transparency have started to bear fruit. As I said at the outset, I agree with the thrust of the committee’s recommendations and the general direction of change that it proposes. I hope that I have shown in my brief address that the steps taken in recent years are going in the same direction. Building on what has been achieved so far, I remain determined to continue along the same path and to facilitate the adaptation of CEB structures and governance to the demands of a changing environment. In my endeavour to make the Bank more relevant and stronger, I hope that I can count on the continued support of the Council of Europe.

      The PRESIDENT – Thank you, Governor, for the information you have given to us. We are looking forward to co-operating with you on our Bank. We now come to the speakers on behalf of the political groups. I call Mr Kox to speak on behalf of the Group of the Unified European Left.

      Mr KOX (Netherlands) – This house of democracy and human rights is discussing its strong relations with a Bank that has an almost triple A rating, on the basis of a very precise report from an esteemed member whose political group is nevertheless not known for its warm relations with banks and the financial sector in Europe. That may look and sound weird but it is not, because it is a special Bank whose main aim is gaining not financial profits for shareholders, but social profits for our citizens and societies. This special Council of Europe Development Bank is our Bank, so discussing its activities in the Assembly is more than worthwhile. I welcome the Governor of the Bank and its other representatives, but also thank them for their work and activities and their effects.

I hope the Bank agrees with the rapporteur’s proposal to strengthen its ties with the Council of Europe and this Assembly in order to maximise its impact and comparative advantage. Continuing improvements in governance and protecting quality is wise advice from the rapporteur to members and the Bank. Will the rapporteur elaborate on how we parliamentarians can, as we should, contribute to the Bank’s policy and to the visibility of its activities, which could use some improvement? How can we, as parliamentarians, increase co-operation between the Council of Europe, the Council of Europe Development Bank and this Assembly? If possible, I would like to know how the Governor believes we can further improve that relationship.

At the end of the debate, if possible, I would like to hear the opinions of the Governor and the rapporteur on co-operation with European Investment Bank, that huge other bank. You, Madam President, and myself and the other leaders of the political groups, visited the EIB during a meeting of the Presidential Committee in Luxembourg. Are there relations with that bank? Is there competition? Could there be more synergy between the work of the little Bank – our Bank – and the big bank of the European Union?

Finally, my group endorses the draft resolution and the proposals made in it. On behalf of my group, I thank once again the rapporteur, Mr Elzinga.

The PRESIDENT – I call Mr Schennach to speak on behalf of the Socialist Group.

Mr SCHENNACH (Austria)* – Mr Elzinga has carried out a very good job of work, and I express the full gratitude of my group to Mr Wenzel. I am sure that colleagues who meet Mr Wenzel are struck by his charisma.

The Bank is of great value. As has been said, it is our Bank. Its achievements are unbelievable. It almost goes without saying that my group fully endorses the recommendations in the report. Do colleagues know of a bank that is open to criticism with regard to social added value, and that looks to create employment? We are called on to approve many programmes and reports, but the Bank is active in integration, the environment and rehabilitation, particularly in the wake of serious natural disasters. The aim of at least one bank in Spain is not to cause young people to be unemployed – the Bank aims to create jobs for disadvantaged people.

The Bank is active in areas where there are human rights problems. For example, it is involved in measures to improve prisons. However, it does not stop there. Another success story is that it grants micro-credit and loans to women, who create employment and always pay the money back. It is extraordinary.

We often discuss refugees and migration and have done so this week. Turkey, Greece, Iceland and Italy were founding members, and even the Holy See is a member. Kosovo is one of the most recent members – it became a member last year. That is one reason we should support the Bank. As an Austrian, I think it is a shame that Austria, like Azerbaijan, is not a member. I promise Mr Wenzel that we are doing everything we can to encourage Austria to join the Bank – it is very much in Austria’s interests to become a member. Perhaps the United Kingdom, Andorra and San Marino could also make moves in that direction. We have a duty to encourage countries that are not members of the Bank to join.

The PRESIDENT – I now call Mr Mendes Bota to speak on behalf of the Group of the European People’s Party.

Mr MENDES BOTA (Portugal) – The Bank was founded long ago in 1956 under another, longer name, but once again it is dealing with refugees and displaced persons. They are not the same type of refugees and displaced persons it helped after the Second World War. They are the victims of the new war of social and economic crises. The Bank continues to have the objective of helping refugees and displaced persons, but it has the additional objectives of job creation, and of helping micro, medium and small enterprises.

Governor Rolf Wenzel can count on the EPP’s support, but we have some remarks to make. Let us begin with paragraph 3 of the draft resolution, which states: “The Assembly notes the Bank’s continued commitment to preserving the level of lending to the neediest countries (notably those outside the European Union)”. How does that match table 3 of the appendix of Mr Elzinga’s report, which states that only three countries – Belgium, France and Spain – all of which are European Union members, and surely not the least developed ones, got 40% of the €2 274 million of CEB loans approved in 2013? Is that because of limitations on increasing public debt in “target countries”, or is it a problem of visibility? Are governments, regional and local authorities, and public agencies aware of the possibility of the Bank financing social projects? How, 58 years after the Bank’s foundation, are eight member States missing from the group of stakeholders?

      The Bank’s strategy should continue to be to address sectoral needs, but it should revise its priorities with regard to geographical areas. Social and economic development levels can no longer be considered from the traditional perspective of eastern and western Europe. Crises and problems of social cohesion can be found all over Europe, cross-cutting so-called rich, poor or emerging countries. In every country, it is possible to find deeply depressed regions that need social help, together with other regions that are not suffering as much from austerity. A regional approach to the allocation of loans from the Bank should be considered.

      The Bank should be careful in relation to public-private partnerships. Please avoid them, Mr Governor. The bad use of this tool in some member States has led to heavy repercussions for long-term costs that have had to be supported by taxpayers. This has given them a bad reputation among the public. A bad reputation is the last asset the Bank needs.

      The report and the draft resolution do not emphasise enough the possibility of the Bank supporting and providing direct funding to public bodies and agencies without relying, whenever possible, on the intermediation of private banks, as Amendment 4, tabled by our colleague Ms Bergamini and others, states.

      We support all the measures contained in the governance reform of the Bank, and the objective of making the requirements on capital adequacy, leverage and liquidity more compatible, so as to enable the financing of projects in favour of youth employment, Roma integration, housing for vulnerable populations, and so on.

The Council of Europe Development Bank is a bank, but it is different from other banks. It brings social added value and combines financial rules with the values and principles of the European Convention on Human Rights. That is the way it is and that is the way it must continue to be, while it counts on us, as parliamentarians, to support it and keep it accountable.

      The PRESIDENT – I call Mr Selvi on behalf of the European Democrat Group.

Mr SELVİ (Turkey) – I thank the rapporteur for his report, which brings the important work of the Council of Europe Development Bank to the fore. The Bank aims to strengthen social cohesion in Europe and constitutes a major instrument for solidarity in Europe. Supporting its 41 member States – the most recent participant is Kosovo, which joined last November – the Bank contributes to the enhancement of social integration via the implementation of socially oriented investment projects.

Although the Bank is the result of a partial agreement of the Council of Europe, the social vocation of the Bank is linked closely to the priorities of our Assembly. It addresses the concerns and problems of all member countries. As underlined in the draft resolution, the work of the Bank is also related to the implementation of the recommendations of our Assembly, as well as those set out by the Secretary General in his 2014 report. Financing social projects and responding to emergency situations also helps to improve living conditions. For example, I am glad to hear that the Bank recently announced a package of measures to help Bosnia and Herzegovina, Croatia and Serbia after they suffered devastating floods.

In recent years, much has been done by our Assembly to tackle several aspects of the economic crisis. While recognising the Bank’s contribution to achieving sustainable and equitable growth, we need to give priority to ensuring the financial strength of the Bank in the prevailing context of economic uncertainty across Europe. On the one hand, this entails contributing, as parliamentarians, to the efforts to expand the membership of the Bank. It is important to have co-ordination between European Union structures and the organs of the Bank. On the other hand, we need to continue to support the work undertaken by the governing boards, administrative council and the Governor.

I also emphasise that governance is a global issue that requires careful consideration and co-ordination with existing structures. While acknowledging the efforts of the rapporteur to contribute to the work of the Bank, we need to bear in mind that any proposal to change the voting system in the Bank’s organs or the reporting of the evaluation mechanism should involve all shareholders of the Bank.

The PRESIDENT – I call Ms Anttila on behalf of the Alliance of Liberals and Democrats for Europe.

Ms ANTTILA (Finland) – Let me begin by congratulating the rapporteur, Mr Elzinga, on a well-prepared and timely report on the challenges for the Council of Europe Development Bank. The Bank has the important task of promoting the mission of the Council of Europe in supporting social development in its member States.

The Bank has a different economic model and it has been challenged by a difficult economic and financial environment. Its niche is social added value projects in member States. It has rightly focused on new challenging social projects, such as those relating to job creation and job preservation in micro, small and medium-sized enterprises. I would welcome an extension of the Bank’s activities to cover Roma integration and social housing projects, as that could offer possibilities for co-operation with the European Union.

Under the current leadership of the Bank, governance issues have progressed. However, as reflected in the report, efforts to address good governance and the rationalisation of the Bank should continue. Fine-tuning its structures and cutting bureaucracy would improve serving the Bank’s aims. Internal reform has been too slow and a fresh look is needed. The voting rules should be changed to be more equal.

The Bank should continue its close association with the Council of Europe to consolidate social cohesion in member States and diminish differences in social development. At the same time, the Bank should improve its visibility and make efforts to become better known. As parliamentarians we can help, but the Bank should focus on promoting its activities in member States by using such initiatives as the information kiosk that is here today.

Let me finish by encouraging those member States who are not yet members of the Bank to consider joining it in the near future.

The PRESIDENT – The rapporteur does not wish to respond now, so I call Mr Rouquet.

      Mr ROUQUET (France)* – I thank the rapporteur and the Governor for their statements. However little known the Council of Europe Development Bank is – our Bank, as some have reminded us – it is an essential tool, something borne out by the objectives assigned to it by its articles of agreement. Its priority is “to help in solving the social problems with which European countries are or may be faced as a result of the presence of refugees, displaced persons or migrants consequent upon movements of refugees or other forced movements of populations and as a result of the presence of victims of natural or ecological disasters.” It also has the vocation of contributing to the implementation of investment projects that have the aim of strengthening social integration, managing the environment, supporting public infrastructure with a social vocation and supporting micro, small and medium-sized enterprises. Naturally in such circumstances I endorse the resolve expressed by the rapporteur and the committee to strengthen the ties between the Bank and the Council of Europe and to continue improving the Bank’s governance as well as the quality of the projects that it funds.

      I commend in particular the proposals to enhance the ties between the Bank and the Commissioner for Human Rights and to provide a mix of loans and grants to projects that are conducive to major social impact. It is an interesting idea that the Bank should bolster the absorption capacity for European structural funds in our member States in priority sectors, even if the problem is far from being a matter only of financial support. The establishment of an honest, effective and impartial State is as much a cultural and political issue as a technical and financial one. For example, the integration of Roma was mentioned and it is evident that the technical dimension of that issue is not what is most important.

