Know How Fund

Learning from History Seminar

Transformational Diplomacy: From the Know How Fund to The Arab Partnership 30 October 2013

gov.uk/fco

Foreign & Commonwealth Office Learning from History Seminar Transformational Diplomacy: From the Know How Fund to the Arab Partnership 30 October 2013

Contents The Know How Fund: A Brief History

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Speakers and chairs: short biographies

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Introductory remarks

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Professor Patrick Salmon, FCO Chief Historian Sir Simon Fraser, Permanent Under-Secretary Mark Lowcock, Permanent Secretary, DFID Dr Keith Hamilton, author of Transformational Diplomacy after the Cold War: Britain’s Know How Fund in Post-Communist Europe, 1989-2003 (2013)

Panel 1 - Responding to Change in Central Europe, 1988-1990 Chair  Professor Patrick Salmon, FCO

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Speakers  Lord Waldegrave  Ann Lewis  Adrian Davis

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Q&A

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Panel 2 - New Challenges, New Commitments and New Strategies, 1990-2003 Chair  Sir Tim Lankester

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Speakers  Barney Smith  Sir John Birch  Michael McCulloch  Tony Faint

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Q&A

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Panel 3 - Legacy: Transformational Diplomacy after the Know How Fund (the example of the Arab Partnership) Chair  Sir John Vereker

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Speakers  Tim Stew  Michelle Burns  Tim Williams  Graham Ward

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Q&A

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The Know How Fund: A Brief History 1.

The Know How Fund (KHF), Britain‟s bilateral technical assistance programme in postcommunist Central and Eastern Europe, was launched by Margaret Thatcher‟s government in the spring of 1989 in response to the economic and political changes then taking place in Poland. At a time when it was still uncertain as to whether General Jaruzelski would succeed in retaining power in Warsaw, the Fund was intended to encourage and facilitate Poland‟s transition to democracy and free-market capitalism. The fall of the Berlin Wall and the collapse of communism elsewhere in the region led in 1990 to the extension of KHF activities to East Germany, Hungary and Czechoslovakia.

2.

The Fund was focused upon civil society rather than governments. Managed jointly by what were then the two wings of the Foreign and Commonwealth Office (FCO), the Diplomatic Wing and the Overseas Development Administration (ODA), the KHF sought, through a broad and diverse range of projects, to assist the transformation of both institutions and working practices. In addition to supporting agricultural, business and financial sector restructuring, its projects provided advice on democratic policing and the organisation and functioning of political parties.

3.

A separate KHF for the Soviet Union was announced in November 1990, and after the disintegration of the Union in 1991 funding continued in the successor republics. By 1995 Russia was the third largest recipient of British bilateral aid. Bulgaria and Romania also became beneficiaries of the Fund, as eventually did Albania and the former Yugoslavia.

Other Whitehall departments, particularly the Department of Trade and Industry (DTI) and the Department of the Environment, were meanwhile drawn into programme management and implementation. All this gave rise to a degree of interdepartmental wrangling over the financing of the KHF and its „political‟ objectives. Following New Labour‟s victory in the general election of May 1997, the ODA was transformed into the Department for International Development (DFID), and it assumed primary responsibility for administering the KHF. A new strategy was devised, which placed more emphasis upon responding to the consequences of radical change. Spending in countries which were committed to accession to the European Union (EU) was progressively run down; and from about 200001 aid was no longer administered under the rubric of the KHF. Bilateral technical assistance programmes, such as the Britain-Russia Development Partnership, continued, but these were rapidly reduced in size as a result of a switch of funding towards the Middle East in the aftermath of the invasion of Iraq.

FCO Historians

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Speakers and Chairs Sir John Birch is Chairman of the Advisory Board of the UCL School of Slavonic and East European Studies and a retired member of HM Diplomatic Service. He has served in Bucharest, 1965–68 and the Comprehensive Test Ban Treaty Negotiations in Geneva, 1977–80; and as Counsellor in Budapest, 1980–83; Head of East European Department, 1983–86; Ambassador and Deputy Permanent Representative to the United Nations in New York, 1986–89; Ambassador to Hungary, 1989–95; Director and Chief Executive of the British Association for Central and Eastern Europe, 1995–2004.; Director for the Schroder Emerging Countries Fund, 1996–2004.

Michelle Burns is the Head of the Arab Partnership Participation Programme Team in the FCO. She has worked in the civil service for 8 years on programmes designed to improve health, education, child development, policing and local governance at local, national and international levels. She has worked as Head of Profession for the Education Cadre in DFID, and in the Ministry of Justice and the Home Office developing child protection and crime reduction in Eastern Europe and Turkey. Previously she worked as an academic and management consultant overseeing programmes on child development and child protection in North America, South America and the UK. Adrian Davis has been Governor of Montserrat since 2011 on secondment from DFID. He was Deputy Head of the Know-How Fund for Eastern Europe, 1989–91. He has served at DFID and its predecessor departments since 1974, including as First Secretary in Dhaka, 1977–79; Economic Advisor for the South East Asia Development Division in Bangkok, 1980–83; Advisor for Aid and Economy in Cairo, 1984–87; Head of East Asia and Pacific Department in Cambodia, 1994–96; Head of Information and Services Departments, 1996–99; Head, of the Environment Department, 1999–2003; Country Representative for Cambodia, China, Indonesia, North Korea and Vietnam, 2003–11.

Tony Faint has been a consultant on international development since 2003 and was Director (International) at DFID, 1997–2002, after being Under Secretary for Eastern Europe between 1990 and 1997 and Director or Joint Director of the Know How Fund between 1991 and 1997. He served at DFID and its predecessor departments (ODM/ODA), including as First Secretary (Aid) in Malawi, 1971–73; Head of SE Asia Development Division in Bangkok, 1980–83; Head of Finance Department (ODA, FCO), 1983–86; Head of the East Asia Department, 1989–90, and Under Secretary of the International Division, 1990–91. He was Alternate Executive Director of the World Bank in Washington, 1986–89, and UK Director at the EBRD, 1991–92.

Sir Simon Fraser has been PUS at the FCO and Head of the Diplomatic Service since 2010. He was Private Secretary to the Minister of State William Waldegrave, 1989-90. His other appointments were as Permanent Secretary in BIS, 2009-10; Director General for Europe and Globalisation at the FCO, 2008-9; Chief of Staff to the European Trade Commissioner Peter Mandelson, 2004-8; Deputy Chief of Staff to the Trade Commissioner Leon Brittan, 1996-99; Director for Strategy and Innovation, including policy planning, FCO, 2002-4 and Political Counsellor in the British Embassy in Paris, 1999-2002. He started his career as a Middle East expert, serving in the British Embassies in Baghdad, 1982-84 and Damascus, 1984-86.

Keith Hamilton, a consultant historian in the FCO, was formerly a senior editor of the series Documents on British Policy Overseas and is the author of Transformational Diplomacy after the Cold War: Britain's Know How Fund in Post-Communist Europe, 1989-2003 (Routledge, 2013).

Before joining the FCO, he was lecturer in International Politics at the University of Aberystwyth.

His most recent publications include: Slavery, Diplomacy and Empire: Britain and the Suppression of the Slave Trade, 1807-1975, co-edited with Patrick Salmon (2009); and The Practice of Diplomacy: its Evolution, Theory and Administration (co-authored with Richard Langhorne, 2011).

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Sir Tim Lankester was President of Corpus Christi College, Oxford, 2001–09 of which he is currently an Honorary Fellow. He was Permanent Secretary at the ODA, FCO, 1989–94. He worked as an Economist for the World Bank in Washington DC, 1966–69 and New Delhi, 1970– 73. He then worked in the Civil Service as: Private Secretary to the Rt Hon. James Callaghan, 1978–79 and to the Rt Hon. Margaret Thatcher, 1979–81; Under Secretary at HM Treasury, 1983– 85; Economic Minister, Washington and Executive Director at the IMF and the World Bank, 1985– 88; Deputy Secretary, HM Treasury, 1988–89; Permanent Secretary at the Department for Education, 1994–95; Director at SOAS, 1996-2000.

Ann Lewis is Vice-Chairwoman of Governors at the English college in Prague and a retired member of HM Diplomatic Service. She served in the Research Department, 1966–70, 1971-72 and 1974–79; Moscow, 1970–71; Helsinki, 1972–74; Assessments Staff, Cabinet Office, 1979–82; East Berlin as Head of Chancery, 1982–85; Eastern European Department 1985-2000, including as Deputy Head, 1988-91; Cultural Relations Department, as Deputy Head and Head, 1991-2000.

She has recently edited several books on the EU and the Ukraine, Belarus and Moldova.

Mark Lowcock has been Permanent Secretary for DFID since 2011. He served at DFID and its predecessor, the ODA, as Private Secretary to Baroness Chalker, Minister for Overseas Development, 1992-94. He was Deputy Head and Head of the DFID Regional Office for Central Africa (in Harare), 1994-97; Head of European Union Department, 1997-99; Head of the DFID Regional Office for East Africa (in Nairobi); Director, Finance and Corporate Performance, 200103; Director General, Corporate Performance and Knowledge Sharing from 2003-06; Director General, Policy and International, 2006-08 and Director General, Country Programmes, 2008-11.

Michael McCulloch headed the Joint Assistance Unit of the Know How Fund for the former Soviet Union, FCO, 1992–97. He served in the ODM/ODA from 1969, including as Assistant and then Principal Private Secretary to the Ministers for Overseas Development, 1972–73 and 1984–85 and as Head of the Evaluation Department, 1985–86. He represented the UK as Executive Director on the Board of the EBRD, 1997–2001, and served as Special Advisor to its President, 2003–04. He was then a member of the Investment Committee of Europolis Invest AG, which develops a commercial property portfolio in Central and Eastern Europe, 2002-2011, and Chairman of the BEARR Trust, which supports social reform and NGOs in the former Soviet Union, 2003-2008.

Barney Smith is a retired member of HM Diplomatic Service and has been Editor of Asian Affairs, since 2005. He was Director of the Know How Fund for Eastern Europe, 1990–92 and as Head of the Joint Assistance Unit he first ran all the programmes, including in Russia, and when the JAU for the Soviet Union was established, he ran the JAU for Eastern Europe. He has also served in: Bangkok, 1970–74 and 1987-90 (Counsellor); Paris, 1977–78 and 1981-82 (ENA); and as: Head of Chancery in Dublin, 1978–81; First Secretary and Counsellor at the UK Representation to the EEC in Brussels, 1982–86; Head of the South Asia Department, 1993–95; Ambassador to Nepal, 1995–99 and to Thailand, 2000–03.

Tim Stew is Head of the Arab Partnership Department in the FCO, which leads on the UK‟s strategic response to the Arab Spring. He was appointed in October 2010 as leader of a team to develop a policy regarding popular discontent in the Middle East and North Africa. Its pre-Arab Spring recommendations led to the Arab Partnership, launched by the Foreign Secretary in February 2011 and expanded in May 2011 as a joint FCO and DFID programme. He has 17 years of Middle-East experience, including postings in Egypt, Kuwait and Saudi Arabia and work on Iraq.

He has conflict experience in Bosnia where he helped establish the 3-man British Embassy during the siege of Sarajevo in 1995 and witnessed the early stages of transition to peace following the Dayton accords.

Sir John Vereker is a Director of XL Group plc, XL Insurance Company and MWH Global. He was Permanent Secretary for ODA/DFID, 1994-2002 and Governor of Bermuda, 2002–07. He served in a number of posts at DFID and its predecessor departments from 1967, including as: Private Secretary to successive Ministers of Overseas Development; Under Secretary, 1983–88; Principal Finance Officer, ODA, FCO 1986–88. He also held posts at the World Bank in Washington, 1970– 30 October 2013

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72, at the Prime Minister‟s Office, 1980–83 and at the DES/DFE as Deputy Secretary, 1988-93. He is the author of „Blazing the Trail: Eight Years of Change in Handling International Development‟, Development Policy Review, 2002.

Lord Waldegrave of North Hill has been Provost of Eton College since 2009 and was Minister of State at the FCO responsible for Eastern Europe in 1988-90. He has held numerous other ministerial appointments including for the Environment and Countryside, 1985–87; Planning, 1986–88; Housing, 1987–88; Agriculture, Fisheries and Food, 1994–95. He was Secretary of State for Health, 1990-92, and Chancellor of the Duchy of Lancaster, 1992-94. He also served in the Central Policy Review Staff in the Cabinet Office, 1971–73; the Political Staff in 10 Downing Street, 1973–74; and as Head of the Leader of the Opposition‟s Office, 1974–75 and Chief Secretary to HM Treasury, 1995–97. He was MP for Bristol West, 1979–97. He is the author of The Binding of Leviathan, 1977.

Graham Ward has been Chief Commissioner of the Independent Commission for Aid Impact since 2010 and Vice-Chairman of the World Energy Council since 2008. He is also currently an Ambassador of the International Integrated Reporting Council and a member of the Executive Council of the Parliamentary Group for Energy Studies. He has over 35 years‟ national and international experience in assurance, standards and scrutiny. He retired in January 2010 as a senior partner within the Global Energy and Utilities Group at PricewaterhouseCoopers. Previously he was President of the International Federation of Accountants, 2004-6 and President of the Institute of Chartered Accountants in England and Wales, 2000-1. His publications include The Handbook of International Corporate Governance (2009).

Tim Williams is currently the Senior Governance Adviser for DFID in the Middle East and North Africa Department, leading on DFID policy in support of the UK engagement with the Arab Spring.

For the last 15 years he has worked with DFID in Africa and Whitehall on supporting programmes covering emergency response, reform and capacity-building in local organisations, governments and ministries. He is a specialist in „governance‟, including public sector reform, local government, anti-corruption and public financial management. He has also worked in the City of London, Africa and Asia as a volunteer and with NGOs.

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Introductory remarks Patrick Salmon, Chief Historian Welcome to the Foreign Office. My name is Patrick Salmon, and I am Chief Historian. This is the latest in a series of Learning from History seminars which we have been running these for about three years now. The idea is to bring to the Foreign Office a long-term and policy-relevant perspective on current affairs. Today‟s is extremely relevant, perhaps the most relevant we have ever held. It is also a very special occasion because it is also the launch of Keith Hamilton‟s book, Transformational Diplomacy after the Cold War: Britain’s Know How Fund in Post-Communist Europe, 1989 to 2003. Until very recently Keith was Senior Editor of the series Documents on British Policy Overseas, and a Consultant Historian with the Historians Team. He is also one of this country‟s most distinguished international historians. It is the special quality of Keith‟s work that he is never content merely to describe, but always to analyse and interpret. It is a tribute to his questioning spirit that, having begun his career as a historian in diplomacy before the First World War, he should have become the author of a genuinely pioneering study of diplomacy – transformational diplomacy, as he terms it - at the turn of the 20th and 21st centuries.

I will not say any more about the book or about the Know How Fund itself because Keith himself will be making a few comments in a minute. Before that, however, I shall be asking Simon Fraser, our Permanent Under-Secretary and Mark Lowcock, Permanent Secretary at DFID to say a few words to open the seminar. And before I do that, I want to thank my colleagues, in particular Isabelle Tombs and Ann Herd for all the hard work that has made this event possible.

Sir Simon Fraser, Permanent Under-Secretary Thank you very much, Patrick. I just want to say what a pleasure it is for me to be here to help open this event, both professionally and personally. I‟ll come on to the personal bit in a moment, but professionally, first of all, it is quite intimidating to see so many people in this room who were grandees when I, at the time of the Know How Fund, was a First Secretary in the Foreign Office – people I would hardly dare to speak to. But you are very welcome; thank you very much for coming back and joining us today. It is great to see so many familiar and friendly faces.

The Know How Fund was established in the spring of 1989, and was a very innovative piece of diplomacy led by the Foreign Office, working with the Development part of the Foreign Office as it was then. It was aiming to try to make a specific, technical, meaningful contribution to supporting change, first of all in Poland and then in other parts of Central and Eastern Europe. I lived through it because I had the privilege at the time to be William Waldegrave‟s Private Secretary. He was the Minister responsible for that part of the world, as well as the Middle East. It was a very challenging and interesting time, but I remember 1989 and 1990 as one of those really exceptional, transformational, inspirational moments in my career. It was a completely formative time; I think William feels the same. The Know How Fund was a contribution made by the Foreign Office to support peaceful evolution, change, and the development of societies in those countries.

It is wonderful that Keith has written this book.

It is wonderful too that we are having this seminar today. This seminar epitomises three things that we are trying to do in the Foreign Office at the moment. One of those is, indeed, to learn from history; as Patrick says, this is one of a series of seminars. The Foreign Secretary himself has placed a great emphasis on the value and importance of learning from history. The second thing we are trying to do is to keep on encouraging people to come up with new ideas, and new ways of doing diplomacy. The Know How Fund is an inspirational example of that. The third thing we are trying to do is increase our outreach – both to former members of the Foreign Office and to the academic community, and to others who are interested in international affairs – through events such as this, which enrich our thinking and the life of the Foreign Office. This is an excellent event. Of course, we will also be talking about the Arab Partnership work that we have been doing 30 October 2013

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since 2011, which in a sense can be seen as a successor of the Know How Fund in terms of the type of approach that we are seeking to take.

To finish on a personal note, I do want to say that success, as we all know, has many fathers and mothers, and many of the fathers and mothers of the success of the Know Fund are in this room today. If I could just say, I think the intellectual driving force, and political driving force of the Know How Fund was William Waldegrave. It is a great tribute to him that he picked this up, was creative in thinking it through, and worked with officials so effectively to make it work. It is great to see Anne and Adrian and others like Barney in this room. I am sorry if I mention a few names and exclude others – but it is great to see so many people who were associated with this here to share their experience today. I am sure we will learn a lot from it. Thank you very much.

Mark Lowcock, Permanent Secretary, DFID I am delighted to be here too. I am handicapped somewhat, even compared to Simon, by having a number of my illustrious predecessors in the room. I am going to have to guard what I say doubly for that reason. I really enjoyed the book, Keith; I think it captures an interesting and important experience. I have a couple of serious reflections on the book to offer that I hope will inform and maybe challenge your discussions during the course of the day.

There has been a series of books or pieces written about this period and development assistance in particular. We have just had a book published by one of our former colleagues, Barry Ireton, on the history of British development systems since the 1940s. Anthony Seldon has been writing a bit about this in his history of the Labour government in the 1997 to 2010 period. Another book, which captures part of the very same period that Keith‟s book captured, is Tim Lankester‟s book on the Pergau Dam. There is quite an interesting contrast between the two, because Tim‟s book captures arguably the biggest scandal and problem that Britain has ever had in its development effort. Keith‟s book captures the contrast, if you like: I do not think we should overstate the impact of the Know How Fund, but nevertheless, clearly a successful and useful contribution. I am not on commission, but Tim‟s book is for sale and it is a ripping yarn if you have not read it.

It is important to know that the Know How Fund was actually quite small. In the 1993 to 1998 period, we spent about $275 million; the Americans spent 10 times as much, the Germans 20 times as much. We ought to ask ourselves what are the right ways of measuring the success you can have with a limited amount of resource, which is what we had. There are various quotes in the book that point out the difficulty of that. One of my former colleagues said, „If the success measure is how fast we are spending the money, we are doing quite well. If the success measure is the breadth of the smiles on the faces of British consultants, we are doing fantastically well.‟ Of course, we were trying to do some serious things: promote political reform, and promote economic reform. Those are intrinsically hard things to measure. The book does a nice job in capturing the nuances of that.

The two serious points I wanted to make and offer for your discussions are firstly, this was about assistance for reform. The story that comes out is that the assistance worked when the reformers wanted to reform. There is a nice set of descriptions of the importance – I think Lord Waldegrave was at the heart of it – in terms of focusing on the reformers and focusing especially on economic reform and keeping them focused on the IMF in particular. In the early phase, that was a really important thing to do. Likewise, in the early phase, the first few years, it was clear that there were a set of energetic reformers. As time passed, the momentum of reform slowed somewhat. There is a very interesting quote from an American ambassador, on pages 153-154 for those of you who have the text, which captures this quite well. He says, „The overarching lesson is that without some degree of consensus and political reform, the impact of assistance on political and economic reforms is limited.‟ That is a lesson that still applies to us now. Simon and I spend a lot of our time working on the Arab Spring, in lots of other countries: you can throw a lot of money and effort at problems, but unless there is a strong degree of desire on part of the people you are throwing it at to solve the problem, you are not going to be spending your money wisely.