Rapporteur, you have put forward specific recommendations and wishes, such as for a new survey to be carried out vis-à-vis the bank’s staff to see whether what appeared to be a somewhat damaged social climate had improved. In such circumstances, would it not be a good idea if, this time next year, you were to report back on your proposals? That would also contribute to increased interaction between the Bank and our Assembly. Perhaps there is already a plan for that. To conclude, I thank our rapporteur for his sterling work on an extremely complex and insufficiently well understood subject.

Mr RECORDON (Switzerland)* – I thank our rapporteur, Mr Elzinga, who has got to grips with a subject that is not well known and that can be quite dry. We have not often discussed this in the main committees of the Assembly, so I am pleased that we are dealing with it in the Chamber today. The Bank clearly carries out useful work by funding projects of social and environmental importance.

      One of the questions posed in the amendments is on the geographical scope of the Bank’s work and direct finance. I urge caution. The Bank has not yet reached a position where it has the means by which to give out funds. I agree with the rapporteur that the number of countries is right. Support should not be exclusive: as the rapporteur outlined, in some areas, such as migrant-related issues, it would make sense for some help to be provided. Countries in the south such as Italy – I am thinking about Lampedusa in particular – have to contend with extreme pressure and the Bank could help them with their need for facilities to carry on the Mare Nostrum operation.

      I am reluctant to support Mr Mendes Bota’s suggestion to open up funding, but perhaps that is because I do not know the subject matter well enough. The Council of Europe Development Bank could help provide extra support where the main funding has already been secured. While drawing on the analytical work carried out by private banks, it could also add its own analysis. That would be an intelligent way of working; otherwise, we will have dual analyses carried out and waste too many resources. I therefore express caution about some of the amendments tabled, but I endorse the report.

      Mr SHAHGELDYAN (Armenia)* – I thank the rapporteur for his excellent work on a topical subject. I will concentrate on three points that are important for those countries that are not members of the European Union, but part of the European neighbourhood programme. First, for us, the Bank’s most important function is the extension of projects for small and medium-sized enterprises. It is important to concentrate on start-ups to offer possibilities to create new jobs. The Bank could greatly influence Armenian banks to extend their level of business in that sector.

      Secondly, as well as credit and financial resources, the Bank could propose the transfer of banking technologies. In Armenia, banking is one of the most advanced and stable parts of our economy, but, at the same time, standing relationships and credits not only could provide funding, but could help us out, especially with regards to standards, which is crucial.

      Thirdly, banks, through the extension of their projects, could extend far “cheaper” credit, which is vital for SMEs, which do not have many financial resources. For these companies’ strategic development, they need cheaper credit than they can currently obtain.

      Finally, I thank the rapporteur once again. The Bank’s business in countries that are not members of the European Union – my country, Armenia, for example – is vital not only for development in general but for social development especially.

      Ms VALAVANI (Greece)* – I express my warmest thanks to the rapporteur, Mr Elzinga, for his report. The Council of Europe Development Bank could, in certain circumstances, have an increased role in addressing the continent’s problems, but the European banking system contains many constraints and limitations that act as a check on the strengthening of these activities. We note from the report that in those areas in which the Bank may intervene, there are criteria such as cost-effectiveness, regulatory conditions and the requirements of the rating agencies. So it is the markets that determine the ability of such an important tool to intervene, at a time when the consequences of the economic and social crisis are not being addressed, especially in the countries on the outskirts of Europe.

Like the European Investment Bank, the Council of Europe Development Bank has a 50% contribution from national banks. Has it been taken into account that in countries such as Greece, because of specific circumstances and the demands of the troika, such circumstances are an obstacle to recovery and we therefore have a limited ability to contribute? The national contribution should therefore be cancelled for countries like Greece for a period of, say, five years, until the countries have entered into a cycle of growth. With 28% unemployment, 60% youth unemployment, a 25% reduction in GDP and disinvestment, Greece needs help from the Bank, but the other countries under the troika make only a negligible contribution.

We need a network of development banks co-operating among themselves and with the relevant European institutions, thus contributing to the economic process to increase employment and tackle the acute social problems we face. For that network to play its role in promoting growth, the Basel III rules need to be accepted, following the example of the major northern European bank, the KfW in Germany. At the same time, we need to mobilise and reinvigorate the European Central Bank and the European Investment Bank in order to address the issues of debt and unemployment and the need for growth.

Problems are being compounded in Europe today and as a consequence we are seeing nationalist and neo-Nazi political groups emerging and hoping to impose their anti-democratic agenda. Pursuing austerity policies that impoverish and marginalise a large part of the population of south-east Europe will inevitably lead to a worsening of these perilous phenomena. So it is vital to put an end to these austerity policies and differentiate budgetary policy, while bringing into play tools such as the European Central Bank and the European Investment Bank, so that Europe enters into a virtuous cycle of growth and co-operation with regular employment and restoration of the right to work and the dignity of workers.

The PRESIDENT* – The last speaker is Mr Rivard, Observer from Canada.

Mr RIVARD (Canada)* – I am happy to have the opportunity to reveal what the Council of Europe Development Bank inspires in me. I had the good fortune to meet representatives of the Bank earlier this year when I was a member of a Canadian delegation. It was my first contact with the Bank and I must admit that the description of its work left me with a very favourable impression. The Council of Europe has so many means of action and the Bank is a unique institution. It is the instrument through which the Council of Europe can implement its many laudable social and development objectives by granting, under very favourable terms, funding for projects that would not receive it in the commercial market.

Such an institution is more than indispensable in the present climate, when many countries are having difficulties in recovering from the most significant recession in recent history and need funds to invest in their economies to stimulate the upswing. In funding projects that promote social cohesion, such as subsidised housing or the development of micro, small and medium enterprises, the Bank guarantees that the principles on which the Council of Europe was founded – democracy, human rights and the rule of law – are not sacrificed to financial objectives. Importantly, the suggested areas for reform would aim to strengthen the Bank in its role in the service of the social and economic needs of those countries and sectors in the greatest need.

I congratulate the rapporteur, Mr Elzinga, on his work and his excellent recommendations which would ensure the viability of the Council of Europe Development Bank.

The PRESIDENT* – That closes the list of speakers. I invite the Governor to respond to the comments made in the debate.

Mr WENZEL – I thank all the members of the Assembly who commented on the report and on the Bank’s activities more generally. I sense a lot of support for the direction that the Bank is taking and for the Bank’s role at a time when Europe is undergoing a severe financial and economic crisis.

Mr Kox asked how we can raise the visibility of the Bank, and that is a very important question. I mentioned that the Bank has, for the first time, a kiosk outside the Hemicycle, but that is just a small contribution. When delegates go home to their countries, I ask them to talk to their colleagues. I hope that those who represent countries that are not yet members of the Bank will spread the news about its activities in promoting social cohesion in Europe. I also take the point that the Bank, including myself as its Governor, should continue to raise our visibility, perhaps by addressing meetings and attending conferences. Of course, whenever I am invited here, I will accept the invitation, but I cannot invite myself. I am happy to represent the Bank at the Parliamentary Assembly and to answer all the questions delegates may have.

Some speakers mentioned the enlargement of the Bank’s membership, particularly Professor Schennach – indeed, he had very warm words for the Bank, for which I thank him. It is an issue that individual governments must attack first. Here, members can see me, the management of the Bank and its existing member countries, but they should speak to their colleagues in parliament, ambassadors and ministers, and ask ministers to make the point that the membership of the Bank should be enlarged. That would make it much easier to raise the visibility of the Bank and to explain in more detail what it can and cannot do. Because we are a bank, there are clear limitations to what we can do; we must raise the funds for our borrowing activities in the international markets, which means we must maintain reasonably well – I emphasise reasonably – our rating in the international markets so that investors will lend us money that we can use to finance our activities.

The support for small and medium-sized enterprises has become a more important area of action for the Bank, and over the past couple of years that has become even more true of lending into micro-enterprises. Support for the rehabilitation of prison facilities and detention centres and for micro-loans to women – thank you for mentioning that, Mr Schennach – have also become more important, and I guess that they will become even more so in future.

Mr Mendes Bota expressed some caution about private-public partnerships. We are of course aware that the new financial instruments that are being discussed by our member countries have particular risks, not just for them but for the Bank. Maintaining sound banking also means that we must be fully aware of the risks carried by new financial instruments. On the other hand, we must also respond to our member countries when they say, “Look, we face fiscal consolidation needs. We must look into new financial instruments, such as private-public partnerships and equity investments. Can the Bank also be a part of such new instruments?” That is exactly what I understand to be the meaning of being flexible and responsive to member countries’ needs.

I wholeheartedly support Ms Anttila’s call for us to continue with governance reform: that is an important element of Mr Elzinga’s report. Nevertheless, it is another issue that member countries must attack. I must say that I have less leeway as a governor; I am interested in a bank that is stable not only in financial terms but in terms of governance.

Mr Shahgeldyan asked a question that also relates to membership. The Bank can lend only to member countries – we cannot lend to countries that are outside our membership. Armenia is not a member, so it cannot borrow or receive financial assistance from the Bank. It is as simple as that. That makes the Bank attractive in a way, so I call on you to become a member of the Bank. That would not only support the Council of Europe’s policy more directly, but make you eligible for the Bank’s support.

It is true that the Bank was originally established by eight member countries in 1956 as a resettlement fund to support the integration of Second World War refugees. We thought that after perhaps a decade or two the issue would be solved and addressed adequately. However, the refugee problem still exists in Europe. That is why the Bank is very active in the Regional Housing Programme, which involves four countries – Serbia, Montenegro, Bosnia and Herzegovina and Croatia – with the objective of addressing the housing needs of about 75 000 people who are refugees and internally displaced persons from the war in the early 1990s. That is still an issue – it is a highly social issue that the Bank is addressing.

Of course, there are other refugee issues. Our lending and activities depend on countries wanting to borrow from the Bank: we cannot impose anything on the member countries – they have to come to us and we will work together to address their problems.

I might be wrong, and if so I apologise, but I think Mr Mendes Bota asked about the distribution of our lending activities. Our development plan gives the broad direction for our policies in the years to come. Our new development plan for 2014 to 2016 was approved unanimously last year. We have thoroughly discussed the distribution of our lending activities and agreed that no matter what the country or region, what is important is the social value of a project that we want to finance. We are not a second European Investment Bank; we are a very specific social development bank. We have a social mandate and any project that we finance should meet our social mandate test. If a project has high social value, we will finance it, no matter where it is; be it in a country that is supposed to be very rich or in a country that is supposed to be not so well-off, we will finance the project if it has high social value.

I thank those who have spoken in support of the Bank’s activities and the general direction of our policies. I would of course be glad to return if I was invited again.

The PRESIDENT – Thank you very much, Governor, for not only your report but the way that you answered the questions. I think we all agree that you are always welcome in this Chamber

I now give the floor to the rapporteur to respond. You have six minutes.

Mr ELZINGA (Netherlands) – First, I thank the Governor for his speech in support of the report and his presentation about the Bank, which has really helped its visibility among the parliamentarians present while also stressing its added social value and the relevance of its role in member States of the Council of Europe.

Mr Kox, I appreciate the support for the report from you and your group, and will return to your questions shortly.

Thank you, Mr Schennach, for your warm words about me and the Bank, especially bearing in mind that Austria is not yet a member. I fully agree that it is in Austria’s interest to join the Bank. I also very much appreciate the support of your group.

Thank you, Mr Mendes Bota, for your support and questions about the Bank. Mr Wenzel replied adequately and precisely about the need for a project to have added social value, so I will not try to add anything to his reply.

Thank you, Mr Selvi, for your support for the CEB on behalf of your group. Thank you, Ms Anttila for your support for the report, and particularly for your recommendation on the resolution, which is very welcome.

Mr Rouquet, thank you for clearly stressing the need for the CEB’s social vocation; you made it clear why the Bank is important and I am grateful for your recommendations, which are much appreciated. You suggested that I should follow up next year – let me return to that at the end of my six minutes, of which four remain.

Mr Recordon, thank you for your support. I agree that neither geographical focus nor sectoral priorities should be exclusive. The focus is important, but I want to underline the smart two-pronged approach developed by the Bank in its new development plan that takes into account both axes – region and, especially, added social value, no matter where the project is.

      Mr Shahgeldyan rightly stressed the fact that emphasis should be placed on the countries in the eastern neighbourhood of the European Union and talked about the need to help micro, small and medium-sized enterprises create jobs. Fortunately, the Bank is doing that and there is a lot of demand for such loans. However, I have to say that the CEB can only help its member States, and unfortunately Armenia is not yet a member. Social development is important to Armenia, but the Bank can help only if Armenia joins it.

      I say to Ms Valavani that I fully understand that Greece has a very limited ability to contribute to banks and other institutions because of the circumstances there. However, this multilateral development bank does not require any contribution. After the initial subscription of capital, a State is a member and shareholder of the Bank and can benefit from loans from it. From the Bank’s perspective, there is no obstacle to investing in Greece.

      Mr Rivard, I am pleased that even an observer State – not only a non-member of the Bank but a non-member of the Council of Europe – takes an interest in the Bank and has such good understanding of, and such warm support for, a unique European social multilateral development bank. I very much support everything that you said about the CEB.

      I turn to the questions that were asked. Mr Kox and others asked what we, as members of this Assembly, can do to help the Bank increase its visibility. The Governor gave some clear examples. To start with, members can take a copy of my report, but they can also find material at the kiosk just outside the Chamber. They can take it home and give it to their governments, and those with constituencies can also give it to regional and even local authorities, so that they can all propose projects to the Bank through their governments. That can help raise the visibility of the bank to authorities with projects that could be helped by loans from it.

      Mr Kox and others also asked what members of the Assembly could do to strengthen co-operation. First, they can keep the Council of Europe Development Bank in mind while doing their job here in the Chamber and in our Committees. I invited the Governor to the Committee on Social Affairs, Health and Sustainable Development when it was dealing with the report. Other committees could also create a link with the Bank by inviting its representatives to their meetings if it is relevant to do so, especially when they meet in Paris only two floors down from the Governor and other Bank staff. For example, if the Committee on Legal Affairs and Human Rights was discussing the European Convention for the Prevention of Torture and Inhuman or Degrading Treatment or Punishment and found that prisons needed fresh investment, the Bank could support that project proposal.

      I will be the rapporteur for the next year until a new rapporteur is appointed, so the follow-up to the report and to the draft resolution, which I hope we will adopt today, will be in my hands. I hope you trust that I will follow up on everything that is done. I agree with Mr Rouquet that we should not wait too long to debate the Bank again, but I think a biennial debate would be best, just as we discuss the European Bank for Reconstruction and Development biennially. In two years’ time it will be the CEB’s 60th anniversary, and that would provide a good opportunity for a debate on the next report. The Assembly would be able to celebrate the anniversary and perhaps organise some extra activities to present the Bank here at its birthplace.

(Mr Walter, Vice-President of the Assembly, took the Chair in place of Ms Brasseur.)

      The PRESIDENT – Does the chairman of the committee, Mr Ghiletchi, wish to speak? You have two minutes.

      Mr GHILETCHI (Republic of Moldova) – I congratulate Mr Elzinga on his report. I would not have wanted to be in his place when I was listening to my colleague Mr Mendes Bota, but when I watched Mr Elzinga in the committee, I admired his interest in the matter and his competence. As he mentioned, we had an exchange of views with Governor Wenzel, whom it is my pleasure to welcome here again. We had a good discussion in Paris, and I believe that, as others have said, our Bank is in good shape. I therefore encourage members to support the Bank and the draft resolution. Mr Elzinga has shown a willingness to find compromise on some of the amendments, and he has had a balanced approach to the report.

      We need to support our Bank, and I wish it success. As Mr Elzinga said, we invite and welcome questions, and whenever we have discussions with the Bank we find answers to them. I am from Moldova, where the Bank has supported some good projects and, as Mr Kox said, brought social profit to our citizens. I encourage members to support the draft resolution.

      The PRESIDENT – The debate is closed.

      The Committee on Social Affairs, Health and Sustainable Development has presented a draft resolution to which seven amendments have been tabled.

They will be taken in numerical order, which is the order in which they appear in the Compendium and the Organisation of Debates. I remind you that speeches on amendments are limited to 30 seconds.

We come to Amendment 1, tabled by Ms Bergamini, Ms Centemero, Mr Giro, Mr Galati and Mr Fazzone, which is, in the draft resolution, to replace paragraph 2 with the following paragraph:

“The extremely uncertain economic situation and new regulatory constraints prompt the CEB to adapt, as necessary, its priorities, working methods, internal structures and governance in order to deliver “more with less” and to face the challenges posed by the present economic situation, which changed the usual patterns of social crisis. Today, in fact, the fault lines that jeopardise social cohesion no longer follow the boundary dividing eastern and western Europe, but cut a jagged path through the continent as a whole. In light of the above, the Assembly believes it is time for a review of the CEB’s strategies, which have hitherto been focused on achieving goals oriented to specific geographical areas. The CEB should instead adjust its intervention policy to favour specific areas of action over geography. With a view to the more effective integration of its funding with the financial instruments of the European Union, it should also promote the standardisation of the criteria used for the allocation of funds and set priorities with reference to the regional rather than the national boundaries of member States. The Parliamentary Assembly welcomes the Bank’s capital increase (effective from the end of 2011), efforts to expand its membership and to boost the social added value of projects, as well as steps to adjust internal structures and strategies. In this regard, the Assembly invites the CEB to enhance the transparency of its activities, including through the online publication of the value and destination of its investments.”

I call Mr Mendes Bota to support Amendment 1.

Ms MENDES BOTA (Portugal) – I appreciate what Mr Wenzel said about there being no more differentiation between eastern and western countries of Europe, but different regions of a country can be at different stages of development. There are great inequalities, and that is why the amendment – I have not signed it, but I support it – states that the allocation of funds should be made according to priorities based on regional, rather than national, boundaries.

The PRESIDENT – Does anyone wish to speak against the amendment? I call Mr Elzinga.

Mr ELZINGA (Netherlands) – Unfortunately, I have to advise against adopting the amendment. Funds can already be allocated regionally, and regions can propose projects, although they have to be presented to the Bank by the national government.

The PRESIDENT – What is the opinion of the committee?

Mr GHILETCHI (Republic of Moldova) – Against.

The PRESIDENT – The vote is open.

Amendment 1 is rejected.

We come to Amendment 2, tabled by Ms Bergamini, Ms Centemero, Mr Giro, Mr Galati and Mr Fazzone, which is, in the draft resolution, to replace paragraph 3 with the following paragraph:

“The Assembly appreciates the fact that, despite the grim economic situation, no member State has failed to pay back loans, helped by the Bank’s willingness to and assistance in redesigning some ongoing projects to help countries in budgetary difficulty. Although the demand for CEB loans temporarily decreased between 2011 and 2013, the interest in new projects is picking up again, with a strong emphasis on employment-support measures. The Assembly notes that in order to achieve the objectives of the Europe 2020 strategy, European Union member States are encouraged to supplement the Union’s resources with funding from the Council of Europe Development Bank (CEB). One of the strategic objectives of the CEB’s 2014-2016 Development Plan is to work hand in hand with member States to help them make better use of European structural funds, starting with the European Social Fund. The European Social Fund allocates a minimum amount of investment to each European Union member State and specifies that the remainder is to be distributed according to regional rather than national needs, an approach that allows for differences in wealth levels, which may be considerable, within countries.”

      I call Mr Mendes Bota to support Amendment 2.

      Mr MENDES BOTA (Portugal) – I have nothing to add to my argument in favour of the previous amendment.

      The PRESIDENT – Does anyone wish to speak against the amendment? I call Mr Elzinga.

      Mr ELZINGA (Netherlands) – I could say the same as Mr Mendes Bota.

      The PRESIDENT – What is the opinion of the committee?

      Mr GHILETCHI (Republic of Moldova) – The committee is against.

      The PRESIDENT – The vote is open.

      Amendment 2 is rejected.

We come to Amendment 3, tabled by Ms Bergamini, Ms Centemero, Mr Giro, Mr Galati and Mr Fazzone, which is, in the draft resolution, paragraph 4, to delete the following words: “- and a geographical focus on non-European Union countries in South-Eastern Europe.”

      I call Mr Mendes Bota to support Amendment 3.

      Mr MENDES BOTA (Portugal) – I believe that an oral sub-amendment has been proposed, and I would only support the amendment if I thought that the oral sub-amendment was going to be rejected. I do not think that that will happen.

      The PRESIDENT – I have been informed that Mr Elzinga wishes to propose an oral sub-amendment on behalf of the Committee on Social Affairs, Health and Sustainable Development, as follows:

In Amendment 3, to delete all the words of the amendment except “non-European Union”.

If both the sub-amendment and the amendment are agreed to, paragraph 4 of the draft resolution would end “and a geographical focus on countries in South-Eastern Europe”.

In my opinion, the oral sub-amendment is in order under our rules.

However, do 10 or more members object to the oral sub-amendment being debated? That is not the case.

I call Mr Elzinga to support the oral sub-amendment.

      Mr ELZINGA (Netherlands) – I wished to keep the original phrase in the amendment. We need to focus on that specific area because there is a great need for social added value within projects, but we also agreed that there was a need in European Union countries in the region so we agreed to delete the reference to non-European Union countries.

The PRESIDENT – Does anyone wish to speak against the oral sub-amendment? That is not the case.

What is the opinion of the mover of the amendment?