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A second serious point I took from the book – and I will think a lot more about this myself – the middle chunk of the book, pages 110 to 140, are largely around internal Whitehall tussles, turf wars and struggles about who was in charge of what. It is quite striking to me that, after the first few years of the Know How Fund‟s existence, it looks as though quite a lot of our collective effort was debating with each other the next best thing to do. In the last few years we have tried really, really hard to work in as collaborative a way as we can, especially through the creation of the National Security Council. The book does convey quite well the ease of falling into other sorts of traps. If I may say so, that tussle is a little bit overstated. Most people spent most of their time trying to solve the problem, but I do remember myself, from the stance I had in Lynda Chalker‟s office and from other positions, that there was quite a bit of this tussling with each other as opposed to solving the problem. Today‟s generation of leaders need to make sure that we do not fall into that trap.

The last thing I want to say is the Know How Fund was hosted initially in 22–26 Whitehall, which is now the home of the Department for International Development. I remember when Michael [McCullough] came to an alumni meeting we had a year or so ago; he said he was glad to be back in that building. I want to quote what Michael and Barney [Smith] said about that set of buildings when they first moved into them. Michael described a „shabby entrance with no reception facilities, nor any adjacent space to provide them.‟ Then „a rabbit warren of poorly lit and not very well ventilated rooms of uniformly depressing character.‟ Barney was not quite so positive; he referred to the „dingy decoration and blotched mirrors, which gave the place the air of a low class brothel.‟ I want to tell you that it is a lot better now, and please come and visit us if you have not had the chance to do so already. Thank you very much.

Dr Keith Hamilton This is not quite the book it was meant to be. When I first received a telephone call from David Coates, the then Head of the Joint Assistance Unit for Central Europe in about November 1994, it was not to invite me to write the history of the Know How Fund. It was to ask me if I knew how much it would cost to hire an outside historian to do the job. I hesitated. I concocted a few figures in my head, suggested them, and then I said, „I will do it for free.‟ Well, not quite for free because I was a paid official at the Foreign and Commonwealth Office, but nonetheless, it would cost the Know How Fund no extra money. Part of my reason for doing that was because at that particular moment I was in the midst of what seemed like a never-ending wrangle over the publications policy of the FCO‟s historical branch. The possibility of getting down to writing a serious history was terribly appealing.

That was, in terms of contemporary parlance, my window of opportunity – perhaps a more apposite metaphor might be my defenestration of Prague. Nonetheless, I went along to see David about it. Just how serious a history David wanted was another matter. David Coates suggested to me that what he would like was a history based largely on oral records. He said there were tales to be told, tales that would never reach the archive. My main aim at that stage was indeed to go around interviewing people, but of course, I needed some guidance. David said, „Look, I have got all of these papers in this corner of my press. You had better read these.‟ He picked them all out and shoved them all into two Tesco bags. I then walked down Whitehall with these two bags of papers. How astonished I was when the first one that fell out was a handwritten note from the Foreign Secretary. Clearly, for somebody in the records department, this was quite a tale to tell.

Nonetheless, those papers stimulated my appetite for more. I really felt I would like to have a look at much more on the Know How Fund before I began interviewing people. In consequence, I called up the archive at Hanslope Park, and I began work.

It was a wonderful period. I had never been so excited going through these papers, which were barely two years old. For me, contemporary history had never been more contemporary.

That history, of course, was finished within about 12 months or so. It was a very different history in many ways from the one that we have today, since this was obviously a larger piece of work. It was, in part, stimulated by events in Eastern Europe, by the commemoration in 2009 of the 30 October 2013

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20th anniversary of the events of 1989, and of course, from posts for copies of my original internal history. Patrick Salmon also encouraged me to go ahead and this time, with the assistance of the Cabinet Office and DFID archives, I was able to go on taking this history up until the early years of the 21st Century. In many ways it is not a completely satisfactory history. There is perhaps too much diplomacy, too much administration, and there is too little in it about the operations of the fund. There is too much policy, too little local colour. Nonetheless, it is a diplomatic historian‟s verdict; it is a diplomatic historian‟s version of events.

It has also left me with several questions in mind, questions that we may have some answers to today: questions that I do tentatively pose in the book, but which I really have not succeeded in giving proper or full answers to. One of the obvious questions is how much of a difference did the Fund make? After all, it was quite small compared with the multilateral effort that was going on at the time. Did it contribute much to changing history? If so, how much? That is not ever an easy question to answer, but one that we might reflect on.

The second is to what degree did Britain benefit from the Fund? You cannot really read the documents without realising that some people will say, „There is political and commercial advantage to be had from developing this, using this fund in Eastern Europe. „You cannot read the documents relating to the Fund without being aware that some saw in it a means of securing political and commercial advantage: commercial contacts would be made and political influence expanded.” It would be interesting to hear the views of the panellists here on just how far that did contribute to British influence in Eastern and Central Europe.

Finally, the other question – one that is implicit in much of the book – is the question of how far those charged with managing Britain‟s development aid can really work satisfactorily in tandem with British diplomacy. When David Coates spoke to me about the book in the first place, he said he thought the Know How Fund was a successful, hybrid exercise: it was a successful fusion of two cultures, the diplomatic and the developmental. Yet one cannot read through the book itself without realising that from time to time there were these tensions, for very obvious reasons. After all, why was so much aid being given to middle income countries of Central and Eastern Europe when developmental money was needed elsewhere in Africa, Asia, and the Caribbean? That was the other question: how far aid and diplomacy can be made to work in tandem? This is the evidence that I derived from the archive. It is my interpretation. We have witnesses here today, who I hope will shed more light on it.

Responding to Change in Central Europe, 1988-1990 Patrick Salmon Thank you, Keith, and thank you Simon and Mark for those comments. I was struck by the extent to which the questions posed by Keith at the end resembled those Mark posed just a few minutes before. They are ones we are going to come back to throughout the day.

I am chairing the first panel. It is devoted to the origins of the Know How Fund, responding to change in Central Europe in 1988 to 1990. We have given some guidance notes to our panellists to do with how the collapse of Communism was greeted within the Foreign and Commonwealth Office, and the way in which the response from that part of the Foreign Office interacted with the response of the Prime Minister, Margaret Thatcher. I am sure we will come back to that throughout the discussion as well. We have three experts –– Lord Waldegrave, Ann Lewis and Adrian Davis. Each of them will speak for a few minutes outlining their take on these events. I hope we will then have plenty of opportunity for questions and contributions from the floor.

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account of how the Foreign Office worked. There was no mention anywhere in it of Ministers. I said, „We have Ministers, do we not, Patrick?‟ And he said, „Yes, yes, we do.‟ „What do they do?‟ I said. „There is the matter of the presentation of the nuances‟, he said. I think he was pulling my leg, but I have never quite discovered, and I have never got the truth from him since.

One of the things about this episode, which we are talking about today, is that this was highly unusual in that it was highly political from the beginning. Britain was equipped with a symbol and a leader in Margaret Thatcher, who resonated all across Eastern Europe. There is no such thing as a value-free policy of course, but this was politics right from the beginning. David GoreBooth also came to see me early on to talk about the Third World War. That made me nervous. I said, „David, what about the Third World War?‟ He said, „Oh, Minister. It is over. We just won‟, which was a typical David Gore-Booth remark. What was happening was the restoration, post Cold War, to the European family of a range of countries that were once part of the Western European family. This was not like developmental aid in traditional senses in my view, then or now. You will find flip remarks in the papers from me expressing a little suspicion of the ODA philosophy. The ODA did not much care for us giving money to well off people and so on and so forth. But what we were doing was not like development aid, in my view. Of course, the people in ODA were going to be extremely important as individuals, and in the end, institutionally: telling us how to do contracts and so on.

This was about reintroducing liberal economics, parliamentary democracy and law and so forth to countries that had mostly had such things in living memory of people. This is why I am deeply suspicious of the phrase „The Arab Spring‟. Spring is a thing that follows winter, and winter follows autumn, and autumn follows summer, and summer follows spring. It is a cyclical affair. The phrase is of course borrowed from the Prague Spring. The Prague Spring had followed a Prague Winter. In 1938 Czechoslovakia was one of the leading industrial countries of the world. We were quite consciously – and Margaret Thatcher amongst us, who knew a lot of the history – involved in something a little different, and perhaps unique. We were trying to be helpful midwives to the birth of something that was going to be born itself. Of course, there were wonderful – in the current jargon – disruptive officials in ODA and in the Foreign Office like Ann, Barney, and Adrian who got it absolutely straightaway. They contributed at least as much as we did. However, we were trying to do something that was not a matter of rolling out a development programme for some new countries. That is my first proposition. Great credit to the Foreign Office that they were so swift in moving and getting it: that was because of the structure of the Foreign Office.

It is a small diversion, but to the outside world, the Foreign Office always has an image of being a stately and old fashioned place. I find it is not like that. I find it like a very good senior common room. We had a young Frenchman; I do not know if you remember that programme, Simon, where they sent people from the Quai d‟Orsay. We had a Frenchman who was seconded to us. We put him, of course, on the Algerian desk in order to alarm the French. When he went away, I said to him, „What is the main difference between the Quai d‟Orsay and the British Foreign Office?‟ „That I am talking to you, Minister‟, he said. The sense of a continuous big seminar of people, quite junior as well as senior, was part of why we were able to move quickly.

Incidentally – I will offend some people present today, but not others, depending on your age – we quite often find that foreign ministries that deal with regimes are slow to notice when those regimes are about to disappear. You have built up contacts; you have built up ways of doing things: it cannot be that they are all going to disappear. It is all going to take much longer than people might think, and so on. Actually, it was all moving very fast. Quite often it was talking to the youngsters in the embassies who were out in the crowds, in the streets, who sometimes knew more – not more than the best ambassadors who talked to their youngsters – but they were noticing what was happening quicker. The KHF was one answer to this. One other important point I want to make. We politicians came with relevant baggage, because we were Thatcherites, more or less. We were believers in free economies, and we also knew people who were involved in all of this before we came to our Ministerial jobs: we knew relevant people. Leszek Kołakowski was a fellow at my college in Oxford; friends like Roger Scruton and Jessica Douglas-Home were 30 October 2013

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running underground universities in Czechoslovakia. There was a lot going on that was capital P Political outside the sphere of official action. So, some of us came with quite a lot of baggage – relevant baggage for once.

The range of things that we wanted to do were, of course, how to get the communist party out of all the institutions of state, how to talk to people about a depoliticised civil service and foreign service, depoliticised spies. I remember taking a group of allegedly former KGB generals to lunch at Brooks‟s Club, and said to them as we toasted, and drank a good deal of Brooks‟s drink, that this was probably the first time a Minister had taken KGB officers to lunch in Brooks‟s club. „Why do you say that, Minister?‟ they all said, slapping their thighs. So, there were contacts going on right across the board. Of course, the economics was part of it – stock exchanges, markets.

After all, we were the country that had led the way worldwide in privatisation.

In some ways, the most important contribution I made to the whole thing was – and it would not be allowed today as you would have to go through great procedures, and it would have taken two years – was the appointment of Kate Mortimer, who should be here today but died much too young. I happened to know Kate. I had been in the old Think-Tank, in the CPRS in the 70s. Kate had been there later, and had written a report with Tessa Blackstone not wholly admired in the Foreign Office.1 She had gone off to work for Sebastian Walker‟s publishing firm. That had not worked, and I knew she was looking for a job. She had been in Rothschilds, she had been in the World Bank, she had been in the just the right sort of places. Her appointment was probably one of the most useful things that I proposed. „Maddening parsimony of HMT‟, I have written down here, but that is just life, is it not? In a way you can argue that they were quite good, I suppose. However, we were arguing that there was a huge peace dividend coming along here if the whole of Central and Eastern Europe was stable, and they could spend a few millions, could they not? They did spend a few millions, but if they had spent a few million more it would have been helpful.

Yes, there was competition with others. We wanted to keep a British flag flying. We did not want all our aid to be subsumed into multilateral aid for which we would get no credit. We had some old-fashioned views that it was a good idea to have other than Germans influencing Central Europe. As this is being recorded I will not add the name, but I remember sitting in the Grand Place in Brussels having a boozy evening with one of my German colleagues who explained to me that the Ukraine was in a traditional sphere of influence of his country. Some of that made one a little nervous. Anyway, pluralism is a good thing, and we thought we had some genuinely good things to offer in terms of how to manage a civil state, how to do privatisations and to set up a liberal economy.

Once or twice, I was a not altogether welcome brake on what officials wanted to do. I was chivvying you most of the time, not that you needed much chivvying, but I wanted to have a British flag up, and we wanted to be doing things quickly. We wanted to have something to say to our friends and to our new allies. However, sometimes one wanted to use a political test to slow down a little bit, slightly to the irritation of officials. When the people in Bulgaria removed the stars from their caps and said they were now all social democrats, I insisted on using the test of Georgi Markov‟s murder to see whether they had really changed. When Mr Gotsev, Deputy Foreign 1

The Prime Minister, Harold Wilson, announced in January 1976 a review by the Central Policy Review Staff (CPRS) of overseas representation. In August 1977, amid a storm of protest, the CPRS recommended a change for British overseas representation, with a dramatic reduction in the volume and type of work performed overseas, particularly in the fields of diplomatic hospitality, information work and the reporting of diplomatic and economic information. One of the main suggestions was that the Diplomatic Service and the home Civil Service be effectively merged with a Foreign Policy Group created from the latter (Report by the Central Policy Review Staff, HMSO, 1977).

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Minister, said to me that Markov was clearly killed by the British Secret Service in order to discredit the People‟s Republic of Bulgaria, but could he have a very large loan, it seemed to me that the answer to the latter was „no‟ for the time being, until he pulled himself together a little bit on the first.

You had to be careful with this, as officials were very, very keen to tell me, but one should use some tests of whether there was real reform going on. It was very important that we did not deal out very big credits in the way that the old Ostpolitik had done, which would have slowed down reform. That comes out in the book very well. On the whole, we did well. It was a one off situation – and this is perhaps the last thing to say to a seminar with today‟s title – it is difficult to draw many conclusions for other places in the world where the problems are more difficult. But here we had people who were the people Paddy Leigh Fermor2 had been staying with, or sleeping with, in 1934. They were part of the old family of Western nations who were trying – after a nightmare period of first Nazi occupation and then Communist occupation – to get back to where they would have been; most of them anyway. It was far easier to help them.

Partly what one was doing was not trying to teach so much as to help them to raise their morale, and help them to keep going with what they were doing themselves. They needed friends.

Sometimes they were well out to the right of us. My first interview with Václav Klaus, I noticed he had a copy of Adam Smith on his table, with which he was much more familiar than I was. I put some feeble and rather patronising advice to him. I said, „Could you try to make some agreements with the opposition parties about welfare spending so that your first election is not all bidding about pensions?‟ „Welfare? We are not going to have any of that nonsense‟, he said. Some of them were a bit scary. Sometimes I was trying to help them back a little bit. With Václav Havel I had quite a different conversation with about the uniform for the guards in the Castle. A man of the theatre, he knew that it mattered what the national symbols were. I say that in a jokey way, but it was actually important what the new symbols of state were.

I will end by the remark that, I think it was Skubiszewski3 said to me in my old office (the Whitehall end of the Foreign Office, because things were being refurbished at the other end). The opening of Parliament was taking place, and there was clinking of harnesses and bands, and so on and so forth. He was not listening to what I was saying – not unknown to me. He wanted to go and watch the parade, and as the parade went by he said, „the communists robbed us of our rituals‟. One of the things that we were helping them to do was re-establish the rituals of a liberal civil society.

Ann Lewis Keith first interviewed me on this subject about 20 years ago, and I never really thought this book was going to see the light of day, so congratulations, Keith. I have been asked to present a slightly different view: the view from the coalface, if you like, or what Keith would call local colour. Please forgive a slightly personal note to these remarks.

Keith kindly says that the Know How Fund was my brainchild. Well, yes and no. Yes perhaps in a certain way, but no in the sense that the Know How Fund was the culmination of a process that had been going on for several years. Apart from the advent of Gorbachev, which was clearly crucial, I would date the beginning of the process to 1985 when John Birch, then head of EED, one of the many hats he is wearing today, wrote a dispatch endorsed, by Geoffrey Howe, which proposed a new and more forward policy for the UK of constructive engagement in Eastern

2

Sir Patrick Michael Leigh Fermor is well known for having walked from the Hook of Holland to Constantinople in the 1930s, embarking on this voyage when he was 18. He received hospitality on the way in barns, shepherds' huts, monasteries and the country houses of the landed gentry and aristocracy in Central Europe. This is recounted in three famous travel books: A Time of Gifts (1977), Between the Woods and the Water (1986), and The Broken Road: Travels from Bulgaria to Mount Athos (2013).

3 Krzystof Skubiszewski was Polish Foreign Minister (1989-1993).

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Europe. (If you will forgive me, I am going to use Eastern Europe because that is what we called it then.) The idea was that we would encourage contact right across the board, both official and unofficial, academic, British Council, with every sector of society, with a view to nibbling away at the foundations of communism, creating a critical ferment, as he called it: not provoking instability, but maximising our contacts, and supporting different ways of thinking wherever we could. Coming to the political process, of course, the big breakthrough was when Jaruzelski finally brought noncommunists into the Round Table process, and that was on the eve of Mrs Thatcher‟s first visit.

Mrs Thatcher was indeed a great star in Eastern Europe. Her name was widely known; she was very widely admired. Her visit was a very important occasion. I recall that the Foreign Office sent over a slightly anodyne speech full of warm words and congratulations, but short on commitments. When she made the speech, it turned out to be rather different. As she said, “Once the Poles provide the commitment, the resolve and the perseverance to break through to success, their friends will be ready to help them in practical ways”. She went on to refer to the IMF, credits and debt, investment, joint ventures, and finally, increasing contacts of all sorts between our governments and peoples. This was considerably more forward than anyone had expected.

According to Keith‟s book it created some alarm in the Foreign Office. That must have been in the economic departments, because in EED we were full of glee at the thought that we would really be doing much more and being more active in helping the process of reform.

At this time we were in discussion with posts about what might be done in practical ways to support the process of reform. In Hungary, of course, economic reform was already fairly well advanced. In Poland it was political reforms which were in the forefront and economic reform pretty much nowhere. The posts started working on various projects, mostly in the field of management training and other economic aspects, some of which were already in train. In our department we were thinking also in terms of wider areas where we had skills which they were going to need - in law and governance, justice and the media. As reform continued in Poland, and as Jaruzelski‟s visit loomed the following June, everyone was casting around in Whitehall for something that Mrs Thatcher could offer. She wanted an eye-catching statement. She wanted to provide something powerful that would indicate UK interest and desire to see them succeed. But many things were very difficult: IMF money, debt, credits; all these things were very difficult. In my department we were thinking of what we could contribute to this.

For those who really like trivia, I can tell you that the idea of the Know How Fund came to me late one night while I was in my bath, pretty much in the form in which it eventually emerged.

Instead of looking around for one or two projects, none of which would be impressive enough in its own right, we should go for a global fund that would enable us to transfer skills and expertise across a whole range of areas. This would give us flexibility, and we would not have to make very early decisions on exactly what would be included. I went into the office the next morning, and walked into the office of Tony Gooch, our economics expert, and said, „I‟ve had this idea. What do you think?‟ He was quite positive and asked „How much money would you put in this?‟ and I said, „I have not thought about this. £1 million?‟ Such is the nut from which big forests grow. Anyway, the idea found some favour in the hierarchy in the office. £1 million was thought to be quite inadequate for the kind of splash we wanted, so it was put up to £5 million, though it was only £1 million a year over five years. There was some uneasiness in Number 10 about whether this would really create the right effect, but as it happens, it went down very well with the Poles. It created a lot of good publicity, and Mrs Thatcher was pleased. This was only one of several things she mentioned, of course, but it was the most immediate, and the most practical.