      Mr MENDES BOTA (Portugal) – I was not present in the committee meeting where the question was discussed and the sheet I have in front of me does not correspond with the oral sub-amendment, so I shall abstain.

      The PRESIDENT – What is the opinion of the committee?

Mr GHILETCHI (Republic of Moldova) – The committee is in favour.

The PRESIDENT – The vote is open.

      The oral sub-amendment is adopted.

      Does anyone wish to speak against Amendment 3, as amended? That is not the case.

      What is the opinion of the committee?

      Mr GHILETCHI (Republic of Moldova) – The committee is in favour.

      The PRESIDENT – The vote is open.

      Amendment 3, as amended, is adopted.

We come to Amendment 4, tabled by Ms Bergamini, Ms Centemero, Mr Giro, Mr Galati and Mr Fazzone, which is, in the draft resolution, at the end of paragraph 6, to add the following words:

“Finally, the Assembly invites all its members to advocate a change in the bylaws of the CEB that would enable it to implement policies of financial support and provide direct funding to public bodies and agencies without relying on the intermediation of private banks.”

I call Mr Mendes Bota to support Amendment 4.

      Mr MENDES BOTA (Portugal) – I do not wish to press the amendment.

      The PRESIDENT – Amendment 4 is not moved.

      We come to Amendment 5, tabled by Ms Bergamini, Ms Centemero, Mr Giro, Mr Galati and Mr Fazzone, which is, in the draft resolution, at the end of paragraph 7.2.6, to add the following words: “, and proposes to member States a change in the bylaws of the CEB that would enable it to implement policies of financial support and provide direct funding to public bodies and agencies without relying on the intermediation of private banks.”

I call Mr Mendes Bota to support Amendment 5.

      Mr MENDES BOTA (Portugal) – We want to emphasise the possibility of funding being provided directly to the institutions that require it without the intermediation of private banks, and the oral sub-amendment will simply add the words “where appropriate.”

      The PRESIDENT – I think you have jumped the gun slightly, Mr Mendes Bota.

I have been informed that Mr Elzinga wishes to propose an oral sub-amendment on behalf of the Committee on Social Affairs, Health and Sustainable Development, as follows:

      In Amendment 5, to delete the words “and proposes to member States a change in the bylaws of the CEB that would enable it to implement policies of financial support and provide direct funding to public bodies and agencies” and to add the words “where appropriate” at the end. The amendment would read “without relying on the intermediation of private banks where appropriate”.

In my opinion, the oral sub-amendment is in order under our rules.

However, do 10 or more members object to the oral sub-amendment being debated? That is not the case.

I call Mr Elzinga to support the oral sub-amendment.

      Mr ELZINGA (Netherlands) – I propose to delete these words because they duplicate phrases in the resolution. I want to add “where appropriate” because in many cases work can take place only through the intermediation of private banks, although I agree that there is no problem with avoiding it if we can.

      The PRESIDENT – Does anyone wish to speak against the oral sub-amendment? That is not the case.

What is the opinion of the mover of the amendment?

      Mr MENDES BOTA (Portugal) – I agree with the oral sub-amendment.

      The PRESIDENT – What is the opinion of the committee?

Mr GHILETCHI (Republic of Moldova) – The committee is in favour.

       The PRESIDENT – The vote is open.

      The oral sub-amendment is adopted.

      Does anyone wish to speak against Amendment 5, as amended? That is not the case.

      What is the opinion of the committee?

      Mr GHILETCHI (Republic of Moldova) – The committee is in favour.

      The PRESIDENT – The vote is open.

      Amendment 5, as amended, is adopted.

      We come to Amendment 6, tabled by Ms Bergamini, Ms Centemero, Mr Giro, Mr Galati and Mr Fazzone, which is, in the draft resolution, after paragraph 7.2.6, to insert the following paragraph:

“reviews its strategies, which have hitherto been focused on achieving goals oriented to specific geographical areas, adjusting its intervention policy to favour specific areas of action over geography, promoting the standardisation of the criteria used for the allocation of funds and setting priorities with reference to the regional rather than the national boundaries of member States;”      

I call Mr Mendes Bota to support Amendment 6.

      Mr MENDES BOTA (Portugal) – I do not wish to press the amendment.

      The PRESIDENT – Amendment 6 is not moved.

We come to Amendment 7, tabled by Ms Bergamini, Ms Centemero, Mr Giro, Mr Galati and Mr Fazzone, which is, in the draft resolution, after paragraph 7.2.8, to insert the following paragraph:

“enhances the transparency of its activities through the online publication of the value and destination of its investments.”

      I call Mr Mendes Bota to support Amendment 7.

      Mr MENDES BOTA (Portugal) – We want more transparency and believe that the Bank would benefit from publishing the value and destination of its investments online. The more the public are aware of the destination of the funds, the better.

      The PRESIDENT – I have been informed that Mr Elzinga wishes to propose an oral sub-amendment on behalf of the Committee on Social Affairs, Health and Sustainable Development, as follows:

In Amendment 7, to delete the words “through the online publication of the value and destination of its investments”.

In my opinion, the oral sub-amendment is in order under our rules.

However, do 10 or more members object to the oral sub-amendment being debated? That is not the case.

I call Mr Elzinga to support the oral sub-amendment.

      Mr ELZINGA (Netherlands) – Of course, I fully support the objective of transparency but the Bank already publishes the value and destination of all loans on its website, so we would be asking for something that is already being done.

The PRESIDENT – Does anyone wish to speak against the oral sub-amendment? That is not the case.

What is the opinion of the mover of the amendment?

      Mr MENDES BOTA (Portugal) – I agree with the rapporteur, as the main purpose of our amendment was to enhance transparency. It is correct that the Bank already publishes this information on its website.

      The PRESIDENT – What is the opinion of the committee?

      Mr GHILETCHI (Republic of Moldova) – The committee is in favour.

       The PRESIDENT – The vote is open.

      The oral sub-amendment is adopted.

      Does anyone wish to speak against Amendment 7, as amended? That is not the case.

      What is the opinion of the committee?

      Mr GHILETCHI (Republic of Moldova) – The committee is in favour.

      The PRESIDENT – The vote is open.

      Amendment 7, as amended, is adopted.

We will now proceed to the vote on the whole of the draft resolution contained in Document 13513, as amended.

The vote is open.

The draft resolution in Document 13513, as amended, is adopted, with 54 votes for, 2 against and 1 abstention.

My congratulations to the rapporteur and my thanks to the Governor of the Council of Europe Development Bank.

2. Europe’s public administrations in flux: public service under threat?

The PRESIDENT – The next item of business this afternoon is the debate on the report entitled “Europe’s public administrations in flux: public service under threat?”, Document 13529. It will be presented by Mr Tiny Kox on behalf of the Committee on Rules of Procedure, Immunities and Institutional Affairs. Therefore, I call Mr Kox, the rapporteur. You have 13 minutes, which you may divide between presentation of the report and replying to the debate.

Mr KOX (Netherlands) – It is an honour to present to the Assembly a draft resolution and recommendation, which we adopted unanimously in the Committee on Rules of Procedure, Immunities and Institutional Affairs and to which no amendments have been tabled, although the report deals with an issue that has often, throughout our member States and their parliaments, been the subject of serious political controversy: how to organise public administration and public services. May I assume that although the issue was, and still is, the subject of often intense political debate, the report that I present to the Assembly is considered a more or less adequate description of what has happened in this respect in recent decades? Over that time, public administration throughout Europe was in flux for several reasons and public services changed substantially due to reforms in public administration.

While I was preparing this report over the past two years, it was not my goal to offer my ideas on how public administration and public services should be organised in our member States, however interesting these ideas might have been, at least to some of us. Instead, my goal was to offer the Assembly a report that shows how public administration and public services are organised in our member States and how they have changed substantially in the past two decades. I did my best to base my report on the available facts and figures, scientific surveys from all over the continent, the analysis of and meetings with experts, and the results of several parliamentary investigations. I thank all those who helped me get access to all this information and to understand the processes of change – their origins, goals and achievements. I took advantage of the many studies of the OECD.

Most useful was our committee’s hearing in Paris, with contributions from well-known experts on this matter. In particular, I mention Professor Massimo Florio from the University of Milan. I also benefited a lot from my discussions in London with representatives of the European Bank for Reconstruction and Development, which follows developments in public administration and public services closely, especially in the eastern European member States of our Organisation. I am grateful for the support I received from various trade union organisations and institutions, which of course closely follow the effects of changes in public administration for public services in general and workers in particular. I mention here the European Federation of Public Service Unions and the International Labour Organization.

I express my gratitude for being able to make use of the information given to me by the House of Commons in the United Kingdom and the ample information on the subject collected by the parliamentary inquiry of my own Senate in the Netherlands. The fact that the findings of that inquiry – its conclusions and proposals for how to deal with changes in the organisation of public tasks by public administration and through public services – were adopted almost unanimously by the parties in the Dutch Senate inspired me to try to draft a report, a resolution and a recommendation that could enjoy broad support from delegations and political groups in this Assembly.

Although I tried to base my survey on available facts and figures and the input of experts and parliamentarians, my report also includes some normative elements. These norms were stipulated by this Assembly and the Committee of Ministers and therefore led me in this survey.

Let me now summarise my main findings. A decade ago, this Assembly emphasised that a high-quality civil service is a vital precondition for strong democracy and the rule of law. The Assembly then invited the member States of the Council of Europe to place the interests of their citizens and Europe’s common values at the heart of any administrative reform. In view of the unique role of public administration and its contribution to social cohesion and employment, the Assembly then encouraged Council of Europe member States to consider all possible consequences carefully before introducing new private sector-oriented management methods.

The introduction of those methods, together with large-scale privatisation and marketisation of public service delivery, has been the leading aim of public management reforms throughout Europe since the beginning of the 1990s. That has been done under the umbrella of new public management in order to modernise public administration and make it more efficient, more effective, more profitable and less costly.

Member States of the European Union in particular were encouraged to outsource and privatise parts of their public administration. Several directives of the European Commission invited or even forced member States to liberalise and strengthen the market economy, trim down big government and marketise public services. More or less in the same period, States in Central and Eastern Europe, after the abrupt end of communist rule and the sudden introduction of pluralist democracies and market economies, saw major changes in economic ownership and in the organisation of public administration and public services. Many of the new member States of our Organisation also adopted new public management methods to build their new public administrations, although under completely different circumstances.

The ongoing process in Europe of having more market and less government has accelerated since the outbreak of the financial and economic crisis in 2008. Harsh austerity measures have put public administration and public services under tremendous pressure in almost all member States. In 2012, this Assembly made known its worries about the impact of the austerity measures on democratic and social rights standards. In the winter of last year, the Commissioner for Human Rights spoke of the serious threat to more than 60 years of social solidarity and expanding human rights protection that was being caused by measures taken in the areas of public administration and public services as a result of crisis management and austerity. I recommend his excellent report wholeheartedly to all of you.