The original proposal to Number 10 said that there would a separate unit in East European department to run this fund once we had it, but unfortunately it took four months actually to find the staff.. So there was I, asked within the margins of my day job, as it were, as Deputy Head of East European Department, to run the Know How Fund. I had no experience of running programmes; nobody in the Foreign Office did. We did not have programmes. I knew nothing about the financial procedures that one might adopt. The first person that came over from the Finance Department to talk to me about it said, „You can use the money for anything that fulfils the remit set by Number 30 October 2013

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10.‟ That was all. Meanwhile, of course, Ministers – Mr Waldegrave, as he then was, in the forefront – were extremely keen to see some action, as Ministers always are. The Poles were sitting there expectantly waiting to see what would happen. Posts were clamouring for things to happen. People outside started writing in with all their ideas for projects and programmes; some of them they had had on the shelf for years. Some of them were crackpot, some of them were actually rather sensible. But it was all very difficult at the time.

I have to say, we were rescued by the British Council, to whom I shall be eternally grateful.

It so happened that the director in Warsaw had a whole raft of projects on the shelf that he had wanted to undertake when he could, but there was no money. Peter Mackenzie Smith kindly came over from the Council, brought me about a three-page list of projects that they would be able to carry out . I ticked the ones that seemed to me to fit most neatly into the remit that we were given.

The Council very kindly launched quite a lot of those very rapidly, so we were able to have some action on the ground. Meanwhile, we picked out the most sensible of the projects we were getting from outside and that the post were also receiving. The Great Britain/East Europe Centre – which had for some time been running study visits and seminars for parliamentarians and others – very rapidly adapted to the new possibilities and came up with some very useful projects. By the autumn, amazingly in retrospect, we had projects underway on parliamentary institutions, local government, retraining the unemployed, journalism, accountancy, financial management and privatisation, plus finally we had a mission going out to Poland to identify suitable future projects. It was hoped this would make going forward more coherent. Mrs Thatcher was very enthusiastic about the Know How Fund. . She wanted to expand it for Poland, and extend it to Hungary.

By this time it was becoming all too clear that really this was quite beyond the capacity of the people who were trying to deal with it in East European Department. Finally in the autumn, the promised unit was set up, the Joint Assistance Unit, to take over the running of the Fund. It was to be headed by Dick Jenkins, who was the Foreign Office‟s biggest expert on Poland, and had just come back from a commercial post in Warsaw , with the help of Adrian Davis from the ODA. Finally, the thing was put on a more professional, sensible basis, and I was able to retreat to my day job, which was dealing with the various regimes that were beginning to collapse all over Eastern Europe. I then passed the nitty-gritty to Dick and Adrian, but I remained dealing with the Know How Fund as it was extended to other countries, as and when regimes changed.

It seemed to me that it was always terribly difficult to do anything very far-reaching for new regimes. The soft option was always to fall back on expanding the Know How Fund, or extending it to another country. I agree with Adrian that in some cases this was not always as well thought out as it might have been. Anyway, it was there, and everybody wanted one. It was immensely popular at the time. We even had a request from Mongolia, „Please can we have a Know How Fund?‟ Sadly, they could not. It was also becoming clear to me that the Foreign Office and its Diplomatic Wing really did not have the resources, the experience, or the budgets to run what was an increasingly expanding programme. I got a lot of flak from my diplomatic colleagues when the proposal was put, and I agreed, that we should bring in the ODA to take over most of the funding and management of the Know How Fund . This would enable us to use the systems that they had in place, and operate in a more professional way. In some ways, I regret that the diplomatic wing took somewhat of a back seat from this point on. But a segment of the Know How Fund was always preserved for projects in governance, law, parliamentary procedures and so on, which were very valuable.

I could say a lot about the aims and how far the Know How Fund succeeded, but perhaps that is better kept for the discussion period.

Adrian Davis In Montserrat, about 10 days ago, I was extremely lucky and privileged to hold the FIFA World Cup trophy – probably one of the first Englishmen to hold it since 1966 – as part of the World Cup Trophy tour. It is going to 89 countries before Brazil 2014, and I said to the proponents of FIFA and Coca-Cola, „It must be really nice to go somewhere where you are so welcomed enthusiastically, 30 October 2013

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and everyone is so happy to see you.‟ What is the relevance to the Know How Fund? Well, the relevance is that was the kind of response we got in the initial days of the Know How Fund: a palpable outpouring of enthusiasm and just generally, a very positive attitude and ownership. Of course, in those early days it was rather difficult to discover whether the people who expressed ownership were people we wanted to be owners. Sorting out who were the most sensible people to talk to was generally one of our trickiest initial tasks.

I was asked to join the Joint Assistance Unit as it was then called in October 1989. I was slightly perturbed because it sounded vaguely military, and although the ODA had got nothing against the Foreign Office, at the time it was probably very worried about being associated with the Ministry of Defence. Of course, it was not like that. The unit was very small: it was me, Dick Jenkins, and a secretary. I was told that the initial view from the Foreign Office was that it could be run by a retired ambassador, but it did not happen like that. What people may not be aware of – and Lord Waldegrave was partly instrumental in this – is that the Know How Fund, as small as it was, had to report to two Ministers, Lord Waldegrave and Lady Chalker. What has not been mentioned yet is the Know How Advisory Board, a group of the great and good of about 12 people.

We had an enormous superstructure coming on top of us.

This was also the first time that new money had become available to the aid programme for many years. It did not come to the aid programme, but it became available for development spending: the £25 million for Poland, the next £25 million for Poland, Hungary, Czechoslovakia, and Bulgaria. All this money was significant in 1989 terms. As Ann said, everyone had ideas on how to spend it. I had been hitherto blissfully unaware of the Polish and the Hungarian diaspora in London. They all had brilliant ideas on how to spend this money. They all were very well connected, and they all did not hesitate to use those connections. That is why in the pre-internet era the only way in which we could actually function was to unplug the phone, literally. As soon as you plugged it in, it started ringing, and someone had a bright idea for you to spend the money. To a certain extent, as people have said, and a bit later on, this applied to other government departments – Mark talked a bit about tussling; other governments were very keen to be involved in Eastern Europe. Who was not? It was the greatest political story for many years. However, they had no funds of their own, and they were keen to use the Know How Fund and push it much wider than its original mandate.

As other people have said, we were governed by the most insistent political imperatives.

We were told to get activities going as fast as possible, but we needed to observe the accounting proprieties. Insofar as ODA experience or expertise was relevant, certainly in the initial stages, it was to try to quickly establish country strategies and move away from the myriad of small-scale projects to ones that could have a more transformative and sustainable impact. In this context, I would like to emphasise what Lord Waldegrave said about Kate Mortimer. In one obituary I read following her untimely death in 2008, the writer said that he had asked a mutual friend in the Cabinet what Kate was doing, and the reply was, „Oh, she‟s sorting out Poland.‟ It was not quite like that, but Kate participated, along with me, in all the initial strategy missions and remained associated with the Know How Fund for over a decade. She was an absolutely wonderful fund of ideas and experience that helped us in a situation that was completely different for most of us.

Although there was the imperative to do things quickly, developing some kind of strategy was critical to deciding what we could do – even more importantly, what we could not. It gave us a way of turning down the many requests that we had without excessive transaction costs. We could say, „This is not what the Know How Fund was set up to do. This is the agreed strategy. It does not fit in here, so please go away‟ – but saying it much more politely than that. We had to find managing agents who could do work for us, who had the expertise. As Ann says, the British Council was a very enthusiastic partner.

This is about ownership and commitment; I remember one particular open management course we did in Hungary. I think of the 100 or so participants, probably about 90% had either a postgraduate, or a PhD, maybe in Nuclear Engineering etc., but they wanted to learn. They wanted to understand the ideas in management. That kind of atmosphere was just wonderful. It 30 October 2013

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enabled us to respond in kind. We are talking about the relevance to the Arab Spring, but actually, if there is a detour, I think the other resonance I have had in this, in my career, is work with China, along with probably other emerging powers: the willingness of the Chinese to learn from relevant experience, to test that experience to see whether it was appropriate to China, and then to have the resources to roll out projects in China. There were not the resources in Eastern Europe, though I will come on to that. But that kind of commitment, that willingness to test evidence, to see what was appropriate: the willingness to learn was a really important characteristic of the Know How Fund.

Certainly in its initial stages much of the ethos of the Know How Fund was to provide the resources for experiment. We were prepared to take a lot of risks, and in that context some failures were inevitable. I think this was accepted by senior management, and to a certain extent, by the politicians. As I have just said, one of the best approaches was to provide the knowledge and experience that governments in Eastern Europe produced to leverage the much greater financial resources that were coming on board, especially from the European Union in the shape of the PHARE programme. That became an explicit part of the strategy. The fact that you could say the UK helped to deliver these resources made it very much a UK transaction. While on the wider resources you would not have the flag, you would have the knowledge that the UK had provided this. I think that was very important. Finally, I always remember when we were talking to the Minister of Finance in Czechoslovakia, as it then was, about privatisation and vouchers etc.

The very young and energetic Deputy Minister of Finance in Czechoslovakia said everything we were saying was interesting, but he was spending far too much time, he thought, on answering questions from uppity parliamentarians. He did not have time to focus on the privatisation. We said that that was one of the by-products of democracy. He vaguely accepted that. Thank you very much.

Questions and Answers Patrick Salmon We will turn the discussion straight on to the floor.

Sir Peter Marshall First of all, thank you everybody for arranging this first class seminar. It is wonderful that you have got this going, and it is obviously immensely stimulating. May I ask two questions, as it were getting in my retaliation first? I would have said there are two almost exponential questions about what we have heard this morning already. The first is: were we sufficiently or equally concerned with the evolution of Europe and of the liberated countries of Europe within the European complex as we were eager in the Know How Fund? Were the two things really in harness? I am thinking we had the Congress of Paris, you might almost call it, in 1990: Mrs Tâ€&#x;s last international appearance. There does not seem to have been the same push to understand exactly what was happening on the European scene generally as a result of this transformation.

The second question beyond it is what is the political – not simply the diplomatic – significance of the developments behind the Curtain that made this possible? What is the significance of the Velvet Revolution, not only in Europe but worldwide? What would be the thinking about what happened subsequently in the later sessions? Is this really the beginnings of soft power as a real factor in international affairs?

Barney Smith I just wanted to put the record straight. We did not start in the brothel in 20 Whitehall; we started in the Foreign Office in Downing Street East. I note that the Permanent Secretary of the ODA got that wrong. I hope it is the only thing that the ODA got wrong. Thank you.

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Patrick Salmon That was a quick contribution, thank you.

Nigel Thorpe, Former Ambassador This is a comment, rather than a question. Is that in order?

Patrick Salmon Yes. Could you identify yourself first? A comment is absolutely fine, yes.

Nigel Thorpe I am Nigel Thorpe. I was in Warsaw 1985 to 1988, Head of Central European Department 1992 to 1996, and Ambassador in Budapest 1998 to 2003 – quite a long stretch of time through the Know How Fund period. What I was going to say was, well, first of all, the Know How Fund was a fantastic idea. It was fantastic to work with the people in the JAU and the people in their Posts who delivered it. It was amazing, and I really wanted to pick up Mark Lowcock‟s question: „Did it do Britain any good?‟ Because it was, as has come out, part of a much wider transformation of more programmes delivered by the West in Eastern Europe, individual countries, multilateral programmes and so on, and the role of the private sector, which had a huge role in changing the economies. We played a part in that, but not always without controversy. In Budapest, where the privatisation advice to the Hungarian government was paid for by the Know How Fund, we succeeded in leading the privatisation of the four major companies, but not without allegations, of course, of corruption, and allegations that this was not actually in the best interests of Hungary.

This came from subsequent governments, including the one that is presently in power. That was a challenge. It is also important that what the East Europeans wanted was not only our money, and our help in building institutions, but they really wanted to become liberal free market democracies like us, which were part of the big Western institutions – joining NATO and joining the EU. That was what I heard all the time when I was Head of CED. That was what we, in the Foreign Office, were working towards, and what ultimately I hope we helped to succeed in delivering.

Patrick Salmon Thank you very much. I should emphasise that it is very much comment as well as questions that we are looking for here. I will perhaps take one more comment or question from the floor and then we will ask our panellists to answer some of the points that have been raised.

Roger Garside, Consultant Thank you. My name is Roger Garside. I am perhaps one of the only poachers here today; I seem to be surrounded by gamekeepers. I created a consulting company in 1990 to sell and to earn a living by selling the expertise of the City of London in creating capital markets in the economies in transition in Central and Eastern Europe. I want to pick up on two points made by Lord Waldegrave. The first is to endorse his praise for Kate Mortimer. It was a brilliant appointment. She was an incarnation of the Know How Fund, and I speak as a consultant, having worked with her for the best part of 10 years.

Secondly, Kate recognised the importance of something else that Lord Waldegrave said, which was the importance of politics. Mao Tse-tung said, „Put politics in command‟, and that is what happened with the Know How Fund. There was a good balance between the political dynamics, the understanding in the Foreign Office of the political dynamics and the will of Number 10 that Britain should play a part in the transformation, with the technical systems and expertise and the bringing in of people from the outside to contribute. I am not sure that I heard Lord Waldegrave correctly – I thought he said that that lesson, that prudence in politics was not transferrable to ongoing operations today. If he did say that, I do not agree with that. One of the things that I learnt from my work in this was the indivisibility of politics, economics, the whole bag.

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If one is to be successful in the development business in whatever country, in whatever context, there has to be the very explicit cohering of all these factors. I think that Kate understood that well, and I hope that lesson will not be forgotten.

Patrick Salmon We will take a pause there and ask our three panellists to reflect on some of those questions. The one that Peter Marshall mentioned at the beginning was the European dimension, and that linked up with the point that Nigel Thorpe made about the East Europeans wanting to become part of larger international institutions. Another was the suggestion, again made by Peter, of „is this the beginning of soft power?‟ Finally, the one that Nigel mentioned was the question of criticism of some of the actions that we took in relation to privatisation. Lord Waldegrave, would you like to start responding, please?

Lord Waldegrave Yes, thank you. Taken slightly out of order, adding a footnote about politics, there is one thing that is not covered in here. It is about the Know How Fund. There was another strand. Now, remember that all us young Conservatives of the day spent happy days at Cadenabbia in Adenauer‟s old house as guests of Konrad-Adenauer-Stiftung. We were extremely jealous of the Stiftung in Germany, at their capacity to take action. In the end that led to another strand that still exists: The Westminster Foundation, to do explicit politics, to help people set up party political organisations and so on. That was valuable too. It should not be forgotten.

Going fast, there was a comment that Adrian suffered constantly from the diaspora people ringing up. Some of them were a waste of time, others were not. I remember doing joint scholarship programmes with George Soros, for example, which was significant and valuable. In some respects, the diaspora could be helpful. The European transformation in general – to widen it, remember that going on in the background of this is the travails of the Prime Minister‟s slowly shifting scepticism about the European Union. At one of those seminars at Chequers – I was slightly involved in this – she began to see that one of the ways of helping her to dissolve her fear of the European Union was to widen it. We had the great widening or deepening debate. Pretty early on she became converted to the idea, which was not her original idea. Her original idea was that we should keep the European Union as small as possible. Then she thought, „Well, if we can get all these countries in, surely there would be more pluralism, and the whole thing would grind to a halt‟, which would be a jolly good thing as far as she was concerned. Taking it slightly lightly, the Union would become more like a trading area, and not get so involved in what she saw as nation building. That is an important part of the background.

In terms of relations to these countries, as various people said, a vital part was their desire for the respectability of joining the institutions: Council of Europe first usually, then the European Union and NATO. Of course, then one was running up against the big diplomacy with Russia when one talked about NATO. My point about how transferable all this is was not to be pessimistic, let alone to decry the idea that one should try and work with people who want to establish free markets and liberal democracy and law in civil society around the world. I retired from politics years ago, I know nothing about what is going on in the Middle East, but I do think there was something a little different about the restoration of these countries to the family of European nations. It was not very long before that some of them had been normal players. It was not odd that the French all poured back into Romania. The French and the Romanians had been close allies before the Second World War, and so on and so forth. There were ancient links to restore and long traditions in liberal democracy.

One other thing to remember, in which I was a small part of the conflict with the Prime Minister, was that she was locked in a dangerous battle, as I saw it, to try to slow down, or try to prevent the reunification of Germany. This wasted some of that great prestige, all across Europe, and certainly made the Americans think we had gone a little bit loopy. We were out of action at the

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high diplomatic level. The Foreign Office and Douglas Hurd restored it pretty quickly, but there was an odd counter thing going on in the background that you must remember.

Patrick Salmon Thank you for that comment, because I recall the last seminar that you attended, which was about German unification,4 and indeed, I think that is exactly the right answer. Ann, would you like to make any comment?

Ann Lewis Yes, one or two points. The Know How Fund was in many ways the forerunner of the much bigger EU PHARE Programme, and I think the UK had quite a lot of input into the formulation of the PHARE programme, which of course had far greater resources than we ever had in the Know How Fund. Other countries were also offering help, but it is my impression that the recipient governments had terrible difficulty coordinating what they were getting from whom. Perhaps some of the ex-ambassadors and people from posts might like to comment on that. There is no doubt that there was a certain element of competition going on. I have written down the aims of the Know How Fund. Apart from supporting transition, „demonstrate UK commitment to the region, keep the UK at the forefront of those helping, capitalise on the UK‟s prestige in the region‟. It was a very strong bilateral push, and it certainly was intended partly to counter the German effort, or indeed that of any of our other allies. But most of what we did with the Know How Fund was in fact useful preparation for EU membership. It helped to reform their institutions in a way that is now required of all the applicant members of the EU. To that extent, it was part of the pre-EU processing, even if they had not quite got around to thinking of EU membership.

Finally, on soft power, soft power had of course been important to UK diplomacy for a long time. The principal agents, I would suggest, are the BBC World Service, and the British Council.

However, it may be that this was the first time that soft power of the Know How Fund kind was applied to an area in transition, specifically to help the democratic process. To that extent it was perhaps a forerunner of later programmes.

Adrian Davis On the political aspects of the Know How Fund: it was of course included, Lord Waldegrave, in that I think we have a split of something like 20:80, and that was, to begin with, funded by the Foreign Office, and the 80% was funded by ODA, but I think it all merged, and so it was done.

The only other point I want to make is on soft power. I do not know whether there is a distinction between what we tried to do in Eastern Europe, which was explicitly transformation from centrally planned to a free market economy, and what we tried to do in developing countries, by and large, which was to develop them. I certainly do think this was the first example of soft power, and how people saw it, and that it does have resonance for, as I said, the work that we did in China as an integrated HMG operation, and the emerging powers programme more generally.

Money is not the issue in any of these countries. Money is not the issue in China; money is not the issue in India. It is about expertise. It is about using what you have in order to inform policy choice, and leverage what you hope will be the correct decisions. That is often more important than just spending money in the larger development programmes we have in other developing countries.

You can get a lot of payback for this. I think this was the first time we explicitly recognised that and implemented it in a proper and strategic way.

4

See transcript of witness seminar „Berlin in the Cold War, 1948-1990 and German Unification, 1989-1990‟ held at Lancaster House on 16 October 2009: http://issuu.com/fcohistorians/docs/full_transcript_germany.

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Lord Waldegrave I have two sentences: one on the other influence that we as politicians brought to the streams of innovation in the Foreign Office itself. I was very conscious of the precedents of what we, particularly the British, had done well in Germany after the war, some of it done by one of my and Dick‟s old mentors, the great Robert Birley, our former Headmaster, who I used to go and see at Wilton Park conferences. So, there were some precedents there. Again, the restoration, if you like, of Goethe‟s Germany, which was how he would have put it. It was restoration. Transformation is not quite the word in a funny way of what one was trying to get at, and what we thought the precedents were.