My report brings together numerous data on the changes in public administration and their consequences for public services, and measures them against the norms that were formulated at an earlier stage by our Organisation. The references are in my memorandum. On the basis of that, I have drawn up a draft resolution, which the Assembly will decide on today. It recalls our earlier recommendations on civil service reform and expresses the concern that recent public administration reforms might, in spite of our norms, have been guided too greatly by managerial and budgetary criteria, with a negative effect on the functioning of public administration, the quality of public services and the trust of citizens in public administration and the functioning of democracy. The resolution also contains several lessons learned, which could be used to avoid mistakes in the future.

I also urge the Assembly to adopt the draft recommendation. It supports the Committee of Ministers with its “Council of Europe Action Plan for Social Cohesion”, which it says is at the heart of the Organisation’s mission. The draft recommendation asks the Committee of Ministers to review the action plan, to adopt guidelines for future social cohesion policies and to engage in a dialogue on the subject with this Assembly. We should not leave this matter entirely to our much respected Committee of Ministers.

Let me finish by thanking the secretariat for its great assistance. In particular, I thank Kateryna Gayevska, who provided me with excellent help at the beginning of this project. I finished it while she was doing something far more important – giving birth to her new baby, Anatole. I thank and congratulate her.

I look forward to an interesting debate and to positive votes on the draft resolution and draft recommendation.

The PRESIDENT – Mr Kox, you have four minutes remaining.

Speakers in the debate will have four minutes. I ask colleagues to try to stick to four minutes so that I do not have to cut them off. If they keep an eye on the clock, it will tell them how much time they have left.

In the debate, I call first Mr von Sydow to speak on behalf of the Socialist Group.

Mr von SYDOW (Sweden) – The title of the report might not seem exciting, but immediately on reading it, one finds it exciting. It is not about public administration per se but about the consequences for the individual. I found it very interesting.

The rapporteur combines the issues of markets and income distribution. Those must be studied together, rather than as separate issues. In his findings, he has found some interesting connections. I would like to bring to the attention of members a new book that, although it was perhaps not necessary to mention it in the report, exemplifies the importance of the report’s subject. I refer to Mr Thomas Piketty’s book, “Capital in the Twenty-First Century”. It reminds us that the present time marks a sharp return to the wealth distribution that prevailed before the outbreak of the First World War. We are in a similar situation because of low growth and unfair distribution between incomes from capital and wages.

      We must not focus completely on administration, but also consider benefits and social redistribution through the taxation system. It is right to place social cohesion on the agenda. However, although some of the administrative changes should receive a large amount of criticism, they are not the main reason for the worsened redistribution among individuals. Benefits such as rents for pensioners, family allowances, illness insurance and unemployment compensation are important in western Europe as well as in eastern Europe, even though they are not immediately related to administrative reform. The marketisation of much of public administration has definitely had some influence. I agree with the OECD that some parts of it have had a major effect, but that other parts do not have these socially destructive elements.

The rapporteur has pursued his report in a very good way: through intensive collaboration with the Committee of Ministers and the relevant social ministers. The danger is not in the wording or in the revised mission for the ministers, but in the division within governments between the various ministries – the foreign ministry, the finance ministry and the social ministry. They really need to work in close collaboration. Thank you, rapporteur, and good luck with your report.

The PRESIDENT – I call Mr Shahgeldyan to speak on behalf of the Group of the European People’s Party.

Mr SHAHGELDYAN (Armenia)* – I thank Mr Kox for his work and for the report. It is an important and topical report. That is particularly true for many countries in eastern Europe, but it is also true for those in the west.

The functioning of public services in any State is the measure of the effectiveness of the State. The public and societal environment obliges the public sector to introduce reforms and to change public services constantly to improve their quality. Such services must be anthropocentric; the services must always take into consideration, first and foremost, the user of the services.

      Furthermore, in the difference between services provided by the public sector and those that are privatised, there is sometimes a lack of balance. That is very important. One needs to rediscover the balance, which is something that politicians must deal with, and not only politicians. I draw particular attention to the new, conceptual approach of the rapporteur. To be effective, public services must have a clear developmental strategy, be flexible and be able to adapt to a changing environment and to a future socio-political reality.

The motivation of civil servants is particularly important to the good quality of services. I am convinced that when service providers are professionally demotivated – I refer to paragraph 6.6 of the draft resolution – the quality cannot be good. We therefore need to find new ways of motivating civil servants. We can do so by exchange of best practice among the States of the Council of Europe.

      Many countries of the former Soviet Union are in a particularly difficult situation. Their inherited mentalities require major modernisation to ensure good public services. Civil servants are poorly paid, their status is vulnerable and they are often exposed to corruption, but such problems can be resolved through bold new approaches. Some innovative policies are suggested in the report, which could be of great interest to many member States of the Council of Europe. Taking advantage of good experience in other countries could be useful and valuable.

      In the report, we find not only a profound analysis of the existing situation, but a vision of how it could develop positively in future. That is important. In our view, this kind of complex, holistic and visionary approach is necessary for all countries, but in particular for central and eastern Europe and, even more so, for the former Soviet States. Again, rapporteur, thank you very much for an excellent job of work.

      The PRESIDENT – I call Mr Neill to speak on behalf of the European Democrat Group.

Mr NEILL (United Kingdom) – It is a particular pleasure to serve under your chairmanship, Mr President. May I express my respect for the work of the rapporteur and for the care that he has taken with the report and its methodology? I am glad that the House of Commons was of assistance to him in preparing the report – it is an excellent facility, and I bear testament to that. I say those things in that constructive spirit, because I am afraid that I must now say that there is a point at which I part company with the rapporteur.

Frankly, I will not be able to support the report. Let me tell you why. It is not because it does not highlight important issues – because they are that. It is not because it does not suggest valuable methodologies – I concede that, too. I regret to say, however, that the tone is more negative than the situation warrants. Too much emphasis is put on the phrase “cuts in public spending”. Too much emphasis, in particular in the draft resolution, is put on the undesirability of a loss of control over delivery of government services, whereas I suggest that government easing up on control of service delivery is a positive and beneficial thing. I am also sorry to say that too much weight is placed on the report of the Commissioner for Human Rights, which, while valuable, many would regard as based on frankly contestable evidence.

That is why I am afraid that I cannot follow the rapporteur down this path, which is a pity, because it is a missed opportunity. Change in public services delivery is inevitable, not only because of economic necessity, but because of the change in the nature of the way in which we live. It is a pity that we do not recognise that in the report.

We have to start from the premise that sound public services, which we all want for our citizens, have to depend on sound public finances. I make no apology whatever for the fact that, in my time as a minister for local government in the United Kingdom, I significantly reduced expenditure on areas of public service. I also note that, during that time, efficiency improved and various opinion polls demonstrated that public satisfaction with local government services actually increased, so we should not fall for the notion that good services inevitably means more spending. It is a question of how cleverly you use the money you have available. We have sought to demonstrate that in the United Kingdom and, I know, in many other States.

It is a shame, too, that the report does not recognise the real opportunity to loosen up the delivery of public services and to find a new and more imaginative paradigm. It is a good thing for government to move away from being a direct provider, whether at the local or the national level. Some of the best innovations in public services delivery have come from government – national and local – moving to being commissioners, rather than direct deliverers.

In the United Kingdom, there are some particularly excellent examples of employee-owned mutual and social enterprises – the use of the third sector – so we can think of a new and cleverer approach. In the United Kingdom we now have some 80 live and trading staff-owned mutuals, up from only nine in 2010. I was also in a position to help mutualise parts of our audit practice; it has improved the service to local authorities and, at the same time, reduced costs. We should not regard that as a negative. The State needs a strong corporate centre to ensure that there is rigidity and probity in the delivery of contracts, but giving greater flexibility to the service deliverer and to the contractor can bring real benefits.

I very much agree with the point made by Mr Shahgeldyan a moment ago. We need to think about the shape of our public services not in terms of the producer interest – if you forgive my saying so – but in terms of the user. We should always think in terms of the outcome that best suits the user of the public services, even if that requires those who provide the services to do things differently from what they are used to. We must also focus relentlessly on outcomes, rather than process. I am sorry that we have not had a little more emphasis of that in the report. Perhaps we will be able to do so on another occasion.

The PRESIDENT – Thank you, Mr Neill. You got 29 seconds more than you would have got in the chamber in our parliament. I call Mr Kolman to speak on behalf of the Alliance of Liberals and Democrats for Europe.

Mr KOLMAN (Croatia) – I thank Mr Kox for the effort that he put into the report.

Public administration is the point where the citizen and the State – in the widest sense – meet. It is the place where all theories about the State, the citizen and the organisation of central and local governments connect and are put into practice. In our opinion, it needs to be as efficient and streamlined as possible. It must not pose a financial burden on taxpayers any larger than is absolutely necessary.

For such reasons, it is important constantly and continuously to re-evaluate and redefine how our public management performs, because circumstances change every day. It is also necessary to look at what has to be done by the central State and at what can be done locally or regionally, but we must also not forget to look at what can be done by private operators or through public-private arrangements of different kinds.

Without doubt, as the rapporteur confirms in his report, a number of reforms in recent and not-so-recent years have been successful and adopted in many Council of Europe member States. One can observe an increase in quality of service due to greater competition among service providers, which are smaller and easier to steer than central government, and to improved transparency. Reductions in cost while keeping high quality of service, improvements in management and professionalism, focus on customers and results – instead of only on rules and procedures – and innovative activities have more benefits that we have witnessed in practice, and they are mentioned in the report.

What is needed is a lean, efficient and small State. Citizens should not be forced to pay for inefficiencies, over-employment and redundant or antiquated procedures that the system is too lazy to change. At the meeting point of the State and the citizen, the State needs to provide citizens with the services they need quickly, professionally and without stress. We therefore see the need for constant public administration reform. We also call for great caution when evaluating reforms so that we do not become too critical of the idea of change because we are in an economic crisis or because there have been setbacks. It is true that there have been setbacks. Some reforms, particularly in the field of privatisation, have left a lot to be desired, but we must be careful not to belittle the whole process just because there were setbacks. Setbacks mean only that we need to be more vigilant and careful – the rapporteur mentions that point several times. One thing we need to do before making reforms is a thorough analysis of the outputs of a department or an institution and the cost. Starting there, we can make decisions on the type and depth of changes that can be introduced.

      I stress that, although the economic crisis and austerity measures have had a negative effect in many public administrations, it is not a normal situation by any means. We cannot judge the idea of reforming public administration only by emphasising the effect of austerity measures. It is our deepest belief that the goals of efficiency, user-friendliness and cost-effectiveness need to be reached. The reform of public administration needs to continue. It is our responsibility as parliamentarians to keep an eye on the process, analyse measures before they are introduced, and evaluate the results of reform. We absolutely agree with the rapporteur on that. To put it symbolically, we cannot ban cars because accidents happen. We need to ensure that we produce safer cars and drive more carefully. The status quo in public administrations across Europe is not acceptable, and reforms need to continue.

(Mr Rouquet, Vice-President of the Assembly, took the Chair in place of Mr Walter.)

      The PRESIDENT* – I call Ms Valavani to speak on behalf of the Group of the Unified European Left.

      Ms VALAVANI (Greece)* – I thank Mr Kox most warmly for his excellent statement. In 2013, the President of Slovakia told Der Standard, an Austrian newspaper, that between 1985 and 2005, everything in his country had been privatised, the end result of which was that his State no longer had sufficient public funds and services to carry out reforms. Slovakia is not an exception to the rule. In recent decades, governments of many developed countries have gone along with the privatisation of public services. People were all too willing to believe that deregulation was important to stimulate the market. Of course, we could not avoid an increase in public debt after 2008. A different approach had to be taken, because the aim was to save the banking sector by artificially increasing the debt and inflating it disproportionately. Therefore, there were job losses in all countries. We must grapple with the global phenomenon of an increase in prices and the cost of living, and a decrease in service provision. We are all aware of the consequences.

      For example, we have seen the dismantling of rail services. The privatised utilities, one after another, have encountered serious problems. Consumers and users have not had access to services and the standard of services has been inadequate as a result of privatisation, and as a result of reforms of the public administration that protected the economic rights of citizens. We believe that that is the upshot of the massive wave of privatisation we have seen. We will look closely at the referendums in places that want a return to public services. That has been seen in certain German cities in respect of the prohibition on the privatisation of water utilities.

      In southern European countries, the result of the troika’s intervention has been a fresh wave of reform of the public administration that has served only to exacerbate the crisis in the country. For example, in Greece, 3 million people currently do not have any kind of public insurance and are wholly reliant on the solidarity shown by doctors. That cannot supplant State services. People suffering from cancer and other serious illnesses are in that predicament.

      In my country, the banks were mismanaged, and public assets were sold off to tackle the debt. We are a member State of the Council of Europe, and if the Council of Europe does nothing to improve the situation, it will only deteriorate further. In September, we lodged with the European Commission all the signatures we collected in the right to work petition. Another idea was to bring about the withdrawal of the provision on water privatisation. Apparently, we are no longer talking about who owns the water and whether it will be privatised. A few months on, there were negotiations on an agreement for the wholesale privatisation of public services, including public administration, water, electricity and health. We have been talking to the United States as part of the Transatlantic Trade and Investment Partnership, but if the agreement is signed, it will not be possible for us to renationalise any of the companies and utilities that have been sold off. That is highly regrettable, because Greek public services are being sold for a pittance to foreign countries. Ultimately, we will have to buy our services from other countries, which is not in our interests.

The PRESIDENT* – The rapporteur does not wish to respond now, so I call Mr Reiss of France, because Ms Jonica is not in the Chamber.

      Mr REISS (France)* – In a world in which the digital revolution is speeding up time, the transformation of public administrations is as inevitable as it is desirable. Does that change have a negative or positive impact on public services? As mentioned in the report, that needs to be studied from the point of view of social cohesion, but I would add that it should also be studied from the point of view of the quality of services provided and cost.

      In principle, it is positive to accept that a public service mission can be carried out just as well by a private person as it can be carried out by a public person. Opening up so-called network industries such as transportation, telecommunications and postal services to competition has tended to generate positive results, whatever criteria one uses to assess the situation. Without the opening up to competition, I very much doubt that mobile telephony would have developed as much as it did, at least in France. The results are not quite as obvious in the field of energy.

      There are significant differences among the various member States. The tendency to find ways of providing public services at the best possible cost is of course prevalent, and that seems to me to be going in the right direction. At the same time, it is naturally important to keep a high-quality civil service, probably with fewer numbers, and concentrate on certain essential functions of the State. For instance, security is a fundamental civil right, so can activities that are purely national and sovereign, such as police forces, be privatised? Would that be advantageous? That is probably one of the limitations of this change.

      One also needs to avoid making systematic use of quantitative logic that is inappropriate in certain fields of public action, such as diplomacy. Generally speaking, one abuse of the change could consist of the fact that an entity called upon to assume a public service mission may spend a substantial part of its time justifying what it does, rather than actually doing what it is supposed to do. In France, we have created very many indicators to assess the effectiveness of the action of the State. The cost of these indicators is high, especially in terms of information technology, and it would be interesting to measure their real effectiveness.

      The rapporteur has described these changes in a very instructive manner, but I disagree with him on one point. Budgetary cuts and reductions are only not linked to reform, but to the absolute need to ensure the good health of public finances in many States. Whatever the mode of management of the State, a continuous increase in deficits, with obligatory payments by taxpayers, is not a sustainable solution. One has to accept the fact that some employees in the public sector today are in a very precarious situation financially speaking. That is also the case in the Council of Europe. This state of affairs is not just the result of austerity, but of the need to introduce flexibility into systems that are often absolute and rigid.

      On the other hand, I share the belief of the rapporteur that it is important to evaluate whether the creation of agencies is the best solution, especially from the point of view of the cost and the consistency of public action.

      Mr CRUCHTEN (Luxembourg)* – After reading the report, I would like to congratulate and thank Mr Kox. Not only is it an excellent job of work, but he has shown in his very balanced report the dangers that States, and citizens in particular, have been running with privatisation and the liberalisation of public services in recent years.

This is a phenomenon that can be observed from different angles and from different European countries. As the rapporteur rightly points out, in some cases good results have been obtained. However, that is certainly not true for other countries. Deregulation often goes hand in hand with deterioration in the quality of services provided to citizens and worse employment conditions, wages and salaries. The great promise made to citizens that privatisation would have benefits in terms of cost reduction and therefore lower prices for consumers has not been objectively verified. Some see privatisation, deregulation and liberalisation of public services as a response to the economic crisis of recent years and suggest that we go further down the path of deregulation. It is, however, one of the main causes of the crisis we are experiencing. We need to call into question that trend, because, as the mayor of Munich Christian Ude has said, privatisation only looks good on the first day when you cash in the proceeds, but the following day you wake up to the fact that you have really sold out.

I do not think that politicians should be tempted by a quick buck in the short term. On the contrary, policies need to be shaped or framed in the longer term to ensure that quality public services respond to the needs and expectations of citizens. We need to protect citizens against unbridled capitalism and abuse in the market place. We need to preserve jobs that are decent and durable.

Ms GIANNAKAKI (Greece)* – I congratulate Mr Kox on an excellent report. It is balanced and strikes at the core of all of the problems that have confronted public administrations in Europe in the past few years.

We talk about entrepreneurial spirit, but within the framework of the Council of Europe we must keep in mind that users need well-provided public services of a certain quality. Everywhere in Europe after the economic crisis there have been wide-ranging debates on what type of public administration and civil services we want. Equality of services is particularly important in the European social model, as is the protection of economic and social rights. I think most of us agree that these conditions cannot be ensured by a multi-headed State. Sometimes in health and education the presence of the public sector is absolutely essential, as it is for providing clean water. We cannot treat the State like a businessperson. That is not because we are dogmatic, but because that would be counter-productive.

The State needs to respect the rules of the market, but it also needs to ensure social cohesion, which is one of the Council of Europe’s priorities. The economic crisis has brought to the fore the thought that rigour and austerity can have negative consequences. The reduction in public sector debt was not well planned. In horizontal terms, there was a discrediting of everything done by the public sector. The public sector was not really reformed, but deregulated. That has resulted in enormous problems for many public service users. It has broken the link between the citizen and the State, with extreme options being implemented and then met by an extreme response. It is clear from the European Parliament elections that people want a new social contract. They want full respect for their human rights, but they also want their social rights to be protected. They want to have, through a new mode of management, a public sector that is more efficient and productive, but one that still takes into consideration the specificities of the State.

Mr XUCLÀ (Spain)* – I put my name down to speak in this debate because I think it is one of the most relevant debates we have had this week.

      We are all members of our parliaments in our individual countries and we all have different ideological backgrounds. I hope that we are not dogmatic or inflexible, but we do come from different ideological families. Mr Kox has allowed us to have a very interesting debate indeed. I think that this is an extremely constructive exercise. In some respects, I agree with you, and in other respects I do not, but I am sure that we will find some common ground in looking for solutions.

      The economic crisis has obviously had a knock-on effect on the quality of public services, as well as on the efficiency of public administration. This is the focus of the report, but we need to ask ourselves where the economic crisis came from. What gave rise to it? Some would say that there were ideological reasons for the deterioration of public services. I am from the Alliance of Liberals and Democrats for Europe and I am all for the free market. I am keen on private enterprise and private initiative to a greater degree than the rapporteur. However I, like Mr Kox and many of you, believe that we need a supervisory regime. We have seen globalisation progress at breakneck speed, with a lot of controls slipping away from the State and a great deal of inefficiency. Who in recent years was controlling the banking sector in our countries, and who was overseeing the sector in the United States? That is why this issue is so important: it was the lack of control that gave rise to the economic crisis that, in turn, has led to a social crisis.

      Since 2007, we have come to understand that it is crucial that we beef up the systems that supervise the banking and financial sectors as well those that supervise financial instruments and transactions. That is key. There may be ideological differences between us. Whether we have 100% public services or 100% private services is one issue, but, whatever the case, it is important that we have proper supervision of public administration.

      I agree with the rapporteur, as well as all of you, that this issue is vital for Europe, because we all agree that we need social cohesion, equality of opportunity. There should be no predetermination, but a social escalator that people can expect to use to progress and live with dignity. That is where our ideological points of view overlap, Mr Kox.

      We need supervision of globalisation and the economy. We may differ on whether public services should be delivered by the public or private sector, but, regardless of which we opt for, there must be proper supervision. Thank you, Mr Kox, for giving us this opportunity to have such an interesting ideological debate at this later hour of the afternoon.

      Ms MATTILA (Finland) – I thank Mr Kox for his interesting report. This issue concerns all of us around Europe. Let me start by talking about the Nordic countries. The Nordic welfare model is based on a strong public sector and high taxes. The public sector offers many services that are important from the State’s point of view, such as education, health care and municipal engineering. In the end, such services are also important to the markets.

      I believe that the Nordic model is a good one. It guarantees the fundamental rights that secure a stable development of society. That cannot all be for sale or subject to market forces, which is why we need strong guidance from the State on how to monitor and steer privatised services. In Finland, it is believed that taxpayers’ money has gone to private providers and ended up in so-called tax havens. Aggressive tax planning makes that possible. Sweden has also had problems with offshore companies that have collected profits from taxpayers’ money but do not pay taxes to the State that orders and pays for the services. Public services should not be dealing with such businesses. By doing so, we expose our European values to danger.

The tendering process does not work if one contractor dominates the market. This is really about us being able to trust in the public sector and the State. We hold trusted positions in municipalities and cities that are responsible for public procurement, but how do we get service from the private sector if there is no competition? In that case, the service is provided on the terms of the open-market contractor. To avoid that, we should legislate against abuse from dominant market positions when procuring public services. Otherwise, are we really obliged to pay taxes without any say on what we should get in return?