Patrick Salmon Back to the floor.

Stephen Barrett, Former Ambassador I was Ambassador in Warsaw 1988 to 1991, and before that, in Prague. Just a couple of random thoughts about the early days of the Know How Fund, and on soft power: I am very interested to hear what Lord Waldegrave said about comparing the situation in Eastern Europe to the problems of Germany after the war. This was in fact something that was attributed also in yesterday‟s obituaries to Mazowiecki, first post-war communist Prime Minister in Poland. On the question of Mrs Thatcher and Jaruzelski, she came to Warsaw some three or four weeks, I think it was, after I arrived on the scene. I took her to see General Jaruzelski. Then something occurred that I think may well be without precedent, in that she allowed General Jaruzelski to speak non-stop for 45 minutes. Be that as it may, the second part of that came when Kenneth Baker came, and again, I took him to General Jaruselski who said, and I think I find this quite interesting, that “Mrs Thatcher was one of the co-authors of our reappraisal in this country‟. I thought that was sufficiently interesting at the time to report to Charles Powell at Number 10. I do not know what has happened to it since then.

Thank you also for guarded praise about the influence of the Polish diaspora in this country. Although any diaspora will have its wild men among them, I think it was their knowledge, experience and contacts that made so much of the early days of the Know How Fund accessible in Poland and here.

A couple of other points, one on coordination: I was one of a group of European Union ambassadors who went to an early meeting at which the then Minister in Poland responsible for economic affairs outlined with his colleagues an enormous shopping list of ways in which you could help them. In desperation, I pleaded, not entirely successfully, for some degree of prioritisation, so I was very glad to hear that we were carefully hitting our targets for Know How Fund assistance in Poland. I think the development of the mechanism in choosing what these were is very important to carry forward into the future.

Stuart Laing, Former DHM I was DHM in Prague during the Velvet Revolution and for a couple of years after that, and then later Head of the Central European bit of the JAU. Then when it became a DFID department, I saw through that bit of transition. I would like to say a couple of things. One is to underline what Lord Waldegrave was saying about the sense of returning to Europe. We heard this constantly from the Czechs and the Slovaks at that time, in 1990. They saw themselves as coming back to where they rightfully belonged. A symbolic image of this was Václav Klaus, physically cutting the fence near Bratislava so that the Slovaks could get to Vienna, which was, and still is, 40 minutes away. That kind of thing resonated very strongly. It was very much a feeling of the politics and the social atmosphere of what was going on.

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of consultants and advisers. We have heard mention of Kate Mortimer; Roger Garside has said his little bit. But I want to emphasise this, because I think their contribution should not be forgotten.

There is a tendency in writing up these things to ignore their role because the files are there and the Foreign Office and DFID write up the stuff that went on between officials and Ministers, while the advisers wrote up their reports for the individual projects. But there is a risk that they may be forgotten, and I should not like that to happen. Thank you.

Roger Garside When I was still Director of Public Affairs at London Stock Exchange, a telegram sent from our ambassador in Budapest, Len Appleyard, was put on my desk. It was inviting the London Stock Exchange to send a representative to speak at the conference on quote, „The reopening of the Budapest Stock Exchange after 40 years.‟ Patrick Salmon I think we are probably going to conclude this session quite soon. What I want to do is just to get the panellists to reflect, finally, if they would, starting in reverse order with Adrian, if you would like to add anything more?

Adrian Davis No. Just to say that while I may have complained about the diaspora, I think that we could distinguish the crackpots from the people who had constructive ideas. We encourage those with constructive ideas and pull the plug on those who are crackpots.

Ann Lewis The idea of returning to Europe was certainly extremely strong in Poland, Hungary and the Czech Republic. I just wanted to say that this was an idea that was very much shared by those of us in the Foreign Office who were working on this programme. We all had quite an emotional involvement in it, not just boring bureaucrats trying to do our best. Of course, it was very important for ministers too.

Lord Waldegrave I just wanted to comment on Adrian‟s remark earlier, which I sympathise with. We added extra problems by setting up a superstructure of an advisory council. Curiously enough, I was very, very keen on that, because I thought that one wanted to try to make this a national and bipartisan effort.

The cost of that was to try to keep the press onside with some good journalists on the council, which did not always work, and with some people from the opposition. This was, of course, more important, and continues to be more important to the Westminster Foundation. Although it did produce a ridiculously top-heavy organisation, it did have a certain real purpose.

The other thing that I want to say is that we, of course, were a liberal democracy. We had plenty of argument amongst ourselves. Stiglitz5 is quoted in here as saying, „All this privatisation is absolute Bolshevism‟ and capitalist Bolshevism and so on. A small detail: Stiglitz was once cornered by Sir Keith Joseph at All Souls, who was under the impression that he was Stigler, who was a very different economist from Chicago. This caused a good deal of mayhem. So there was argument here, and I remember this as not entirely a joke: a complaint from Charles University saying, „The last place where there are Marxist economists is in your universities. Could you not send us any more, please?‟ We had some things to deal with here, but I do think it is a tribute to those who ran the Know How Fund that, on the whole – of course they made mistakes, we made mistakes, and of course we pushed them too fast – but we got there on time. We did some very

5

At the time Joseph E. Stiglitz was Chief Economist at the World Bank.

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useful things. We got the Treasury to spend some money, and it is something to be reasonably proud of.

My final memory is on the diaspora, and how the diaspora did not always help. I was taken, possibly by Havel himself, to watch a tennis match. Lendl had returned to Czechoslovakia to play tennis, to play the local champion, who had not gone to America. You would have thought Lendl would have let him win one point.

Patrick Salmon Thank you. This has been a fascinating first session. All the panellists have contributed a great deal from their own memories, so have people from the floor. The good thing is that we have not answered all the questions yet, so there is a lot of further discussion.

[Break] New Challenges, New Commitments and New Strategies, 1990-2003 Sir Tim Lankester I am not going to introduce my co-panellists in detail because you have their CVs, but just to say what a privilege and pleasure it is to be with old friends. Michael McCullouch and I worked at ODA for some time, and Michael and I went to Moscow together. I pulled out the back-to-Office report I wrote which is actually quite interesting, about our relations with the embassy there. Barney Smith, who was the Head of the JAU and Ambassador to Thailand; John Birch I stayed with in Budapest when I visited Budapest. Tony Faint was my Deputy in Washington when I was on the Board of the World Bank, and we worked a lot together back at ODA. I was involved in the sense that I was the Accounting Officer for most of the development spending, because as the book makes clear, most of the money had to come under the ODA vote.

I was not deeply involved in the JAU, but I certainly took an interest in it and I visited Warsaw, Budapest, Prague, Moscow and Sarajevo in connection with all that. I think the book is really good; I found it fascinating and it brings out clearly that the Know How Funds were a success story. They were certainly perceived as a success story, at a time when British aid was not getting a great press in Britain, at any rate. I think it was a tremendous success in terms of flying the flag; it certainly had that impact for very small amounts of money.. The amounts of money were really derisory. In relation to the spend, the British profile did extremely well.

Did it succeed in contributing to the political and economic transformation of Eastern Europe and the Soviet Union? I think the book is suitably non-committal on that. Actually, for such a small amount of money, for it to make a measurable contribution to such a big ambition,, I think it would be hard to say whether we made that impact. But I do think that very many of the individual projects were effective, so in that sense, it was a success. There was perhaps a mismatch, if you like, between the macro and the micro, which reminds me of the debate which has gone on for years in development aid. You have many countries in Africa particularly which do not seem to have done particularly well – or had not done well in the „80s and „90s – and so people would say that aid has been a failure. Yet, if you read a book like Robert Cassen‟s Does Aid Work?,6 the history is that there have been many successful project interventions. But how much did they contribute taken together?

Let me pay tribute to the imagination of William Waldegrave and the others who dreamed up the Know How assistance. It was a radical departure – but it did go with the political grain in the 6

Robert Cassen, Does Aid Work?: Report to an Intergovernmental Task Force (OUP, 1994).

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sense that Mrs Thatcher was extremely keen on this. She was extremely unkeen on most aid, but this was something she really liked, and so I think the Office – both officials and Ministers – took that up and did very well in responding.

It was an enormously challenging task for the JAU, who had tremendous ambitions on the part of the Ministers, very little money, a mix of motives – one was to fly the flag, another was to be effective at the micro level and the third was to transform. Achieving all those three things was nigh on impossible with such a small amount of money. The experience we had in ODA was the more you tried to fly the flag, or serve British interests, you were often less likely to be effective on the ground. The other point is I think the competition between the departments in London was pretty unhelpful. The fact is, you had Department for Employment people, including Michael Howard, flying around the Soviet Union and Eastern Europe, promising all sorts of things. They did not have any money – well, they had money but they could not spend it because they did not have legal authority. Then, the Department for Environment – Chris Patten, bless him; you would have thought he would have known better, creating his own environment fund – or asking the JAU to do environmental work. Then, the Treasury, worst of all, inventing without any consultations as far as the book indicates, their own little scheme, or big scheme, for transforming the financial sector in the Soviet Union.

It is a great tribute to the staff of the JAU that you managed to do as well as you did, and I pay particular tribute here to Barney. I was actually opposed to your appointment, Barney. As Accounting Officer, I was accountable; I thought it was very important to have somebody who understood procedures. I had hoped that an ODA administrator could be appointed, but you were appointed and you did a fantastic job, because I think you actually understood the ODA concerns about propriety and effectiveness, but you also brought the imagination and the skills of a good diplomat. You were a great success.

In passing, I would like to be the fifth person today to pay tribute to Kate Mortimer. I knew Kate in the World Bank back in the early-70s, and she was fantastic. She could have been Permanent Secretary to the Treasury, I think, but she chose a different path. She was an extraordinarily effective singleton consultant. I do think, if I may say so, if there was a second edition, she ought to be given more credit.

I do think the book looks perhaps a little bit too much through the FCO lens, if I can put it that way. The author is a diplomatic historian, and so that is what one would expect. However, there is this one very interesting issue, which is not really dealt with, which is: why did the Office not look to the ODA sooner? The ODA had 30 years of experience with technical cooperation; indeed, its original title was the Department of Technical Cooperation under Robert Carr in 1963.

The FCO had suspicions of ODA for not being political enough, not having enough knowledge of Eastern Europe; and for being too bureaucratic and unworldly. I think the Office underestimated the ODA‟s ability to be flexible. It is an interesting question: how different would the Fund have been if the ODA had been put into bat sooner and been given a greater role from the start? I think there were mutual suspicions. The ODA was not, frankly, impressed by the likelihood that the Office would be able to run effective programmes. We obviously knew many Ambassadors in Asia and Africa, one or two of whom showed a deep and enduring interest in the aid programme, like Colin Imray in Tanzania and Bangladesh, but many of them were more interested in flying the flag and getting jobs for British industry than in effective aid.

Bear in mind, as Mark Lowcock said earlier, this was the time of Pergau Dam project..

Pergau was the biggest disaster of British aid history. It was a hugely uneconomic; the aid was indirectly connected to a major arms deal; and the aid was eventually declared unlawful in the High Court. The dating was very similar; the final decision on Pergau was taken by Douglas Hurd and John Major in February 1991, just at the time when ODA was expected to be enthusiastic about the FCO‟s planned assistance to Eastern Europe. I am not blaming the Foreign Office particularly for the Pergau debacle but it was to some degree complicit in what happened.

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The last point was to do with funding, and this is not picked up in the book. The ODA budget had been cut in half in the „80s. By 1990, it was half what it was in 1979. The bilateral programme had been reduced by even more than that, because of the increasing commitments to the EU and the World Bank, etc. We were terrified that if we showed too much enthusiasm for the Know How Fund, the money would be shifted, haemorrhaged out of the traditional aid programme.

I think we were therefore a bit reluctant to get too heavily involved at the beginning. We were very keen that the Office should obtain its funding from the Treasury and not from the existing aid budget, but this meant the funding was not on the scale that FCO would have wanted. This left me, as Accounting Officer, in a somewhat ambiguous position.. On the one hand, I felt that I needed to be more involved and that we should be watching very carefully, because I was accountable. On the other hand, we did not want to get too involved because that would have meant haemorrhaging money from Africa and Asia into Eastern Europe..

Barney Smith Two points on the book. For me, the most relevant remark is on page 99, where it says, „This approach only works with people who want it to work‟. I think that what has happened since then has shown how correct that judgement was. The Central Europeans knew where they wanted to go, but they did not know how to get there. They needed our help in a number of different areas. It is not clear that the Russians ever wanted democracy and a market economy.

I think there is a second important point. I can remember going to see the 65-year-old woman who was running the accountancy college in Krakow, and I said to her, „How are you getting on with the programme?‟ She said, „Fine, we have got all of these accountants in, we are teaching them how to do western-style accountancy‟. I said, stupidly, „Do you think it is going to work?‟ She said, „Young man, of course it is going to work, there are lots of us who remember how it was before and it is just a question of going back. The Russians imposed this system, which is much the same as the system that your Treasury operates, but it will work, do not worry.‟ I think that is an important point, because there was not anybody in Russia who remembered how capitalism had worked, because they had had their revolution in 1917. If there had been anybody who knew how capitalism worked, they would have been shot by Stalin. I think there is a huge difference between Central and Eastern Europe, and Russia.

It is fair to say that when we started, when I arrived in the Know How Fund in May 1990, an obvious choice for the job, as Tim has said, knowing nothing about Eastern Europe and nothing about aid. There were some huge structural problems because there was so much political interest in what we were doing, that there were endless parliamentary questions, endless letters from MPs, endless Ministerial visits both ways, all of which took up people‟s time, because they were all urgent. One of the first challenges was to try and create enough space in which the projects could sensibly be taken forward.

Of course, there is a bit of a mismatch: the ODA has very considerable experience in running programmes which spend a great deal of money, but if you find anybody in the ODA who is prepared to fund a project under £2 million, you are very lucky. The Foreign Office has very little experience of spending lots of money by decision. Of course, there are running costs, there are allowances, there is rent, but they are all necessary and they are more or less immutable. The Foreign Office did not have much experience of actually trying to decide how to spend significant sums of money. I can remember an interesting dialogue with one of the Under-Secretaries, not I think here present, „Why can you not spend £10 million by Christmas?‟ It is not possible: you can spend £100,000, you can spend £50,000, but to spend £10 million, you need quite a large programme and that requires quite a lot of preparatory work.

The other fact that struck me very early on was that many of the experts that we were trying to project forward into Eastern Europe knew absolutely nothing about aid and aid procedures. They had never worked for the ODA, and they came with their own baggage and their own agenda. Of course, merchant bankers, commercial lawyers do not come cheap. The contrast

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between what those people thought they should be paid an hour and what ODA thought it might be reasonable to pay a water engineer in Tanzania was quite dramatic.

The other problem that we faced – and it is entirely a reflection of the political interest in the programme both in the UK and in Central Europe – was the need to be seen to be doing something as well as the need to actually do something. Those are not necessarily objectives that can be achieved with the same project. We initially had really quite a difficult time trying to make sure something as trivial as the names of the projects did not in themselves send people to sleep: that the names of the projects actually sounded quite interesting. There were some projects which, not really from our efforts, were fantastically successful in presentational terms. One of those was the Moscow bread project, when somebody turned up at Downing Street and said, „I have this brilliant idea; we are going to revolutionise the bread circuit in Moscow.‟ Everybody knew that the bread situation in Moscow was ghastly, so we said, „Yes, okay, go ahead‟. By the end, the guys had produced a whole booklet of press cuttings which had been in the Russian and British press about their project.

One of the best stories about that project, which is a real transfer of Know How story, is nothing to do with money at all. The consultant gets there, says to the guys, „How are you running this factory?‟, and they say, „Well, it is easy: we have 650 shops out there and every day, they ring us with their order for the day and then we deliver that amount of bread to them tomorrow.‟ „That sounds a very good system, are there any flaws?‟ „Well, yes, because every day, we only have one phone and about 150 shops do not get through and so they do not get any bread at all.‟ The consultant said, „If you had a different system it would work better‟. The Russian official bridled at that. The guy said, „Look, why do you not just deliver the same amount of bread tomorrow that you delivered today, unless they ring up to change it.‟ „Ah‟ – a lamp light moment. That is what they did. What does that cost? Absolutely nothing. I know that most of the other parts of that project were much more expensive, but that is the sort of thing that was in the minds of the people who set up the Know How Fund.

There is a counter-example. ODA‟s power advisors went to Poland, convinced that a little bit of adjustment, and the Polish power stations could produce 15-20% more electricity. Guys came back and said, „There is nothing to be done. Not only are they more or less as good as us, but in terms of things like working on live wires, they are years in advance of us. It is clear that we did not have the knowhow to provide in every category.

The key lesson that we drew – and maybe there is a lesson for the Arab Spring – is that the best is the enemy of the good. If you spend long enough trying to make sure that the project is perfect, the Minister of Finance will have changed three times in that process. You have to, at some point, say „Good enough‟. If somebody says to you, „I really need somebody to rewrite the bankruptcy law in Poland‟, you find somebody to re-write it and send him to do the job. There is a famous story that, as a result of this process – and we paid some guy a ludicrous amount of money to draft this law, something like £10,000 – as the law went through the Polish Parliament, the six-man German lawyer team who had been hired by the PHARE Programme to draft a bankruptcy law, arrived in Warsaw, two years late. There is no point in a very, very rapidly changing situation, in trying to make sure that what you are doing is perfect. I can remember sitting in the car with Tim, saying, „You are doing lots of small projects are you not?‟ I said, „Yes‟. He said, „Yes, that is how it works because you are doing so many that some of them are bound to be successful.‟ I think one of the other lessons we learned relatively quickly – and I think the country strategy papers that Adrian was talking about were absolutely vital in that regard – was to say, „There are things we do and there are things that we do not do‟. You need, somehow, a mechanism in the face of what was originally envisaged as a demand-led programme; you need some way of saying, „I am sorry, it is a good idea but it is not what we do‟. One of the ways that we dealt with that was to have a whole set of schemes: „You want to invest in Eastern Europe? Julian

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Ebsworth, PIPs, PIFs and TIPs,7 he is your man. You want to do something with the environment, there is an environment fund. You want to twin your town with a town in Bulgaria, we have a scheme for that.‟ Those were always trying to keep control in areas where we could have spent all the money many times over. I think it is important to remember that the money, although it seemed huge to people in the Foreign Office when they looked at their mortgages, really was not very big in terms of the aid effort. I remember just after I had left the Know How Fund in January 1993, bearing in mind that in the first year of the Know How Fund we spent £15 million, DFID spent £20 million on concrete railway sleepers for India. It gives you some idea of how the relative finances work.

One of the most interesting projects that we had, which has been referred to earlier, was the Open University programme. They had a Diploma for the emerging manager. Several smart people turned up and said, „Would it not be a great idea if these programmes were translated into Polish, Hungarian, Czech, Romanian, whatever it is, and that would then provide a real multiplier for people who want to understand how the market and small businesses might work‟. The Open University said, „That seems a great idea‟, obviously the Foreign Office would pay and obviously the Foreign Office did pay. The catch was that the Open University insisted that the people who were going to deliver this programme took the exam in English before they could deliver it. That is why in 1991, when they ran the exam, there were five Hungarians in the first 10, and a Hungarian came top of the exam. That is actually a programme that worked really well; nothing to do with government, but gave a whole set of people the tools with which to carry through their aspirations on the business side.

On the differences between the various countries, one of the interesting elements was that we had people in the UK, the diaspora; we had people who spoke the languages. For historical reasons, we had a lot of people who spoke Polish. When Michael Howard went around Eastern Europe, promising this, that and the other, there were enough staff in the Department of Employment to staff a demonstration benefits office in Krakow, and they all spoke Polish. But we did not have the same sort of linguistic back-up – if that is the right word – in Bulgaria, Hungary or Czechoslovakia, and I think that some of the work that was done, trying to twin police forces, was also based on trying to find somebody who spoke the language in the relevant police force so that when they went to the country there would be somebody who could explain what was going on.

Last point: was it successful? Well, who is to know? It was a long time ago and I think I bow to those who say it is difficult to evaluate. At the time, it seemed to be successful; at the time it seemed to be delivering what the politicians wanted. I am sure that if, at the time, somebody had said to us, „Would you be happy with all these countries joining NATO and the European Union, or would you want to put the dice back in the box for another throw‟, we would say, „No, no, we will take EU membership, NATO membership, and the re-integration of these countries into the European ideal.‟ Sir John Birch Thank you, I was the ambassador in Hungary from 1989-95, so I was at the receiving end, a recipient if you like, of the Know How Fund. I was a great supporter. It seemed to me to be a most imaginative response to the great political changes. It gave me and the Embassy quite a lot of influence into all walks of Hungarian life. People were very happy to see us. They thought the Know How Fund was much bigger than it really was. As a result, we were able to spread the influence of it much wider.

It was, in fact, quite easy work. As many have said this morning, we were talking to people who came from the same European culture that we came from. The problem that I think the

7

Public Investment Programmes, Pre-Investment Feasibility Studies and Training for Investment Personnel Scheme.

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Foreign Office today are going to face in reform and restructuring programmes in many problem countries is that they come from a very, very different background.

I was never very happy with the name, the Know How Fund. It just struck me that it was a bit condescending, patronising: „We know, you don‟t‟. It did not translate very well into Hungarian, and fortunately, none of them really understood what it meant, and my Know How Fund officers did not use the term at all.

I think we have to realise that we were a very small cog in a much bigger wheel. The economic side of the reform and the transformation of Eastern Europe was brought about largely by commercial firms, by industrialisation, through privatisation and retailing, and particularly the western accountancy firms who brought new standards. The civil society and good governance aspects of the reform came from universities, charities, the church, the judiciary, and much of that was free of charge. It was spontaneous and was done without any government finance or direct backing. I think the greatest motor for change as Nigel Thorpe said this morning was the lure of NATO and European Union membership.

I worry that we have been patting ourselves on the back a bit too much over the Know How Fund, the brilliance of its creation, the effect that it had. So, I am just going to concentrate my remarks on three areas of criticism of the Fund because I think that may be more helpful as we go forward with work in other parts of the world.

We were still in the thrall of Thatcherism in the 1990s, which had transformed British society. In my first year in Hungary, we had 18 Ministerial visits, including one from „Mrs T‟ herself, and they all brought pretty much the same message, which was, „Congratulations at having got rid of these terrible regimes, now what you have to do is to have a strong market economy and free enterprise to underpin the new democracy”. This message, of privatise, shock-therapy, close down loss-making enterprises, was one that they found quite difficult to accept to begin with. Mrs T was very strong meat for the Hungarians. Some of them saw that this was the right message. In the old terminology: workers, peasants and intellectuals were the three classes of society. The intellectuals understood what it meant. But the workers and the peasants found it hard. They were the ones that suffered.

In the reforms that we were urging, we had to work with people who came from the old system. The really bad hats had gone, but the people who ran the enterprises, ran the ministries, the public utilities, the farms, were competent people but of the old school. I remember a Permanent Secretary in the Ministry of Health saying to me after the changes, „Mr Ambassador, we are not ashamed of the achievements of socialism‟. I think that there was really a serious downside to the shock therapy. There was a great deal of social hardship, particularly in rural areas where farms closed and in small towns where the local factory closed. We were not sensitive enough, even though we had the experience in mining villages in this country in the 1980s of what happened in terms of social disintegration when the main economic heart of a small town or part of the countryside was closed, of what that meant.

We did not see the extent to which the privatisation programmes and the new economy we were promoting was creating terrific opportunities for corruption, which continue to plague these countries to this day. In fact, in 1994 four years after the changes, the Reformed Communists came back to power. A large part of it was because of the economic hardships that people had suffered through the privatisation programmes.

My second criticism, which was referred to by Ann Lewis, is that we were not very good at coordinating. We had the European Union, the Americans, the Germans, French and Austrians, all vying for what looked like the most attractive, the most important programmes. Many of these, of course, were in the privatisation – the financial services, the insurance sectors – but we were all chasing very similar projects. The Hungarians were absolutely hopeless at drawing up a list of their priorities. We tried to help them by coordinating the offers they were getting. They rarely said „no‟ to a proposal.

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If I could just give you one example: the State Property Agency, which was the key to the privatisation programme, was pretty chaotic. They did not have any of the proper bureaucratic structures. The Know How Fund said, „We can send someone who understands human resources and sort out your promotion, your structure, your recruitment programmes, particularly the recruitment.‟ So this poor fellow came. He was put in an office on the top floor. No one paid any attention to him. The KHF did not understand that the culture in any Hungarian organisation, whether it was a hotel or a government department, was that you did not have a fair structure. You gave the jobs to your aunt, your uncle, to their friends and the rest of it. We made many mistakes by not really understanding the work culture.

Some of it was down to us in the Embassy. We should have known better. We were putting people in to do jobs where they were going to meet this sort of, „You say you know how to do it but we also know. We have been here, we have suffered, we know our people, this is the way we do it.‟ We had too many UK departments – mention has been made of that. We had too many agencies coming and offering programmes they could not finance. The Department of Employment in particular: Michael Howard offered them Job Centres all over the country. They said that would be terrific. First of all, they could not deliver them. But also, if there were no jobs there was no point in having a Job Centre. The only people who got in employment were the staff at the Job Centre.

I remember one morning, my PA said, „There is someone in British police uniform downstairs, he wants to see you‟. I thought, „Help, the game is up.‟ But sure enough, it was the Deputy Chief Constable of Merseyside. He had heard that the Foreign Office had money for programmes. So Merseyside came along to see if there was something they could do for the Budapest Police. They were then going to apply to the KHF. That was repeated. We had Kent County Council, which at the time I think was one of the worst-run county councils in the country.

People were dying in hospitals and children were not going to school. They came up with an enormous team to tell Budapest County how they should run their affairs.

We also had too many consultants. I am just going to mention one example, although it concerns my very good friend, Roger Garside, who came and set up the Budapest Stock Exchange. They obviously needed a stock exchange if they were going to have privatised companies and people were going to buy and sell. They set up a magnificent, all-singing, alldancing stock exchange in the centre of Budapest. About a year later we had a visit from the Lord Mayor of London with a big financial services team. We went to the Stock Exchange. We hung about for around an hour, and there was not a single trader. No stocks were bought or sold that morning. Things have probably progressed beyond that now.

My third criticism is that we just had too many small projects, pet projects. My experience was that you really need to develop, if you want change, a critical mass of people, both at the top of the organisation and at the bottom have to want to change the way things are done. These small initiatives we took – and very often they were good projects, failed once we and the advisors had gone because not enough of the staff had bought into the changes. They went back to the way they were doing it before.

To give you one example: every year, the Bank of England – this was not a Know How Fund project, but every year the Bank of England takes two or three middle managers from the Hungarian National Bank and brings them to do a stage at the Bank of England. We had a visit from Robin Leigh-Pemberton, who was the Governor of the Bank, and he went to the National Bank and they gathered 20 or 30 of these people who had been to London, and we had a very nice talk. He said, „I am glad to hear all these good things you heard about and learned while you were in London. Were any of you able to change the way things were done, based on your experience, when you got home?‟ Not a single one put up his hand. I think that does underline the need to have a group of people, really determined, if you are going to get change.

In conclusion, as came through very forcefully from William Waldegrave this morning, the Know How Fund was above all, a political project that was designed to draw the East into the 30 October 2013

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West. I think despite my criticisms, it did play a part. It was extremely imaginative, and on the whole, it went extremely well.

I am disappointed, quite frankly, that it fell into the hands of the ODA and afterwards, of DFID, and that there were so many of these Whitehall battles over turf and relatively small sums of money. To see letters from the Foreign Secretary to the Chancellor of the Exchequer in the book, arguing over sums of less than £1 million, seemed to be squandering intellectual effort. I was very glad to hear this morning from the Permanent Secretary of DFID, with the Permanent Secretary of the Foreign Office sitting beside him, saying that these are things that are not going to happen in the future. Let‟s hope.

Michael McCulloch I am obviously going to talk based on my experience running the Know How Fund for the former Soviet Union between 1992 and 1997. Let me say right away that, like this afternoon, I am delighted that Barney came before me, because that had set some of the lines within which we needed to operate. The second thing I want to say before I start is that the Know How Fund for the former Soviet Union evolved very rapidly and therefore it is difficult to pitch one‟s remarks. Do I talk about how it was early-on, or do I talk about how it was later? Most of what I am going to say will refer to the Know How Fund for the former Soviet Union in what I would call its „core period‟ between 1992 and 1997.

I want to offer some thoughts on four aspects. Very briefly, a word or two about its evolution as a distinctive and innovative instrument: I want to spend more time on what the rationale was for the partnerships that became such a characteristic feature of the KHF. I will then discuss some thoughts about the administration of the fund, where perhaps some of my views may differ from things which have been said already. Then, like others before me, I will attempt to say something about its impact and achievements.

As others have already said, for the former Soviet Union following its longer and deeper immersion in a command economy and authoritarian political system, the task ahead was much more challenging than for Central Europe. There was no sense that it was part of the European family and the „lodestar‟ of the European Union, as a possible eventual destination, really did not apply.

The key strategic decision of our own government was, as William Waldegrave has described at some length, that our bilateral contribution should be through the provision of Know How. This strategic choice was maintained for the Know How Fund for the former Soviet Union. It is quite striking that, despite a lot of pressure from various quarters, some of it international, some of it not; this approach was reaffirmed and maintained by Ministers throughout this period.

Drawing on our comparative advantages, to address what we perceived as the needs of transition was at the centre of the Know How Fund in the former Soviet Union. The outcome of this approach was something that looked rather different from a traditional development aid programme: a focus on creating a private sector; on promoting democracy, including a strong emphasis on free and independent media; on the reform of social safety nets including employment and health services; and in view of some of the discussion which has happened and also what happened when the Labour Government came in 1997, I think it is worth pointing out that the social consequences of transition were not neglected in the early days of the Know How Fund for the Soviet Union, though they certainly assumed a greater importance from 1997 onwards. Finally, a range of legacy tasks and particularly nuclear safety, where I think that we along with other countries in Europe, the G7, made a very significant contribution.

Let me talk to partnership, which was at the core of both the philosophy and operating practice of the Know How Fund. I think the rationale reflected four main things. First, obviously, Ministers‟ insistence on the close involvement of the UK private sector with the intention that private sector expertise would pave the way for private sector investment. The definition of private sector widened as it became evident that many other non-government organisations were inspired 30 October 2013

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to become engaged with transition. In a sense, I think one can talk about the idea of the UK as a whole, through many diverse organisations, committing itself in some way or another to support transition, especially in Russia but also in other parts of the region. I will say a word a bit later on the question of critical mass as opposed to diversity, though I think the verdict is still out on that.

A second factor was uncertainty about the commitment and/or the ability of governments in the former Soviet Union to undertake radical reform, which reinforced the principle that the KHF was not a government programme. Government partners were not excluded where a reformminded leadership could be identified, but what mattered was the flexibility to work with a range of in-country partners, to strengthen niches of reform – what Lady Thatcher at the time called, „Oases of change‟.

I think the third factor, promoting partnership, was a simple fact that neither the diplomatic wing nor the ODA possessed expertise or experience in many of the areas in which the Know How Fund would work. Associating with those individuals and organisations that did was therefore a rapid and efficient way of acquiring that expertise.

Finally, the virtually exclusive focus on Know How and the corollary absence of finance aid as an instrument was a natural foundation for partnership with multilateral institutions that had the capital and/or lacked the means for essential technical assistance to enable and support funding.

Hence, an incredibly diverse range of partnerships through which the Know How Fund pursued its mission; there is obviously not time to describe it in detail here.

Let me move on to the administration of the Know How Fund for the former Soviet Union.

Tim has already reminded us of the overarching framework within which this operated so I will not go further into that. But by the time the Fund for the former Soviet Union was properly launched in 1992, the principle of joint administration and the arrangements adopted for Central Europe had evolved into the decision to set up the two joint systems units, „CE‟ and „EE‟. It was somewhat ironic for me to be appointed first Head of the JAU. In 1979, I carried out with the late Christian Adams the FCO‟s first Rayner Review8, on whether it was desirable and feasible to merge geographical departments of FCO and ODA. My first visit to 24 Whitehall, when I was received by Barney and Dick Jenkins, I had the characteristic welcome from Dick Jenkins, „I hope you are not bringing any of your sandal-wearing ODA nonsense here.‟ So bringing together staff and resources from two financially rather disparate organisations for a task unfamiliar in different ways to both, was certainly challenging. Rather than dwell on the chaotic conditions that prevailed initially – and they were – I will highlight some of the strengths of the Know How Fund administration as it matured.

In my view, the blend of skills and experience proved relevant and valuable, especially when Russian-speaking diplomatic staff were assigned and, later, when experienced aid administrators came to see the Know How Fund as an attraction rather than a posting to a void.

The urgency of building up the programme against tight resource constraints, which has already been mentioned by several, led to a search for alternative ways of securing additional staff. Our openness to external secondments and flexible working attracted many able staff, notably women in mid-career, including from Canada, Germany and elsewhere, and other departments around Whitehall.

8

In 1979, the new government ordered a review of the Central Statistical Office and the Government Statistical Service as an early part of its policy of reducing the size of the Civil Service. The review, conducted by Sir Derek, later Lord Rayner became known as the Rayner Review. It was published in a government white paper in April 1981 and recommended that 'information should not be collected primarily for publication (but) primarily because government needs it for its own business'. Consequently, the CSO was cut by around 25% but continued to produce the same range of economic statistics (Privy Council Office, Government Statistical Services, Report of the Rayner Review, London: HMSO, 1981).

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The third point is that it is not just co-location of the two JAUs, but the separate location on Whitehall helped to mould a strong common identity. Indeed, in some ways, the really unattractive accommodation helped in that process too. Developing that common identity amongst the staff of the department was reinforced in many other ways, formal and informal. Others have already referred to the key contribution to shaping the fund made by the team of externally-sourced advisors, and Kate has been mentioned, but I think Richard Wilson on privatisation was another key influence, with knowledge in areas such as privatisation of financial sector.

I would add two other things which greatly helped us. The first was the keen interest of, the regular reporting to, and support from Ministers. Notably Douglas Hogg in the early stages of the FSU9 fund and the Secretary of State. Then, also, coordination arrangements which were specifically designed for the former Soviet Union through Economic Relations Department in the FCO and I pay particular tribute to Kevin Tebbit who certainly helped us negotiate many of these Whitehall battles and, in the process, leverage up the funds available for the Know How Fund on two or three occasions. Then, also, a slightly more informal Treasury group, which was chaired by Sir Nigel Wicks.

During the Fund‟s first year, we had to devote considerable time and attention to developing a shared understanding of Know How Fund objectives and effective working relationships with our embassies in the region. Of course, the number of those embassies expanded as time went on. It is fair to say, I think, that from the outset there was much common ground about what the Fund should be doing, while agreeing how Fund and embassy should work together, sometimes took longer, largely, I think, because of initial misperceptions and unfamiliarity with what was involved on both ends of the relationship.

Assessing the achievements and impact of the Know How Fund in the former Soviet Union, you will not be surprised to hear me as a former Head of Evaluation in ODA, describe it as a task fraught with difficulty. Relating the modest inputs of the Know How Fund progress with the sweeping changes required in post-Communist countries is really problematic. Against this background, I very much welcome the effort made in Keith Hamilton‟s book, especially the concluding chapter, to offer an overall assessment. I believe it is the first publicly-available survey which draws systematically on evaluations undertaken by ODA, DFID and others. There is much in it with which I generally agree, but let me add four observations.

During most of the years 1992-97, the EBRD‟s Annual Transition Report did show progress against at least some transition criteria for most of our main partner countries in the region. Many of the reforms credited to the Know How Fund, with help in bringing about these advances. Let me refer to just one of them, a letter which Boris Nemtsov as First Deputy Prime Minister of Russia wrote to me in July 1997: „I would like to express my deep appreciation for the Fund‟s contribution to the Russian reform process. Together, we accomplished many significant goals, which, in my opinion, have made the reform effort in Russian irreversible‟.

My second point is that there are interventions where it is possible to identify wider structural impact. Two examples: the work done with the Russian federal employment service, to re-orient it and equip it to deal with the consequences for employees of industrial change; and support, in partnership with the IFC, to the privatisation of agricultural land. This latter redistributed the assets of several hundred state and collective farms in a legally-sound, transparent and fair way, laying the foundation for a more productive, private sector agriculture, and there are some interesting evaluations about how that evolved. But it also directly influenced legislation on private ownership of land in Russia in Yeltsin‟s time. Other examples are mentioned in Keith‟s book.

My third point is that the fact we cannot always detect the links between Know How Fund activities and desirable wider change does not in itself invalidate the case for having gone ahead.

9

Former Soviet Union.

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Acting in conditions of uncertainty, such as prevailed at times of major transition, does require taking some risk.

Lest I be thought to be gilding the lily, I acknowledge that there were certainly times and sectors where the Fund did not get it right. For me the greatest disappointment in the period up to 1997 was the decision not to proceed with the appointment of a leading British expert on largescale privatisation to Maxim Boycko‟s Russian Privatisation Centre. Had we gone ahead, it is just possible that some of the worst consequences of the „loans for shares‟ programme might have been avoided. But then perhaps Chelsea Football Club might have been worse off.

The title of Keith‟s book refers to transformational diplomacy. I would like to conclude with a reflection on the Know How Fund‟s place in the evolution of development. From today‟s vantage point, I suggest, the Know How Fund can be seen as a participant, an experiment and an influence in a fundamental shift in development theory and practice in the closing years of the 20 th Century.

The collapse of Communism, and the Soviet Union itself, signalled the end of the global competition – economic and political – between capitalism and socialism that had characterised much development thinking and practice since the Second World War. Certainly for me, as head of ODA‟s regional office in Nairobi in the late-1980s, that competition was still strikingly represented by the contrasting development paths taken by Kenya and Tanzania, though interestingly the priorities and content of our aid programmes to the two countries did not greatly differ.

In their excellent survey of development since 1945, Challenging Global Inequality, Professors Greig, Hulme and Turner10, go so far as to suggest that the development project up to 1990 could be interpreted as a false start. I think if one is looking for one publication which perhaps captures the sense of this shift, I would see it as Amartya Sen‟s book, Development as Freedom,11 where what had been a dominant view up to that point that development and growth would lead to freedom, effectively, was turned on its head and the role of freedom in promoting development and in combating poverty was argued. I think in charting what came after 1990 in development theory and practice, the Know How Fund made a not insignificant contribution. Look, for example, at Justine Greening‟s speech of 11 March at the London Stock Exchange. Now, would a previous Minister or Secretary of State for International Development have made a speech at the stock exchange? I do not think so. The subject was economic growth and the role of business in international development; it contains much that resonates with what the Know How Fund set out to do in the former Soviet Union.

One example: „DFID is launching a new £5 million commercial law and justice programme to support the improvement of the legal environment for business and investment in developing countries. It will also increase the transfer of world class commercial legal knowledge, skills and support, much of it based here in the UK, to where it is needed‟, straight out of the KHF playbook.

Finally, the blog by Alistair Fernie, Head of DFID Kenya on polling day in Nairobi this year, reflecting on the case for democracy, and referring to our Prime Minister‟s development thinking, the golden thread of conditions enabling open societies and open economies to thrive and address the root-causes of poverty and under-development. So the circle turns.