      In Finland, one big problem is the insufficient application of the law in public procurement. I have high hopes that the European Union public procurement directive will help member States correct this problem. The overall cost efficiency of private suppliers has been misunderstood, as we had not realised that local contractors, through tax revenue, can bring us the best overall cost efficiency benefits in tendering. We must ask: are we really outsourcing the political system?

      Public services have been criticised for being swollen and inefficient and I am sure that that is partly true. The public sector should learn from private contractors and develop itself, as mentioned in the report. I am not against all things private, but politics must be able to control the steering and it should not be tossed around by the markets.

      Mr VILLUMSEN (Denmark) – I thank the rapporteur for his good report and I thank you, dear colleagues, for a relevant and interesting debate. To me, the crisis clearly shows us that the Assembly needs to highlight social and economic rights, because they are fundamental human rights and part of our Assembly’s fundamental values.

      Public debate often portrays privatisation as the only reasonable way forward, with there being no other possible political decision. However, it is not the only policy. We have to ask ourselves whether privatisation is necessary and whether it is working. Does it lead to better quality services? Does it save the citizens money? I know that the steps towards privatisation of the energy sector in Denmark have led to higher prices for consumers and that has also been the case in the United Kingdom, Bulgaria and Portugal.

I had the opportunity to ask the Danish European Commissioner for Climate Action if she could name one case where privatisation in the energy sector in Europe had not led to higher prices for consumers, but she simply could not. However, she still stressed that privatisation of the energy sector is the European Union’s policy. That sounds unwise to me. I am therefore happy with the report, because it deals with the consequences and effects of privatisation of public services.

I take this opportunity to ask the rapporteur what he sees as the most important lesson to learn regarding privatisation processes from the past decades. Thank you for a good debate and good report. We have had an important discussion and we must continue to discuss these issues in this Assembly.

The PRESIDENT* – I call Mr Casey, Observer from Canada.

Mr CASEY (Canada) – I thank the Assembly for the opportunity to address the important issue of reforms affecting public administrations in Europe and their serious effects on public services. This situation goes beyond European borders; it has an international dimension with pressures to reduce public services in the name of structural reform being felt in many countries. This is occurring in Canada as well.

The draft resolution includes a recommendation that the Assembly ask the Parliaments of the Council of Europe member States to “properly evaluate reform measures taken in the field of public administration and public service and learn from the experiences of other parliaments." I seize this opportunity to outline the situation of the public service in Canada and give a few examples of recent reforms.

The federal public service is the largest employer in Canada: it employs approximately 262 000 people in 1 600 locations across Canada and in more than 180 countries. Significant reforms have been made recently to the public service, especially in the austerity budgets of the last three years. These reforms include areas of public sector management such as financial and expenditure management, human resources and information technology.

Regarding human resources, the Canadian Government has gradually but dramatically reduced the number of public servants in the last several years. It has also reformed federal public sector pensions, notably by increasing the contribution rate of employees and raising the age of retirement from 60 to 65 for new employees. The Canadian Government has also brought changes to the public service health care plan, including increases to pensioner cost-sharing and eligibility. Recent legislative initiatives include the modification of collective bargaining rights, including the dispute resolution process and the imposition of more stringent conditions on unions where essential services are involved.

These examples of reforms are a legitimate source of widespread concern, not only for public sector employees, but for the public who rely on services provided by Governments in exchange for high levels of taxation. These concerns are similar to those expressed by the rapporteur. The report explains that, since the 1990s, but more intensely since the financial crisis of 2008, large parts of the public sector in most Council of Europe member States have been privatised, public service tasks have been outsourced and agencies have been created to deliver public services outside the control of governments. The objective of these reforms was to modernise public administration and make it more efficient, more effective and more profitable. Some of these reforms have achieved their goals. Unfortunately, others have had negative effects.

As noted by the rapporteur, “social cohesion is at the heart of the Organisation’s mission. It is therefore essential to place it at the top of the political agenda, especially in times of crisis.” I wish to add my voice to this concern based on a comparable Canadian experience. I also offer support for the recommendations of the Council of Europe Commissioner for Human Rights, which are quoted in the report, to safeguard social, economic and other human rights in times of crisis. It is in times of crisis that austerity measures are taken, and they challenge the core principles that govern public administration. It is also in times of crisis that fundamental rights and freedoms are challenged by the effects of such measures. It is important to make sure that our common fundamental values, rights and freedoms are not sacrificed in the name of economic expediency.

The PRESIDENT* – As Mr Hofman is not here, that concludes the list of speakers. I invite the rapporteur to reply.

Mr KOX (Netherlands) – As I said in my introduction, this issue has been, and still is, the subject of serious political debate. I am grateful for the debate we have had in the Assembly today. We did not have a debate in the committee, but the Committee on Rules of Procedure, Immunities and Institutional Affairs is slightly different: we are more interested in fact finding than ideological debate.

It is right that we should debate how we see the reforms of public administration and public services. My intention in the report was to ensure that we had the debate, as much as possible, on the basis of facts and figures, and scientific surveys, so that the debate is on evidence, not on dogma. That is why the Committee decided unanimously to support the report. The good news is that there is broad support for the ideas behind the report. Rather than being my ideas about how the world should be arranged – that would be interesting, but perhaps not the most effective approach – the report is intended to serve delegates in their discussions in their national parliaments.

I am puzzled why Mr Neill totally disagrees with the report and cannot support it. He does not like the tone – that is always the case with him. Perhaps he has the same problem with music. What about the text – the lyrics – of the report? I did not really hear him say with which of the facts, figures, data, surveys and inquiries he did not agree. I did not invent them: I just brought them together. It is a pity that we do not have four hours or a whole day so that Mr Neill and Ms Valavani, Mr Kolman, Mr Cruchten and Mr von Sydow could discuss this issue. That would be great politics. But the goal of my report is different, the goal of the resolution is different and the goals of the recommendation are different.

The goal of the work that I did on behalf of the Committee on Rules of Procedure, Immunities and Institutional Affairs was to bring together information that delegates could use in their national parliaments. Mr Villumsen asked what the main lesson we learned was. It is always difficult to say, but my view – based not only on my feeling, but on my survey of the facts – is that as politicians we should learn the lessons of what we do. When we reform public administration and public service, we should be aware that that has been done throughout Europe many times and we need to learn lessons from that.

In the parliamentary inquiry carried out by the Dutch Senate, we were all surprised how many times politicians start reforms. As politicians, we are not extremely wise, but neither are we totally stupid. We start reforms with expectations and goals, but then things change, the results do not meet our expectations and the achievements are totally different. That is why we need to learn lessons and, as Mr Xuclà said, we need to supervise and control what is being done. Politicians have the right to do what they want, because they are elected by the people to do so, but the people also expect that we will use our brains – and our brains can be helped by taking advantage of the evaluations that have been done, throughout both eastern and western Europe in the past two decades. That is the main lesson we have learned, Mr Villumsen, but I hope that you also read the other lessons in the resolution and the recommendations.

I very much agree with those who say that we should not leave this to the Committee of Ministers. It is also our obligation as parliamentarians to discuss with the Committee of Ministers how to proceed with this process. I agree that reform will always be needed. If we do not change society, it will stagnate, but we should learn from the past so that we can make better decisions in the future. That is the goal of my report, and I hope that the Assembly will support the resolution and recommendations.

The PRESIDENT* – I call the Chair of the Committee on Rules of Procedure, Immunities and Institutional Affairs to respond.

Ms VUČKOVIĆ (Serbia) – It is a great pleasure to say on the behalf of the Committee on Rules of Procedure, Immunities and Institutional Affairs that we worked really well with the rapporteur. We are grateful for his commitment and the work he has invested in such an excellent report. I reiterate that the Committee supports the report unanimously; we did not need to express ourselves through amendments, as shown by the fact that no amendments were tabled. That obviously speaks in favour of the report as it is.

I am grateful to the rapporteur for the excellent debate he has provoked this afternoon on such a vital and substantial issue that is important for all the citizens we represent. I hope that, in light of the debate earlier in the week on the evaluation of the implementation of the reform of the Parliamentary Assembly, we will expand the conversation in our national parliaments in the search for better synergy between the work of the Assembly and our national parliaments.

As the Chair of the Committee on Rules of Procedure, Immunities and Institutional Affairs, I hope that the Assembly supports the report.

The PRESIDENT* – The debate is closed.

The Committee on Rules of Procedure, Immunities and Institutional Affairs has presented a draft resolution and a draft recommendation. We will now proceed to vote on the whole of the draft resolution contained in Document 13529.

The vote is open.

The draft resolution in Document 13529 is adopted, with 37 votes for, 3 against and 3 abstentions.

We will now proceed to vote on the whole of the draft recommendation contained in Document 13529.

The vote is open.

The draft recommendation in Document 13529 is adopted, with 37 votes for, 6 against and 2 abstentions.

3. Next public sitting

      The PRESIDENT* – The Assembly will hold its next public sitting tomorrow at 10 a.m. with the agenda which was approved on Monday morning.

      The sitting is closed.

      (The sitting was closed at 6.15 p.m.)

CONTENTS

1. Challenges for the Council of Europe Development Bank

Presentation by Mr Elzinga of report of the Committee on Social Affairs, Health and Sustainable Development in Document 13513

Statement by Mr Wenzel, Governor of the Council of Europe Development Bank

Speakers: Mr Kox (Netherlands), Mr Schennach (Austria), Mr Mendes Bota (Portugal), Mr Selvi (Turkey), Ms Anttila (Finland), Mr Rouquet (France), Mr Recordon (Switzerland), Mr Shahgeldyan (Armenia), Ms Valavani (Greece) and Mr Rivard (Canada)

Replies: Mr Wenzel, Mr Elzinga (Netherlands), Mr Ghiletchi (Republic of Moldova)

Amendments 3 as amended, 5 as amended and 7 as amended adopted

Draft resolution in Document 13513, as amended, adopted

2. Europe’s public administrations in flux: public service under threat?

Presentation by Mr Kox of report of the Committee on Rules of Procedure, Immunities and Institutional Affairs in Document 13529

Speakers: Mr von Sydow (Sweden), Mr Shahgeldyan (Armenia), Mr Neill (United Kingdom), Mr Kolman (Croatia), Ms Valavani (Greece), Mr Reiss (France), Mr Cruchten (Luxembourg), Ms Giannakaki (Greece), Mr Xuclà (Spain), Ms Mattila (Finland), Mr Villumsen (Denmark), Mr Casey (Canada),

Replies: Mr Kox (Netherlands), Ms Vučković (Serbia)

Draft resolution in Document 13529 adopted

Draft recommendation in Document 13529 adopted

3. Next public sitting

Appendix I

Representatives or Substitutes who signed the Attendance Register in accordance with Rule 11.2 of the Rules of Procedure. The names of Substitutes who replaced absent Representatives are printed in small letters. The names of those who were absent or apologised for absence are followed by an asterisk