Tony Faint I will try to be very short because a lot of the things I had in mind to say have already been said. I must thank Keith Hamilton for a fascinating scholarly – and for people who lived through the period – a highly evocative work. It is written from an FCO, diplomatic wing point of view, as you said, Chairman, but personally, I think you could overstate the tensions between ODA and the

10

Alastair Greig, David Hulme and Mark Turner, Challenging Global Inequality: Development Theory and st Practice in the 21 Century (Palgrave Macmillan, 2007).

11 Amartya Sen, Development as Freedom (Anchor, 2000).

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diplomatic wing during the Know How Fund period. Certainly within the JAU I think there was a very effective amount of team working.

My first broad point is stages in transition, and I think that the initial design of the Know How Fund was very well adapted for the early and quite chaotic stage of transition, perhaps particularly in North-East Europe, Poland, Hungary and Czechoslovakia, and later the Baltics, a similar case. It was celebrated for its speed and flexibility. But I think it would be wrong to think that speed and effectiveness are always inversely related. In a fast-moving situation, you have to respond quickly: if you do not run, you might miss the bus.

Second, commitment in target countries: Mark Lowcock made this point first. I think a certain level of commitment to reform was needed somewhere in the system to advance major reforms. The Know How Fundâ€&#x;s ability to work outside central government in the regions and in civil society was a strength, but in many parts of the former Soviet Union there was a virtual stasis for periods of years, and there were many setbacks in the Balkans too. Even with its well-known flexibility, the Know How Fund struggled to find ways of advancing reform in these circumstances.

I call to mind a meeting I had with a Federation Health Minister in Russia, around 1993, in which I was trying to promote the idea of collaboration between the National Health Service and the Russian health system, both being public sector. I made a presentation that was consecutively translated; it took rather a long time, and when I had finished, the Minister uttered a single sentence. I looked at the interpreter, and she said, „The Minister said the Russian health system needs only one thing: money.â€&#x; which of course was the one thing we did not have, so that was effectively the end of that meeting, although I struggled on for a bit longer with pleasantries of various sorts.

Third, drivers of change, the pull of the EU: the Know How Fund was always a facilitator, not a driver of change, but the importance of EU enlargement and the prospect of eventual membership was a huge influence on all countries which had a realistic, even if distant, prospect of joining. Even in the Balkans, this prospect eventually pulled slow reformers on to a path of transformation. The converse, of course, is that where there was no prospect of that kind of joining of the EU club, the Know How Fund and other donors, I think, had much less traction.

In addition, Central European countries viewed themselves as throwing off the yoke of Russian domination. Naturally, the perspective in Russia, on the events of the late-80s and early90s was widely different. Nostalgia for the Communist period still remains pretty widespread in Russia.

Fourth point, new Labour, new strategy: as Michael McCulloch has said, the Know How Fund never wholly ignored the social sectors, but I think it is fair to say that the emphasis on economic reform was pretty overwhelming in the early years. The rebalancing that took place in 1997 under the impetus of Clare Short, the Know How Fund with a human face, we used to call it, was useful and appropriate, particularly in view of the progress already made in economic transition in much of Central Europe, and the fact that it was accompanied in many parts of the region by deteriorating social conditions.

Finally, achievements: as many have said, it is always difficult to assess the contribution of a small assistance programme in relation to large historical movements, and I think it could well be that the Know How Fund contributed more to the British profile in Eastern Europe, and hence to diplomatic objectives, than to the underlying process of transformation of economies, societies and politics.

But personally, I was always encouraged by the reputation and popularity of the Know How Fund amongst recipients and amongst reformers. Timely support for reformers is not something the international aid community has always succeeded in providing, and overall, I think that training and institutional support from Britain had an incalculable importance, i.e. you cannot really quantify what it did, but I think it did quite a lot. In the finance sector, and in privatisation, including some of the flagship projects, the Know How Fund was probably quite significant in accelerating the transition in Central and Eastern Europe.

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Questions and Answers Janet Gunn I was Head of East European Section of Research Analysts in the FCO from 1990-93, 1994. I then became Deputy Head of Mission in Sofia in Bulgaria, which is not a country that is well represented here today but it also had a Know How Fund which changed rather dramatically in the mid-90s when enormous pressure was brought to bear to scale back a lot of the programmes and projects and concentrate on capital markets. Everything was to be about capital markets. It was, we understood, an instruction from on high, and that was where the money and effort was to go.

Before that I would like to mention one project which was particularly interesting because it was on the social side and a lot has been said today about economic and financial programmes. That was community policing.

This was designed to help to integrate the Turkish minority in Bulgaria, which had suffered very badly in the last years of the Zhivkov regime. But there was a little twist to it at one point. I knew well a lady who was running an ethnic minorities NGO with Soros money, and I had told her about our community policing project which involved British police coming out and engaging in training in Bulgaria. She rang me in a panic one day and said, „You know those policemen you told me about? Can you get them out here today?‟ I said, „Well, probably not, what is the problem‟.

She said in the Roma mahala – that is the Roma shanty town, for want of a better word – in Plovdiv, the second city of Bulgaria, there is a riot. There is conflict between ethnic Roma and ethnic Bulgarians and it is getting very nasty.

I said, „Well, I am not sure that we can help but I will go and talk to our Know How Fund guy‟, who was lodged at that stage in building adjacent to the main embassy. I walked into his office and there were five bobbies in there, helmets and all in full uniform, and one of them was a Roma speaker from Birmingham. They headed straight down there, after a little bit of arm-twisting of their Bulgarian hosts and they patrolled the streets of this shanty town with the Bulgarian police and they talked bride prices with Bulgarian Roma. That was just a little event but – it is not what they were there for – but they were willing to be flexible. It had huge impact; the main evening TV news showed the British policemen patrolling with Bulgarian police.

I would also like to mention very briefly some of the philosophies and expectations of these projects and programmes. It must go without saying that it is going to work better if the recipients are keen to do it, and to achieve the same goals that we want, that the deliverers wish to achieve.

Also, you have to know you customers well. A little bit later than all this, I had occasion to review a strategy for development assistance to Central Asia. It was about 60 pages long and I got finally to about page 36, where I woke up with a start, because it said, „Our aim is to assist the governments of the central Asian republics in their efforts to combat poverty‟. So I got onto the drafters and I said, „Have you any evidence that the regimes in these countries are trying to do anything at all about poverty‟. And they said, „What do you mean, of course they are‟. I said, „No, they are not. They are lining their pockets and aiming to stay in power‟. So this actually is an aspect of assistance which is very familiar to people working in Africa and other places, where we want to help societies which have horribly corrupt regimes. You have to know your customers as well. Sorry for stating the obvious.

Stuart Laing I just wanted to pick up what John Birch said about stock exchanges and capital markets. I am not sure whether John was going to say something further which makes my remarks now controversial, but I was a great believer in stock exchanges. During my time, which is a little bit after you left, when Christopher Long had taken over, there were several stock exchanges, some of them tiny, operating two days a week with a very small number of transactions. But, if you did not have it at all, you were never going to make the capital market, which a free market economy requires. In the case of Hungary, as I say, by the time I visited, we had brought the project down to one person who was giving them advice in a metals market, metals futures I think. It was really 30 October 2013

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niche, and we concluded that project with the very satisfactory outcome that the Hungarians then employed the same guy at their expense to continue working on it. I was quite happy with the way that that turned out. We exited from that Hungarian stock exchange, leaving it working and paid for by them.

Lord Waldegrave A small point for a footnote somewhere, but in the matter of the name which John referred to: Ann may remember this, but I remember for quite a long time, that we referred to the Know How Fund, to each other and in documents – we were going to have another name for it later – but it became the Know How Fund, because we could not think of a better name that did not end in other problems.

Participant I think we had a competition.

Lord Waldegrave I think we did. It certainly was not meant to be patronising and I would defend that formulation, in a way, from being patronising because if it sounded technical and obscure, that was rather helpful. If we had had some grandiose name, I think that might have been more difficult.

I just want to pick up a couple of points that John made. John, on the one hand, said that we were all brutal Thatcherites and we did not pay enough attention to these transformations and we have been blamed for it since. Doubtless that is true, but I cannot believe that the restructuring both in terms of central planning, but even worse, in the planning from Russia of the Council for Mutual Economic Assistance economy where what people were making in Hungary and Czechoslovakia and so on was for the convenience of the empire rather than the local population could have been undone without pain. I do not think the West, in a sense, can be blamed for that, in my view.

Sir John Birch I think that the damage of the shock therapy was that it did hurt an awful lot of people who were quite innocent of any of the bad behaviour, and any responsibility for the old regime. I would have preferred to see the dole money paid at the factory gate so that people at least felt they had some purpose in what they were doing, even if they were just going to work and not doing very much.

Hanging around on street corners and spending their dole money on beer and cigarettes led to a general malaise that spread throughout the country, as factory after factory closed, and cooperative farms closed down as well.

Sir Tim Lankester I do not think, John, we could have had much influence at a bilateral level. Had we worked through the IMF or World Bank, I think we might have had some influence, but on the bilateral relationship I doubt whether that could really have …

Simon Ray I headed the Central and South-East Europe Department from 1998 to 2003. This was nearly 10 years after the launch of the original Know How Fund. Just a few reflections: the first one is that I inherited something that I understood as very highly valued and highly recognised in our various countries. I was very struck when I travelled around the region that a lot of people had no idea what the Know How Fund was.

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Secondly, I think we had a massive discussion about what the name should be, and there were some who perceived that it would be a major disaster to drop this name, which was recognised by so many. I think we did change it and I do not think it did any harm.

The third thing is that we, in the programmes that we ran, we had learned a lot of the lessons. In particular, what John Birch has just mentioned, about the disadvantage of a large number of small programmes, not necessarily linked to the activities of other players, and of some sort of longer-term, strategic approach to difficult reform efforts. I would say that in the programmes that we had, we worked much more on the social exclusion and the impact of these reforms on ordinary people. I think some very successful programmes done jointly with the World Bank, where we provided a lot of the expertise and they, the finance, including work on the effect of the coal industry in Poland and other places that you have mentioned.

Also, programmes linked with the EU, which of course has very large assistance programmes, again providing assistance in helping these countries to strengthen some of the institutions and move towards applying for membership of the EU. I think all of that demonstrated that lessons were being learned, and I very much share the point that Michael has made about it; it is difficult to say that this was successful. Nevertheless, this was an approach to assistance which did not involve large amounts of money but clearly was a different way of approaching, and has still left its impact on the way that aid policy is run now.

Sir Tim Lankester Can I ask you a question, throw this back at you? You described the movement towards strategy and concentration. Do you think we lost by moving away from being a reactive and „thousand flowers bloom‟ approach which I think William was your idea originally. Lots of small projects, some will work, some will not, but it will free-up the system. So, there was a shift and it was an „ODA-isation‟, which perhaps was inevitable when it came under Clare Short.

Simon Ray For me, it was more a matter of time. People had been trying. Clearly the first reaction after the events of the end of the „80s was not to have a long discussion about a strategic approach; it seems to me entirely appropriate to get stuck in and try and influence things. I think after eight or nine years of that, one could start to see where the reformers were, what reforms still needed to happen and there were other ways of approaching reform which required a rather different approach. It is not that we were trying to be more bureaucratic, but being more reflective about what would work, and the fact that we were just one small cog in a number of larger wheels, of the private sector and of the other institutions, and indeed, the creation of the EBRD which was by this time taking the lead in a lot of the promotion of the market economy.

Barney Smith The point that I was going to make was a comparatively trivial one. At the very beginning the people who ended up as Ministers in countries of Central and Eastern Europe had almost, without exception, never been Ministers before, had not got a clue what they were doing. Not all of them turned out to be in any way capable administratively. I think there was a period when, slightly analogous with poets, there was a time in the Russian era when, if you said brave things, that made you a good poet. Once the countries had moved towards democracy and a market economy, competence started to matter as well. It is the same argument with Islamist groups: they may get in because they are Islamist, but after they have got in people are saying, „Excuse me, is there healthcare, is there a school for my children to go to, is there employment?‟ I think that part of the perceived backlash against the emphasis on market economics is not about whether market economics were a good idea but it is whether the people who were running the countries knew what they were doing and we had examples in the Baltics, for example, of someone who was fantastically independent, unbelievable national patriot who could not administer his way out of a paper bag. Eventually, that shows up.

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Sir Tim Lankester Peter Mackenzie-Smith of the British Council, who produced the goodies for Ann Lewis in that first year, as I recall?

Peter Mackenzie-Smith That is true – at least I hope they were – and it was really on that particular point. I wanted to reinforce what Michael McCulloch was saying about the whole thesis of the Fund being based on partnerships. You had to find an interlocutor on the other side; you had to find people on the other side who were actually going to work with you and if you could not do that, you need not apply.

This element of the Fund I think is probably the most important influence on any future use of it, particularly in the Arab world. It was a bit of a surprise to us, I must admit, in the British Council at this time, because we were used to the implementation of large numbers of aid programmes, some on behalf of ODAs, some on behalf of governments, borrowing money from the Bank and the European Union. To come up with this particular methodology was as much of a challenge for us as I think it was for those of you trying to decide upon the policy of it. The methodology is almost as important in considering how we should take this forward in other countries, as the subject areas and the operations themselves.

Lord Waldegrave I must not talk too much, but another footnote. There are two other areas within my responsibility where things learned by me from the Know How Fund people were relevant. South Africa was one, another transition country in a sense. There was, for example, Jakes Gerwel, the first Cabinet Secretary who came and was trained by Robin Butler in how to run cabinet government. Then, less successfully, but similarly, we offered help to the Palestinian Authority in various ways when that was being set up. There are a number of things where some of the expertise here was relevant.

Nick Carter As a First Secretary in the Foreign Office, I found myself on the first day of Clare Short‟s Ministry and Tony Blair‟s government, parachuted into DFID to be programme manager for Central Asia and the Caucasus - about which today we have not heard very much.

Backtrack a bit – I actually applied to join the Joint Assistance Unit. But as of 1 May 1997, that disappeared and for reasons that I am never fully understood, but others may well know – and I am sure perhaps there is a chapter there somewhere – Robin Cook decided he did not want to hold on to the Know How Fund and Clare Short, having been given her own Ministry for the first time - the creation of DFID - was only too glad to take it over.

Just a few observations and comments from a Foreign Office perspective. I was struck by how much we relied on and worked with experts in the shape of consultants, both in-house DFID consultants, but also those who from the private sector had seen the Know How Fund as a fairly interesting gravy train. It was the responsibility of officials to manage what were a disparate team of consultants and experts, to ensure some sustainability in the projects being designed and always being mindful of the purse strings.

Tony Faint said that you needed some form of traction, and I do not disagree with that, to have made an impact with the Know How Fund. Looking at the countries of the Caucasus and Central Asia, who of course were, and largely still are, largely EU no-hopers, one could say that is why overall in that area the Know How Fund rather struggled to make an impact in those countries. It may be that those countries were on the list of those that Ann Lewis was thinking about when she said that maybe this was where the Know How Fund had been over-ambitious.

No doubt others will reflect on that.

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But I think in those countries we were delivering traction for other organisations, including significantly the World Bank. We were very active in supporting the work of this organisation: the Know How Fund delivered some key enabling elements of major World Bank projects which, one could argue, facilitated earlier World Bank progress in this region than might otherwise have been the case.

Sir John Vereker I am going to cheat by saying a quick word, because I think I am right in saying that you are not here for the last session. What I really wanted to say was that when I took over from you in 1994, the Know How Funds were simply not on my worry list. Astonishingly they had not attracted, unless I am forgetting it, much attention from the National Audit Office; they were popular with Ministers, it was stable, it was extremely well staffed. Although I spent an extraordinary amount of time in the Baltics and Eastern Europe and the former Soviet Union and then endlessly in the Balkans for a Development Secretary, it is a great credit to you personally, to the senior staff who are here, and to one or two who are not – notably Alan Coverdale and John Kirby – that I did not find myself up to my ears in it in quite the way that I think you must have done. So thank you.

Joanna Hanson I am Joanna Hanson, research analyst at the Foreign Office who has worked on Poland and the Balkans. I am also a historian, and this is meant to be a learning from history seminar. I am a tiny bit worried about people‟s concepts of pre-Communist Europe. I do not think really any of these countries we are talking about, had a Europe and a democratic system to look back to. Poland had gone through partitions; Poland had gone through Soviet and Nazi occupation, and then Communism. The 65-year-old lady would have only got her first job, probably, in 1965, when Poland was still a Stalinist country. The other countries were mainly part of the Austro-Hungarian Empire, a fraction better. Poland was only a democratic country between 1919 and 1926, although it had a free market economy, it was comparably as corrupt as some current countries today.

I think it is very important to understand and remember this. I think, about the Balkans, why was the Know How Fund able to work in these countries? I think as we have said, they wanted change, which was really important, and the people had a vision for what they wanted. They may not have had a programme; they had a vision. But they also did not have ownership of the system which they had overthrown. Again, you can compare the Balkans to that; I think that is very important, especially in countries like Poland. The system was brought in, as they would say, on the bayonets of the Soviet army, but they had no ownership of that system. With the Balkans, you see it as slightly different. Of course, we can talk about the Middle East for a long time. So we keep on having to go back to history, I am afraid.

Sir Tim Lankester I do not propose to say anything more. Are any of the panellists straining to sum up?

Michael McCulloch I will not attempt to sum up but there were just a couple of points I want to make. The first is that when we are talking about critical mass and small projects – at least in relation to the former Soviet Union, especially Russia – it is worth bearing in mind that although we started out with a lot of small projects, pretty quickly, in fact if you look in the book, around 1992-93, quite early on – page 105 – the Know How Fund in the Soviet Union was already moving towards a much more systematic approach.

Of course, we maintained a whole host of schemes through which other people did small projects. That was one of the things which really greatly extended the reach of the Fund and of course, the impact is very hard to trace. It was done through a lot of organisations, and some of the fruits of that probably come out over a much longer time.

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My final point is that it always puzzled me why Robin Cook gave up so easily. He had been a very strong supporter of the Know How Fund when in opposition. I remember a couple of major events which he hosted in the House of Commons for the Fund. It always puzzled me, and I do not feel that the story in the book has perhaps, necessarily, had the last word on this.

Sir Tim Lankester The book argues that it was a trade-off of responsibilities?

Tony Faint I was just going to make a couple of very quick points. Firstly, on the name: it certainly struck me as odd to start with, but I did find, as we went on, that it had achieved quite a startling amount of name recognition in the region, particularly in Central Europe. We did a bit of work to brand it, and have a logo and that sort of thing, and put it on bits of machinery. I think this actually worked quite well. Certainly it was associated with the UK. It was not a frightfully boring title like, „Poland and Hungary Aid for the Reconstruction of the Economy‟ (PHARE), for example. I came to like the Know How Fund name; I am sorry it did not translate into Hungarian.

Then on the Budapest Stock Exchange, yes, there was a formal evaluation done of this, and it said, essentially, that this project was carried out too soon – all very well, and quite true, but there is a kind of „chicken and egg‟ issue about that. If the Hungarians come to you and say, „We would like you to help us reconstitute our historic stock exchange‟, and you say, „Why don‟t you come back to us in five years time‟, I don‟t think that is going to work very well.

Sir Tim Lankester Thank you very much. Can I make one final point? Douglas Hurd‟s name has not been mentioned once so far today. I think he deserves credit, actually. He showed a lot of interest in the Know How Fund; I would estimate he spent as much time on the Know How Fund, costing just £50 million over three or four years, then on the rest of the aid programme costing several billion. He was not much interested in the Asian and African programmes. He did spend a great deal of time and the enthusiasm he showed and carried forward William‟s ideas and extended them into the Soviet Union, so I think he ought to get our plaudits too.

Legacy, Transformational Diplomacy after the Know How Fund: the example of the Arab Partnership

Sir John Vereker The purpose of this panel is to try to take some of the lessons that we have been talking about this morning and apply them to the Arab Partnership. You will be reassured to know I am going to say very little, because I know nothing about the Arab Partnership apart from what I was able to read on the internet.

I am joined on this panel by a galaxy of stars who know all about it. On my left, Tim Williams, senior governments advisor in DFID; on my immediate left, Tim Stew, who is Head of the Arab Partnership department at the Foreign Office. On my right, Michelle Burns, who works for Tim on the Arab Partnership. On my extreme right, Graham Ward who was appointed by Andrew Mitchell as the first Commissioner for the Independent Assessment of Aid Impact and assessment of impact is something that we have spent a lot of time talking about this morning.

Patrick rather unkindly suggested to me that since, to be absolutely blunt, few of the panel have witnessed the session this morning, I might endeavour to summarise what has happened. I am not going to do anything of the sort. I will reveal those of my personal prejudices which the 30 October 2013

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discussion so far has reinforced. I think there are probably four, maybe five of those and I would like to feel that they would be reasonably consensual.

First of all, fellow panel members: we have had some discussion about the multiple objectives that the KHFs were trying to pursue, and about the extent to which those may have made life harder. Those objectives have included, of course, pursuing explicitly British political and commercial interests, but also contributing to a reform process, contributing to transition, embedding reform. I think generally speaking in public administration, it is easier to do your job if you are absolutely clear about what your objectives are, and it may be that one of the lessons is just to clarify which of those objectives is dominant.

Second, there has been quite a lot of discussion about the dispersion of effort; the amount of effort was quite small in financial terms, and it was widely dispersed. That has been seen by many as having enabled the Know How Fund to have tremendous impact on individuals, and possibly on individual institutions. But it has also been argued forcefully that a more strategic approach by concentrating the impact in particular countries or institutions might be more powerful.

Thirdly, and I confess freely that this is my main prejudice: there has been some discussion about the fact that the Know How Funds were a small part of a much bigger international effort. My own reaction to Keith‟s admirable book, which focuses explicitly, by intent and execution on the Know How Funds, is that inevitably becomes rather UK-centric, at a time when, let us face it, the dominant factors in the transition in Eastern Europe and the former Soviet Union were not the Know How Funds. They were the international institutions of the IMF and the World Bank, the new institution of the EBRD, the institutions of the European Union and German and American bilateral assistance which were multiples of 20 and 10, respectively, of ours.

Fourth, and another one of my prejudices but also mentioned extensively this morning. It was difficult to operate where the surrounding environment was not supportive. I think this is probably, I would guess, the clearest message from this morning‟s discussion, for the Arab Partnership. This kind of assistance is most effective in a stable and conducive environment. Do not waste your money where it is not going to work.

As a sub-set of that, fifth, there was a lot of discussion this morning about the failure not particularly of the Know How Funds, but of the international community as a whole, to see what was happening on very large scale corruption: corruption in the former Soviet Union, to an extent that threatened the livelihoods of many people, and continues in my view to be a serious stain on the transition process. Now, there are many other messages that people might have heard this morning and many other conclusions that people might draw, and judging by the look of dismay on the face of many of you, they should have been drawn differently by me. But that is an endeavour to kick it off.

The order in which I would suggest we go is to start with the protagonist of the Arab Partnership, so Tim and Michelle will go first. Tim Williams will then shed a DFID perspective, and your Permanent Secretary this morning let it be clear that there is not a hair‟s breadth between the two wings of the endeavour. Then I will ask Graham Ward to give his perspective if I may?

Tim Stew Sir John, thank you very much indeed for that introduction; you have set us a number of challenges which I hope we will pick up as we go through, either during our presentations or in questions afterwards. I much enjoyed those observations and indeed the discussions this morning, which I was able to join certainly some of.

I am delighted to be here this afternoon to pick up at the point where Keith‟s book ends, and that was with the creation in late 2010 of the team and the initiative which was announced in February 2011, as the Arab Partnership. Tim and Michelle will say more about the programme fund itself, and the programming effort, but I wanted to give you an overview of the broader initiative, offering as I go, some thoughts on how history and the Know How Fund in particular has 30 October 2013

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shaped the Arab Partnership and our work, and certainly picking up some of those lessons that Sir John has set out so clearly.

I have to say that the comments made this morning, many of those were music to my ears.

20 years on from the creation of the Know How Fund, we found ourselves in early 2011, facing many of the same issues and questions. But also some significant differences. William Waldegrave mentioned the Know How Fund was a one-off; I would agree, but thanks to Keith‟s work, particularly on the earlier internal history that preceded the book, which you mentioned, which became bedtime reading for me in early 2011. Many of those lessons were available to us at a very early stage of formulating the Arab Partnership.

The Partnership was launched formally by the Foreign Secretary on 8 February 2011 in Tunisia, as the FCO‟s strategic response to the Arab Spring, as we were calling it at the time. This was a policy initiative with a small pot of funds – about £5 million a year – so Ann‟s comments this morning about having a small pot and then expanding, rang very true in my ears.

As happens sometimes with Ministers, February 2011 was about 4-6 weeks before we were actually ready to launch, after a very swift start. But we did have the benefit of initial analysis which we had done in 2009, and a really focused, determined effort, which I led from autumn 2010.

Responding to further events in the region, following Tunisia, the PM then announced at the G8 Summit in May 2011, the expansion of the Arab Partnership as a joint FCO-DFID initiative, with £110 million of funding over four years: absolutely no gap between the two departments.

In between those two events, the initial announcement and then the expansion, there was what we heard this morning described as a tussle in Whitehall. I hope any future historians will take my view of those months as actually robust, collaborative exchange of views across Whitehall, until we settled on the Arab Partnership in its current form.

The Partnership initiative set out our policy approach, as first Tunisia, then Egypt, then other countries in the Middle East and North Africa experienced popular protest, demonstrations and, in a handful of cases of course, revolution. With this, we too set out our offer to the region: we were going to support those seeking change through our bilateral programming, yes, but this was small- scale; and critically, Sir John has mentioned, through our ability to influence the wider international scene and approach. The latter meant, in particular, encouraging and shaping the use of existing multilateral institutions, specially the EU Southern Neighbourhood Policy, where about €140 million of UK taxpayer money was going into the region every year for reform, but we were not seeing the response that we wanted. Also, the large investments being made by the international financial institutions, EBRD, the World Bank, and others where we had a voice. As well as new mechanisms, and that included the Deauville Partnership with Arab countries in transition, which the French G8 Presidency launched in May 2011.

Now, the Foreign Secretary has been heard to describe the Arab Spring as the most important event of the 21st Century so far, while also making clear that reform and transition to more democratic states is a process, not an event in itself; and that it is generational, not the work of a couple of years. If in some future time, an FCO historian is sitting in this or another room, similarly completing a history of the first 20 years of the Arab Partnership, I will feel that we have remained true to William Hague‟s foresight.

There are some parallels with 1989, but also many differences. Some commentators were quick to draw the parallels in 2011, and indeed, countries which had experienced transition from Communism were equally quick to try to offer their services and their advice to movements and potential leaders in a number of Middle East and North African states, particularly Tunisia, Egypt and Libya; offers which were not always welcome. A Tunisian youth leader told me with some vigour in 2011 that she did not want to follow an Eastern European model; „We want to be the model‟, she said quite simply.

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We have spoken a lot since 2011 about the aspirations of the people for a job and a voice, in particular. Governments‟ responses have often underlined the significance of the differences with 1989, and indeed between each country of the region. In some cases, particularly Libya and Syria, this rapidly turned to violence on both sides, and in Syria‟s case, clearly with devastating results. But there was, and is, in the region no common system to be overturned. The people of Egypt were certainly rejecting a social contract with their leaders which they felt no longer delivered what the people needed. Now, the instinct and demand may have been the same in Tunisia, in Libya, in Syria, Yemen and Bahrain, but the government systems and social contracts in each case were not uniform, not the same. Some had certainly suffered dictatorships: Gaddafi‟s denial of a place for civil society or creation of recognisable state institutions was very different to Mubarak‟s Egypt. What did unite these people on the streets, though, was the sense – perhaps spread through social media – that enough was enough: the sudden and visible loss of fear of the states‟ security systems which had previously kept people off the streets and under control.

All of this and the events which followed, came after the UK‟s establishment of what was initially called the Arab Human Development Initiative, a rather clunky title, but a one-year pilot set up in October 2010, to analyse what was driving discontent on the streets of cities in the Middle East and North Africa, to assess how this impacted on UK interests, and how much it therefore mattered to this country, and then to get on with doing what we could do to sort it out.

There was no shortage of evidence and analysis of the problem. Certainly the series of Arab Human Development reports produced by the UNDP since 2002 – Arabs writing about Arabs and for Arabs – set out the deficits in the political, economic and social systems in the Arab world, together with the security and stability concerns. These – 9/11, the war in Iraq – all combined to encourage a western attempt led by the US in the early 2000s, democratisation in the MENA region.

Now, many of the instincts shown by the West at that time were right, but many of the circumstances in the region were not. This drive, often seen as the imposition of western models of government, became discredited fairly quickly. So I was very conscious of that previous experience; I was in the region at the time, and there was also a big question about incentives. In 2011, there was not wall coming down with a golden future lying beyond the pile of bricks, with a promise of membership of a wider, wealthier Europe. The incentives to continue with change were and still are less clear-cut.

But in late 2010, we had already identified where we wanted to support reformers, whether they were civil society or government and it has not changed. Our vision is pretty clear and our aim is clear. It is not about commercial interests or whatever; it is about reform and supporting the reformers in whatever form they take.

So, corruption, poor governance, lack of political and public voice, low levels of participation in the economy for women and youth in particular, lack of access to justice and lack of trust in the rule of law. Combined with the tough treatment meted out by state security systems in many of these countries, this had looked like a combustible mix for some time. We assessed where UK interests were most at risk, thematically and geographically across the region, and where we as the UK had a role and could have most impact, swiftly, flexibly, sustainably, again drawing on the Know How Fund experience. Impact has been our mantra, not how much we are spending, but what effect we are having on the ground in influencing the wider international approach to reform in the Arab world.

We have applied other lessons: the importance of economic development and of political and economic reforms going hand in hand if either is to succeed; and specifically to ensure there is transparency in government if we are to avoid promoting corruption rather than tackling it.

The need to approach this by supporting what we call the building blocks of democracy rather than democratisation as a name in itself: this is not just about free and fair elections: one man, one vote, once. It is about building a supporting the institutions of state and a civil society capacity necessary to challenge and maintain a healthy balance. It has been about the bottom-up, 30 October 2013

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grassroots work with civil society as much as top-level government to government diplomacy – so, a comprehensive pincer movement.

We have shaped our approach with principles, from the start. Differentiation: all these countries having very different backgrounds; humility, these have been Arab revolutions, not ours, and we do not claim to have all the answers. So, picking up Mark Lowcock‟s point this morning, we have known from the start the change and the demand for it has to be home-grown. We cannot generate that in a country that does not want it. We respond to that rather than leading the charge.

Finally, consistency is a principle; this is not about us attempting to spot and back specific winners.

We are supporting the democratic process and institutions, not specific individuals or parties. So there is pragmatism in that but there is also consistency.

Finally, as I hand over to Michelle and Tim to say a bit more about the programme, let me say I think the FCO and DFID do work together on Arab Partnership in a way which is perhaps unusual but which may well strike a chord with those who were working on the Know How Fund.

So, the Arab Partnership is delivering non-traditional aid to countries in the MENA region which arguably would not otherwise attract the essential DFID technical support they need. In the process, we have found a way of combining the best programming expertise from DFID with the FCO‟s policy expertise, and presence on the ground across the region.

Michelle Burns I am Michelle Burns; I do indeed work for Tim. I am the Head of the Arab Partnership Participation Fund here in the Foreign Office. What I want to focus on is one specific challenge that the Know How Fund highlighted: that of monitoring the impact of programmes in both the short and the longterm. I want to flag this one up because it seems to be quite a common theme. Sir John highlighted this notion of, what did we do? What kind of elements can we say we contributed to when we continue to fund particular programmes? It is quite interesting that we have Graham with us from the Independent Commission on Aid Impact on our panel. We know his work very well; I think the term is „ICAI-ed‟ – I do not know if it is a bad use of the English language, but ultimately the Arab Partnership participation fund has recently been reviewed by the Independent Commission for Aid Impact team and we received a „healthy amber green‟ rating overall, which puts us on a par with some of the best development projects that are being funded across Whitehall at the moment. So, not only did Tim give you a really great insight, but from humility perspective, basically, did not flag up what I am about to flag up, that we are particularly perceived as quite a strong programme. But the ICAI team did also highlight to us areas where we could continue to strengthen our response, and the biggest challenge for us is ultimately this notion of impact and evaluation, and the wider results agenda.

It is quite interesting to make the point that not only did the Know How Fund experience this, so the lesson from history is to take this more seriously; we are still receiving that message and it is very much alive and alert today. The challenge being thrown down to us is not just how do we fund projects, but what do we want to achieve with them? This question is increasing in volume and frequency across Whitehall; it is not just in our partnership issue, but it very much is stimulated by the value for money and sustainability agendas that are coming to the forefront now.

Probably, for me, more fundamentally, the questions that are also underpinning that, is not just why and where we do business, but who our chief beneficiaries are meant to be. Tim highlighted quite clearly that we are about working with individuals and with drivers for change, rather than enforcing it on them explicitly.

This is a challenge for all Whitehall programmatic areas, rather than just the Arab Partnership. What I want to do is just talk about, quickly, how we in the Arab Partnership perceive the benefits of paying more attention to rigorous notions of impact. Not only do they improve coordination between us and other Whitehall departments, but the wider community, and it reduces duplication. This has been at the heart of why the FCO and DFID are working so incredibly well together on this particular project.

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Ultimately, it builds a different type of relationship that you have with your partners; one that is encouraging them to think through not only the projects that they want funded, but what they want to achieve with them. These factors help us here in the centre understand the services that are effective, much quicker, and scale them up much more effectively; but more importantly, identifying what is not working so that we do not put money back into components which we know are failing. I wanted to flag that one up particularly because it is a no-brainer; the thing that I heard quite clearly today was, „We have a small amount of funding and we want to make a contribution‟.

But what is fundamentally important is not the volume of money you are pumping in, but what you want to do with it, and that is something that we are really working with, within the Arab Partnership team.

What do we intend to do about the challenge that the ICAI team laid down to us to strengthen our capacity to track and monitor our impact? The first thing that we intend to do as a team is to build and professionalise our network. We deliver through others; we here in London work on the premise that the best thing to do is to work with what comes from the ground up. This is what Tim was very much highlighting earlier. We also want to encourage people with different types of evidence to come to the table to challenge our views so that we can continue to refresh and focus our strategy on where it is most needed.

Finally, we want to build the capacity of our implementation partners, those who are actually out in the field to be able to talk to us much more systematically about impact. It is important that we include them in this discussion, and I enjoyed thoroughly reading the Know How Fund book. One thing that was absent for me were the voices of the beneficiaries who were meant to be receiving the outcomes from this, and it is something that we have to keep very much in the forefront of our minds. Not only will it help us get better at targeting effectively, but it will also ensure that we can be responsive not just to those who are funding out projects, the general public, but that we can have a really clear, solid understanding of why we are doing business in a particular country.

If we get this even half-way right, it not only has benefits for our programme, but it challenges what we do, encourages us to push further, and it continues to add to the body of work that Keith‟s book is part of. I think that is also important; the lesson-learning process has to be consistent and ongoing.

Sir John Vereker Thank you. Before I hand over to Tim, I wonder if you could just bring this to life a little by giving an example of an activity that you are pleased with and how the impact assessment process would work on that. Is that a fair thing to ask you?

Michelle Burns Of course it is. We get asked this a lot, both internally and externally: „Where are you having impact?‟ One of the things that we are really keen to explore is how do we do it in a meaningful manner? If I am thinking through today, we were preparing some material on Jordan, because we have the Royal Court coming to Britain to meet with our Minister. They are very interested to learn where we are funding and what we are doing. One of the things that I am particularly proud of is the training and the capacity building that is taking place in the north of Jordan, to strengthen young people who are disengaged from the political participation process, understand their role and their responsibility, and utilising it to help them get their objective, a job, an education. We have currently trained over 970 individuals from a very small area of Jordan where previously, there was very little interest in the political party process, to be much more attuned to the language and the role that they play in it. I am particularly proud of that.

The long-term aim of that, that we would expect to see, is more active participation in the political process; actually beginning to build CSO capacity within that group, to begin to engage with it more effectively. I do not know if you have anything you would want to add as well, Tim? 30 October 2013

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Tim Stew I might add, but I suspect Tim might also. Again, we are looking at headline figures and measuring impact can be quite difficult. But the sorts of other examples we have: in Tunisia, where there is such a great thirst for knowledge and understanding of how even quite basic elections work, voters‟ rights and all of that. This year – Michelle, correct me – but I think we have trained 85% of school leavers who will be first-time voters this year in Tunisia, in basic voting rights. So, absolutely, we have small funds, but absolutely equally, we are looking for scale of impact. Now, that basic education is going to be basic, but there is a very large group of people there who, this time six months ago, did not have an understanding of how the election system in their country should run.

Sir John Vereker Thank you both for that example; I think that is extremely interesting and ODA, DFID staff will recognise a lot in what you have described, Michelle, from our efforts to raise, for instance, a consciousness of women‟s‟ rights in the sub-continent 10 or 15 years ago. It is the same principle.

Tim Williams So much has been said that everything I wrote earlier has been already been said at least three times. So I am going to change what I was going to do and I am going to try to be a bit reflective, picking up some of the points made by others and pick out how they link to, or we have used or not been able to use, within the Arab Partnership.

First thing I have to pick up, of course, as Sir John has mentioned, our current Permanent Secretary, Mark Lowcock was here earlier, and made a few points. One of them, he did note, about this issue, and it has been picked up a few times, that the Know How Fund, there were many pages between 110 and 140, describing tussles, or whatever, between departments in Whitehall over money, over policies, over direction and form of spend etc. I think it is true to say that with the Arab Partnership – or one of the great things about the Arab Partnership – is that we have a design which is to avoid that. Whether or not Tim was instrumental in that, or others were instrumental I am not sure, but essentially the Arab Partnership launched, as Tim has mentioned, back in 2011, with two funding streams. One is in the Foreign Office, the £40 million; and one in DFID for £70 million. Each one of those has a Board, and then there is a Board above it which unites the two departments. What that means is that departments can work fairly independently, without the need to struggle, because they have their own purse strings. This is brought together by strategies and actors at the level of the embassy, of Post, in each country. So it avoids clashes, and it allows DFID to feed into FCO work, I sit on their Board; and FCO sit on the APEF – the economic fund as opposed to the political fund. So it creates, I would say, a positive dynamic rather than what Mark talked about, the sapping of energies between the departments. So it is positive and reinforcing.

I think that is one thing that we have somehow learned; I think we have gone past a former point of struggle, with our programme.

That said, nothing is ever perfect. We have something called the Conflict Pool in Whitehall that many of you will know. I would not say that the integration between the Arab Partnership and the conflict pool is anything like perfect yet. Whether it will become perfect in the future CSSF12 – which is the idea of the revamped and made-bigger Conflict Pool – remains to be seen. There are lots of us around Whitehall, that are hopeful that somehow, the new instrument that comes out in 2015, bringing in the National Security Council, can actually help bring some of this current mismatch between some of the instruments together across Whitehall. That is a work in progress

12

Conflict, Stability and Security Fund.

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and we will not say any more about that. That is one thing we have learned and we have tried to pick up.

I want, then, to pick up on something that Lord Waldegrave picked up, which is a slightly different perspective. We have all talked about country ownership. The fact that the Know How Fund was – I think he used the word „restorative‟ – it was sort of opening the door to let people go back to where they were. In that sense, they wanted to go back to that kind of open economy, possibly it was not liberal democracy, but there was some kind of democratic openness, and there was the opportunity to join the Council of Europe, the European Union etc. So there were a lot of incentives, political dynamics and interests, in going forward.

When we look at the Arab Spring, we have to recognise that those incentives, those political dynamics, those ancient political settlements, do not exist. The ones that do exist are complicated. We see that complication in Libya today, which was of course two centres of power under the Ottoman Empire, the east and the west, and that is possibly where they are going now.