Pedro AGRAMUNT*

Alexey Ivanovich ALEKSANDROV*

Jean-Charles ALLAVENA*

Werner AMON*

Luise AMTSBERG*

Lord Donald ANDERSON*

Paride ANDREOLI*

Khadija ARIB*

Volodymyr ARIEV

Francisco ASSIS*

Danielle AUROI/Gérard Terrier

Daniel BACQUELAINE*

Egemen BAĞIŞ*

Theodora BAKOYANNIS/Dimitrios Saltouros

David BAKRADZE*

Taulant BALLA*

Gérard BAPT*

Gerard BARCIA DUEDRA/Sílvia Eloïsa Bonet Perot

Doris BARNETT*

José Manuel BARREIRO*

Deniz BAYKAL

Marieluise BECK

Ondřej BENEŠIK*

José María BENEYTO*

Levan BERDZENISHVILI*

Deborah BERGAMINI*

Sali BERISHA*

Anna Maria BERNINI/Claudio Fazzone

Maria Teresa BERTUZZI*

Robert BIEDROŃ*

Gülsün BİLGEHAN*

Brian BINLEY*

Ľuboš BLAHA*

Philippe BLANCHART*

Delia BLANCO

Jean-Marie BOCKEL*

Eric BOCQUET*

Mladen BOJANIĆ/Snežana Jonica

Olga BORZOVA*

Mladen BOSIĆ*

António BRAGA*

Anne BRASSEUR/Marcel Oberweis

Alessandro BRATTI*

Gerold BÜCHEL*

André BUGNON/Gerhard Pfister

Natalia BURYKINA*

Nunzia CATALFO/Maria Edera Spadoni

Mikael CEDERBRATT*

Elena CENTEMERO*

Lorenzo CESA*

Irakli CHIKOVANI*

Vannino CHITI*

Tudor-Alexandru CHIUARIU*

Christopher CHOPE

Lise CHRISTOFFERSEN

Desislav CHUKOLOV*

Lolita ČIGĀNE*

Boriss CILEVIČS

Henryk CIOCH*

James CLAPPISON

Deirdre CLUNE*

Agustín CONDE*

Telmo CORREIA

Paolo CORSINI*

Carlos COSTA NEVES*

Celeste COSTANTINO*

Jonny CROSIO*

Yves CRUCHTEN

Zsolt CSENGER-ZALÁN*

Katalin CSÖBÖR*

Milena DAMYANOVA*

Joseph DEBONO GRECH*

Armand De DECKER*

Reha DENEMEÇ

Roel DESEYN*

Manlio DI STEFANO

Arcadio DÍAZ TEJERA*

Peter van DIJK*

Şaban DİŞLİ*

Aleksandra DJUROVIĆ

Jim DOBBIN*

Ioannis DRAGASAKIS/Vasiliki Katrivanou

Damian DRĂGHICI*

Elvira DROBINSKI-WEIß*

Daphné DUMERY*

Alexander [The Earl of] DUNDEE*

Josette DURRIEU*

Mikuláš DZURINDA*

Lady Diana ECCLES/Cheryl Gillan

Tülin ERKAL KARA

Franz Leonhard EßL*

Bernd FABRITIUS*

Joseph FENECH ADAMI*

Cătălin Daniel FENECHIU*

Vyacheslav FETISOV*

Doris FIALA*

Daniela FILIPIOVÁ*

Ute FINCKH-KRÄMER*

Axel E. FISCHER*

Gvozden Srećko FLEGO

Bernard FOURNIER*

Hans FRANKEN/Tuur Elzinga

Jean-Claude FRÉCON

Béatrice FRESKO-ROLFO*

Martin FRONC*

Sir Roger GALE/Robert Neill

Adele GAMBARO

Karl GARÐARSSON*

Nadezda GERASIMOVA*

Valeriu GHILETCHI

Francesco Maria GIRO*

Pavol GOGA*

Jarosław GÓRCZYŃSKI*

Alina Ştefania GORGHIU*

Svetlana GORYACHEVA*

Sandro GOZI*

Fred de GRAAF*

Patrick De GROOTE*

Andreas GROSS

Dzhema GROZDANOVA*

Mehmet Kasim GÜLPINAR

Gergely GULYÁS*

Nazmi GÜR

Antonio GUTIÉRREZ*

Ana GUŢU

Maria GUZENINA-RICHARDSON*

Márton GYÖNGYÖSI*

Carina HÄGG*

Sabir HAJIYEV*

Andrzej HALICKI*

Hamid HAMID*

Mike HANCOCK/Charles Kennedy

Margus HANSON

Alfred HEER/Luc Recordon

Michael HENNRICH*

Martin HENRIKSEN*

Françoise HETTO-GAASCH*

Adam HOFMAN*

Jim HOOD*

Arpine HOVHANNISYAN/Mher Shahgeldyan

Anette HÜBINGER*

Johannes HÜBNER*

Andrej HUNKO*

Ali HUSEYNLI*

Rafael HUSEYNOV*

Vitaly IGNATENKO*

Florin IORDACHE*

Igor IVANOVSKI*

Tadeusz IWIŃSKI*

Denis JACQUAT*

Gediminas JAKAVONIS*

Gordan JANDROKOVIĆ*

Stella JANTUAN*

Tedo JAPARIDZE*

Michael Aastrup JENSEN*

Frank J. JENSSEN

Ögmundur JÓNASSON

Aleksandar JOVIČIĆ

Josip JURATOVIC*

Antti KAIKKONEN/Sirkka-Liisa Anttila

Mariusz KAMIŃSKI*

Deniza KARADJOVA*

Marietta KARAMANLI*

Ulrika KARLSSON*

Jan KAŹMIERCZAK*

Serhii KIVALOV*

Bogdan KLICH*

Serhiy KLYUEV*

Haluk KOÇ*

Igor KOLMAN

Kateřina KONEČNÁ*

Unnur Brá KONRÁÐSDÓTTIR*

Attila KORODI*

Alev KORUN*

Elena KOUNTOURA

Elvira KOVÁCS

Tiny KOX

Astrid KRAG*

Borjana KRIŠTO*

Dmitry KRYVITSKY*

Athina KYRIAKIDOU

Jean-Yves LE DÉAUT*

Igor LEBEDEV*

Christophe LÉONARD/Pierre-Yves Le Borgn'

Valentina LESKAJ*

Terry LEYDEN*

Inese LĪBIŅA-EGNERE*

*Lone LOKLINDT*

François LONCLE*

George LOUKAIDES*

Yuliya L'OVOCHKINA*

Trine Pertou MACH/Nikolaj Villumsen

Saša MAGAZINOVIĆ*

Philippe MAHOUX*

Thierry MARIANI

Milica MARKOVIĆ*

Meritxell MATEU PI

Pirkko MATTILA

Frano MATUŠIĆ*

Liliane MAURY PASQUIER

Michael McNAMARA*

Sir Alan MEALE

Ermira MEHMETI DEVAJA*

Ivan MELNIKOV*

José MENDES BOTA

Attila MESTERHÁZY*

Jean-Claude MIGNON*

Philipp MIßFELDER*

Rubén MORENO PALANQUES*

Igor MOROZOV*

João Bosco MOTA AMARAL

Arkadiusz MULARCZYK*

Melita MULIĆ*

Lev MYRYMSKYIAndriy Shevchenko

Philippe NACHBAR*

Oľga NACHTMANNOVÁ*

Hermine NAGHDALYAN*

Marian NEACŞU*

Zsolt NÉMETH*

Baroness Emma NICHOLSON*

Michele NICOLETTI

Elena NIKOLAEVA*

Aleksandar NIKOLOSKI

Mirosława NYKIEL*

Marija OBRADOVIĆ

Žarko OBRADOVIĆ*

Judith OEHRI*

Carina OHLSSON*

Joseph O'REILLY*

Lesia OROBETS*

Sandra OSBORNE*

Aleksandra OSTERMAN*

José Ignacio PALACIOS

Liliana PALIHOVICI*

Eva PARERA/ Jordi Xuclà

Ganira PASHAYEVA*

Foteini PIPILI/Maria Giannakaki

Stanislav POLČÁK

Ivan POPESCU

Marietta de POURBAIX-LUNDIN*

Cezar Florin PREDA*

John PRESCOTT*

Jakob PRESEČNIK*

Gabino PUCHE*

Alexey PUSHKOV*

Mailis REPS*

Eva RICHTROVÁ*

Andrea RIGONI

François ROCHEBLOINE*

Maria de Belém ROSEIRA*

René ROUQUET

Pavlo RYABIKIN*

Rovshan RZAYEV*

Indrek SAAR/Ester Tuiksoo

Vincenzo SANTANGELO

Kimmo SASI

Deborah SCHEMBRI*

Stefan SCHENNACH

Ingjerd SCHOU/Kristin Ørmen Johnsen

Frank SCHWABE*

Urs SCHWALLER*

Laura SEARA*

Predrag SEKULIĆ*

Ömer SELVİ

Aleksandar SENIĆ

Senad ŠEPIĆ*

Samad SEYIDOV*

Jim SHERIDAN*

Oleksandr SHEVCHENKO

Bernd SIEBERT*

Arturas SKARDŽIUS/Algis Kašėta

Leonid SLUTSKY*

Serhiy SOBOLEV

Lorella STEFANELLI/Gerardo Giovagnoli

Yanaki STOILOV

Karin STRENZ*

Ionuţ-Marian STROE*

Valeriy SUDARENKOV*

Björn von SYDOW

Petro SYMONENKO*

Chiora TAKTAKISHVILI*

Vyacheslav TIMCHENKO*

Romana TOMC*

Lord John E. TOMLINSON*

Konstantinos TRIANTAFYLLOS

Mihai TUDOSE*

Ahmet Kutalmiş TÜRKEŞ

Tuğrul TÜRKEŞ*

Konstantinos TZAVARAS*

Ilyas UMAKHANOV*

Dana VÁHALOVÁ

Olga-Nantia VALAVANI

Snorre Serigstad VALEN/Tore Hagebakken

Petrit VASILI*

Volodymyr VECHERKO*

Imre VEJKEY*

Mark VERHEIJEN*

Birutė VĖSAITĖ*

Anne-Mari VIROLAINEN*

Vladimir VORONIN*

Klaas de VRIES*

Nataša VUČKOVIĆ*

Draginja VUKSANOVIĆ*

Piotr WACH/Grzegorz Czelej

Robert WALTER*

Dame Angela WATKINSON*

Karl-Georg WELLMANN*

Katrin WERNER*

Morten WOLD/Hans Fredrik Grøvan

Gisela WURM*

Tobias ZECH*

Kristýna ZELIENKOVÁ

Marie-Jo ZIMMERMANN/Frédéric Reiss

Emanuelis ZINGERIS

Guennady ZIUGANOV*

Naira ZOHRABYAN*

Levon ZOURABIAN*

Vacant Seat, Cyprus*

ALSO PRESENT

Representatives and Substitutes not authorised to vote

Maria GIANNAKAKI

Observers

Eloy CANTU SEGOVIA

Sean CASEY

Michel RIVARD