If we look at Syria we see equally a kind of atavism going on there that goes back to where things were before.

Our new Arab Partnership instrument does not have it easy, let me put it that way. We are fighting against the streams of history, rather than fighting with the streams of history. I think that is something that we understand and recognise, and just to say, we are aware of that and we know it is a challenge. Therefore, our success has to be measured, perhaps in different terms.

I will pick up something now from Adrian Davis. He mentioned that at certain points within the Know How Fund, the use of strategies was introduced to help channel, to drive, to help fend off all the claimants for access to the funds. We started with that in the Arab Partnership. We not only started with strategies; we asked countries to undertake a full political analysis, essentially in four parts. Firstly, you look for 8-10 pages on the political and social settlement, what is really driving the power or the forces that create the institutions going forward. Under that, what are the civil conflict-drivers? Thirdly, to look at economic drivers, within those individual countries; lastly, to look at the interests of Whitehall and other actors, whether they are The Gulf – who you cannot ignore if you live in Jordan, or anywhere in the Middle East – or whether it might be America or Israel.

We bring that analysis out, and from that, we ask countries to set up strategies with more specific sets of objectives, which are informed, at least, by this analysis. On flexibility, about which people talked, we asked this to be iterated each year, so that there is rethinking. We now almost need to rewrite the narrative to be honest. In 2012, we had a very hopeful narrative across the Middle East and North Africa. Today, that narrative cannot be as hopeful as we currently have it written. There is that point from Adrian Davis as a learning point from earlier: the need to try to understand those political dynamics and to really have a clear idea of where you are trying to go.

Although I know we had some of the „thousand flowers bloom‟ argument; there is always going to be a tension between those two ways of looking at the world.

The other thing I wanted to pick up from earlier, was a point that Ann [Lewis] in the audience made, to do with coordination with other donors, working with others. Well, competition is a factor at country level between us and the French, or us and the Germans, or the Germans and the French, and everybody else and everybody else.

I have recently been working in Jordan; MOPIC – their Ministry of International Cooperation – actually does not have an interest to coordinate, because they love playing people off against each other. The political dynamic in-country militates against good donor behaviour, what we used to call coordination and the effectiveness agenda. It is very difficult in a lot of the Middle East, but we are aware and we have learned a little bit from the past but what you learn does not mean you can fix the problem that is so deep.

Another thing – this was brought up by Tim Lankester which I thought was quite interesting – that is very true to us, that the Know How Fund suffered from spending pressures and multiple 30 October 2013

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objectives. Ministerial hits, shall we say: need something, need to announce tomorrow, what are we doing? Well, that is life; we cannot get rid of that one either. It happens. There was an occasion when a quite senior person went to Libya, needed to say something, said something and then we were all sitting around afterwards saying, „How in hell can we implement that one?‟ A year and a half later, we have ideas and things are moving forwards.

Those are points that I picked up that I thought were really interesting coming from the discussions and comments made earlier on. I want to pick up on three points that are important with regard to the way that we think, at board level, and programmatically within the Arab Partnership now.

We recognise that reform does require the alignment of the stars. You have to have a political force wanting it; you have got to have organisations that are prepared for it, and you have to have individuals that are trained for it. If you get any one of those missing, it is going to go slower than it would do otherwise. We can possibly work on two and three, but we cannot really do anything about the general political dimensions, pressures and incentives. But when they are there we hope we are light of foot enough to be able to contribute to change.

Tim has just mentioned exactly this issue about time. My feeling is we are doing an evaluation now, after the first three years. It is terribly early. It would have been so much nicer to do one at 5 or 10 years, but life does not work on those kinds of cycles. We are maximum fiveyear cycles and we have to go within that, because of government, so we have to do one at three.

But we need to do one in 2017 and one in 2020. The one in 2020 will be very interesting. We have to think of change of being a slow time. I think in the departments – us and the Foreign Office, and Cabinet Office for that matter – there is a strong interest in the officials to stay engaged. Obviously we cannot speak for Ministers going forward many years, but at the moment there is also very strong support from them to stick with this values-based agenda, rather than interests-based agenda.

Just one last thing I wanted to pick up on, about programmatic approach, which again was mentioned earlier as everything has been. What was said before: the best is the enemy of the good. We nowadays talk about „best fit‟ rather than „technical excellence‟, as it were, recognising that you need to act appropriately in the environment, not necessarily believing that you can parachute your concept of „best‟ into somebody else‟s area. You have to go with the grain.

Graham Ward Thank you Sir John, for inviting me to be here today to contribute to this discussion. The Independent Commission for Aid Impact is a new organisation at the table of development assessment. Having operated for nearly three years, we continue to strive for reports which are relevant, timely, concise and easy to understand, irrespective of how complex the topic being reviewed may be.

As Michelle has mentioned, in June, we published our report – here it is, you can see concision – and that report, FCO and the British Council Aid Responses to the Arab Spring, focused on the Arab Partnership, and more specifically on the Arab Partnership Participation Fund.

We used two case study countries in preparing that report, being a) Egypt and b) Tunisia. I think it is fair to say that some believe that the Arab Partnership used the footprint that was left by the Know How Fund. The past format, deployed on a new region with a similar, or similar-ish, set of issues. I therefore want to look forward from the Know How Fund and the views already expressed, to the Arab Partnership and what we found from this relatively new programme earlier in the course of this year.

The context within which these two programmes emerged is of course similar. At the time of scoping the work for our report, the world‟s attention was firmly placed on the Middle East and the Arab Spring. A series of events that was creating new governments and affecting states in a 30 October 2013

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domino fashion right the way across the region. The FCO had been through similar circumstances before, in recent memory, as this mimicked the events of the end of the Cold War? It would be surprising, considering the rarity of such events, if the FCO had not looked at past models and considered what could be learned and used again under these similar circumstances.

Can I therefore claim that the Know How Fund was a success because it appears to be the basic model for the Arab Partnership? No, I do not think I can; I do not think I can go that far. But I will undertake to outline some aspects that we found in our assessment of the APPF in Egypt and Tunisia, which I believe are relevant to the discussion.

The intended beneficiaries are always at the heart of our reports in ICAI. I believe that this brings up interesting questions: who are the beneficiaries in this case? Who should be benefitting from this ODA spend? In most of the programmes that ICAI looks at, they are fairly easy to identify: a region with new health facilities, a village with a new school, a family with anti-malaria bed nets. But, in this case, however, it is not just those who have direct interaction with the projects; it is the wider society of those countries. Indeed, it does not stop there. Alistair Burt has given us a hint of this in his online video on the Arab Partnership, when he said, „Our security and prosperity on this island are closely linked to the regionâ€&#x;s long term stabilityâ€&#x;. Does that sound familiar? It certainly did to me when I was reading about the Know How Fund.

The Arab Partnership is not only about the benefits to the citizens of these countries. As in the case of the Know How Fund, it is about our own security as well. But nonetheless, those who are living, working, striving for greater democracy and accountability in partner countries, must remain our focus. Where there are this many beneficiaries, it can of course be hard to see the wood for the trees, which is why I want to take you to the grassroots, to Egypt and Tunisia where our team got busy on the ground. I must admit that I am not sure that they expected to be teargassed on their arrival, but it did add a certain flavour to our work.

Three projects in particular I believe are worth mentioning to show the achievements of the APPF. The Centre for the Study of Islam and Democracy in Tunisia, is a first example. It is a think tank that is widely respected across the local political spectrum. It received APPF funding, to support cross-party dialogue on the new Tunisian constitution. An initial workshop of some 200 people identified the most contentious issues which were then discussed in six small working groups, of senior political figures. The outcome of the dialogue was a series of draft texts that were taken back to debate in the Tunisian Parliament. The success here was the speed of the response, taking advantage of a narrow window of time to have the maximum effect. As anyone here who is involved in constitutional law will know, moving these things forward can be very difficult, and actions which move the drafting forward, while building consensus should be warmly welcomed, and we did so.

Arab Partnership funding also contributed towards the establishment of Aswat Masriya, an independent web platform for objective, high quality reporting on the Egyptian elections. This site became the most reputable source of reporting on the elections and had more than 175,000 hits a month. It also provided a platform for the training of journalists, on political reporting in a democratic context, something which local journalists had little or no experience of. We believe that creating a free press is something that we all recognise as a valuable cornerstone of democracy.

The final example to which I want to draw attention to is the British Council-run Young Arab Voices programme, which operates across the region. It supports the establishment of debating clubs in high schools, in universities and in NGOs. Our team witnessed very enthusiastic participation from young people in these clubs, and this helps to promote a new form of political discourse, in which diverse views are expressed and analysed on their own merits.

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So, the APPF can claim to have aided the drafting of a constitution, established a reliable source of information for Egyptian citizens, and enabled young people to engage with others who have a different perspective.

But this is not to say that all the projects under the APPF were a success. A high-risk portfolio means that some projects will fail. This is right. If it were not the case, the programme would have been insufficiently ambitious. Some projects, however, as those which I have already mentioned demonstrate, do have the potential to help the development of newly-democratising states. The key is to learn as you are going along, ensure that you understand why projects succeed, and why projects fail, and to learn from both of these things when selecting future options. We welcomed both the high-risk portfolio and the grassroots demand approach which were taken by the APPF, which we considered to be right for this programme.

The programme is of course overseen by officials in-country, with not only FCO staff but also DFID officials making a contribution. I am always pleased to see good, cross-departmental working. We all know in this room, I think, that the media can be relied upon to seize on the merest whiff of infighting amongst civil servants. Departments, however, can and do work together, and in this case, we saw evidence of a relationship working well.

Staff from DFID on loan to the FCO brought development experience and we found that this enhanced the relationships and credentials of all of those who were involved in the team.

DFID officials, however, were not the only familiar faces involved in the APPF. The British Council is also working to deliver APPF projects, and this makes yet another organisation that has experience of both the APPF and the Know How Fund, and their knowledge and experience, of course, stretches far further than these two sets of projects, making delivery through the British Council, a tried and tested approach.

It demonstrates a level of trust and confidence in the activities of the British Council which did not disappoint in the activities which we saw on the ground in this instance.

So the projects emerged from the grassroots. Staff with a range of experiences were there to take them forward, but we were also impressed with the flexibility of the programme, and its ability to learn and to change as it went ahead. I understand that this was a feature of the Know How Fund as well. It is something, however, which is not commonly enough found amongst ODA programmes. Learning is often the weakest marking that we give in our reports, and yet it is crucial to the delivery of effective and value-for-money interventions.

Learning, and the ability to respond to your surroundings, can make or break aid programmes. There is no doubt that money has been wasted across the globe on projects that fail to accept and respond to emerging challenges and to changing contexts. But the Arab Partnership and the Know How Fund both appear to have this rare quality, the continuation of which is vital, if the APPF is to achieve its medium and its long-term objectives.

There is still, however, more learning to be done. Our recommendations pointed to potential improvements in delivering an explicit theory of change, introducing a grant making procedure that can distinguish between partnersâ€&#x; delivery and financial management capabilities, improving programme management skills and sharing even further knowledge across other programmes. The fact is that the APPF has had a positive start and it deserves the green/amber rating which we awarded it earlier this year, and to which Michelle made reference in her remarks.

I look forward to seeing what work has been done, and what improvements have been made when we return to this report as part of our follow-up activity. I will want to know if changes to the programmes are making a difference on the ground, for the beneficiaries, and how the FCO has continued to respond to the challenges that are being thrown at them. I am also aware that a full evaluation of the Arab Partnership will be starting soon, and I hope that that assessment takes into account the findings of our report and ensures that its findings are adopted into the programme to help it to continue to be both relevant and realistic in its activities and objectives to bring real and lasting benefits to the ordinary citizens of these countries.

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Questions and Answers Sir John Vereker We have spent a large part of today asking ourselves how we measure the impact of these programmes, and I think everything you have said is extremely germane to that. This is the point at which our distinguished panel is open to questions from the floor.

John Birch Your generation have got a much tougher job on your hands than we had with the Know How Fund. It really does strike me as being incredibly daunting.

I have two questions. During the early years of the Know How Fund, the information revolution had hardly begun. There was no world wide web, there were no mobile telephones. Tim Stew made just a passing reference to social media. Is the social media something that you can utilise and use in the good cause of the Arab Partnership?

My second question. With the Know How Fund we were able to work for the transformation of Eastern Europe because the military confrontation with the Soviet Union had come to an end.

That had been, before, the real log jam that had stopped us making any progress, except through very gradual evolution in Eastern Europe. Now, in the Middle East, the problem that has dominated the scene and has really held back the Arab world from making the sort of economic and political progress that is necessary has been the Arab-Israel dispute. If that could be removed, if that could be solved, so many of the other things would move forward. The Arab countries would not waste so many resources and their political development would be much easier. I feel that the Arab Partnership is a sticking plaster when there is a much, much bigger issue behind it. How do we sort out the Arab-Israel problem, particularly as the United States seems, at the moment, to have given up on it?

Tim Stew I am very happy to take those, and to enjoy the challenge. It is quite a big challenge as you say, with the complexity that we have across the Middle East and North Africa. Nonetheless, confident in our teams in both departments that we are up to that.

Social media: an awful lot is said about social media across the region, an awful lot claiming in the early days that this was a Facebook revolution. That is all very well but then you have to put it in context and look at what actual internet penetration there is across the Middle East and North Africa, and it is pretty small still. Certainly by western standards, it is pretty small.

What it clearly did was, amongst that younger generation push messages out, enable people to gather, but this was not a revolution that was caused by social media; it was used in the later days. Indeed, you only have to look at the actions that, for example, the Egyptian government took - Mubarakâ€&#x;s government around Tahrir Square - to see they closed down social media, blocked signals as much as they possibly could. It was good, old fashioned TV and radio that got people out on the streets more than anything else.

Does that mean we cannot use it? No, not at all. We do use it as much as we can; you have heard one example that that ICAI review has picked up on, of us using websites in particular.

So absolutely, one of the fundamentals, if we are going to keep clear-sighted about not having too many objectives, one of the things that we keep in our minds the whole time is the youth angle, to what we are trying to do in the Middle East and North Africa, because of the scary statistics that are out there. It is a hugely changing demographic with a population doubling in 20 years. 75% of that population being under 26; 100 million jobs need to be created in 20 years. I can go on; there are loads of statistics, all of which points to youth being absolutely key. It is very clear that youth across the Middle East and North Africa, as much as anywhere, are picking up their mobiles, smart phones and so on, more than anything else. So absolutely, we are using those means as 30 October 2013

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much as any. That is broadly across government; I think our Ministers are tweeting more and more; responding much more rapidly. We are doing fewer press releases and much more tweeting than we have ever done.

On Arab-Israel, I have on my board upstairs a reminder that there are two really big issues that we should never forget, and that was right from the end of 2010 and that says, „Remind yourself, Arab-Israel and Iran can knock us off track any time.‟ They are always there and those are big issues that need to be solved. So absolutely, they are central. We have seen a couple of examples in the last three years where Arab-Israel has flared up again out of nowhere, and we see the stability of the region fall apart very, very fast; impacts in Lebanon, Syria, wherever else. That is very much on our minds. Clearly we are seeing quite a bit push by Kerry at the moment on Arab-Israel, which the UK is fully supporting.

From my department‟s angle, we look at it in a couple of ways. I think Arab-Israel issues sit at the heart of much of the disagreement in the Middle East, but they do not explain what we saw on the streets in the region, in 2011 onwards. People then cited that dispute as being central. Of course, they always do; that is what it comes back to. But that is not what got people out on the streets. It was the other factors: the inequality, the social injustice, the repression that had been there, and so on. So I think we see it slightly the other way around. Absolutely we, as a government, would not step away from pressing on with whatever we can do to resolve that issue, but at the same time, we see that we can, even if it is a small-scale effort and trying to work through the multilaterals, we try to tackle the other indicators, which actually could perhaps create an environment in the region which is more conducive to finding a solution, because people are finding less pressured – less pressured about territory, about water, about those other indicators and facts of life.

So we look at it from both angles, but I would absolutely agree; if we could make significant progress on Arab-Israel, and on Iran I would add, where we are seeing some more positive signs in the last couple of weeks than we have seen, but let us not get ahead of ourselves. Those are two really big issues which clearly have the capacity to knock us of course at any moment.

Michael McCulloch I am going to ask two questions; for the first I had better declare my interest as a Trustee of BBC Media Action. I wanted to pick up in a wider sense the point that Sir John raised about the media.

You talked about the absence of a clear vision of where countries wanted to go, having decided they did not like what they had and having had enough of that. The question is, how far is there a possibility of developing and working with more independent media in ways that helps countries articulate and debate the question of how they want to evolve. Dealing with obviously quite sensitive issues, the question of the extent of Islamic influence in the way a country is set up and governed and so on.

My second question is rather different: one of the things we were really conscious of in the early days of running the Know How Fund for the former Soviet Union, was that the perceived possibility in any case, that this door, this window of opportunity that had opened, could close very rapidly and the communists could suddenly be back in power. We did not assume at that stage, by any means, that this was a non-reversible development. Is that in some way a concern for you in relation to any of your countries or not?

Tim Williams As I mentioned, with the Arab Partnership, we have two funds: one with the Foreign Office with £40 million and one with DFID, with £70 million. So there is a broad split here. The economic and influencing of the international financial institutions comes under DFID. What we would in DFID would call, „Demand-side governance‟ – that is working with civil society, parliaments, media etc. comes under the Foreign Office APPF, which was reviewed by ICAI. The most appropriate person

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to talk about the media projects, I will ask Michelle to do that in a minute because they come under her area.

On the reversibility issue, yes, as I said before, there are reverses. Egypt is a case in point, where we have seen a counter-revolution, effectively; a very popular counter-revolution. What comes next in Egypt is indeed a very hot debate; how we can support a system that emerges in the future, that does not simply replicate the past. Just to pick up a point that is germane to the earlier question about Israel – and as Tim put it – the nature of the states were why people were on the streets. We cannot forget that about 40% of the economy in Egypt is managed by the army, who have now retaken power. Even during that whole revolutionary period, there was never any threat, as you might remember. One of the deals done by Morsi, with regard to the military, was not to interfere with them when he let el-Sisi in that was the deal; you change the old guy, Tantawi, you bring in el-Sisi but you do not interfere with the military. The structural things that I was talking about earlier, that we need to have aligned if we are to get real reform, they are in question in many of these countries. Hence, the possibility of reverses is there all the time, less so, perhaps, in Tunisia, less so in a couple of other places.

Maybe Michelle should talk, because we have some great media programmes?

Michelle Burns We do have some great media programmes, some of them are overseen by BBC Media Action, but I think what you are hinting at there is, is there an opportunity to work within the region to develop more independent media, and how do we go about doing it? There are a couple of projects that we have, that offer a variety of things, but I think the things that I am most impressed by is the capacity-building component, to get them to understand how to present a balanced message. That is incredibly important, as we are seeing in increasing situations in places like Egypt, where the spaces to discuss a variety of opportunities is shrinking by the day. The ability to be able to offer a balanced approach; it is not just about how you use a medium or a mechanism.

It is actually the information that you are gathering in order to present a balanced story. So that is a key area that we are continuously interested in, so we have that plurality.

The second thing is that we are very keen to look at instances where vulnerable and excluded members‟ experiences are accessible in a way that makes sense, not just to them, but to the wider community. I think that where we are most proud, are projects that do that, that create the space and the opportunity to offer a balanced, different approach, and it is something that we definitely want to continue to work on, keeping in mind some of the components that both Tims have spoken about, which is the structures that we have to work with within those countries to try to make that information available, and some of the mediums we have to use in order to make that happen.

Barney Smith For our sins, when we were running the Know How Fund, at the end of the first year, the word came down from on high, „You must write a report on what you have been doing, instancing every country and all the projects that you have funded‟, and the next year we had to do exactly the same thing for that year. Then for the third year, you will not be surprised to learn, we had to do exactly the same thing again. I wondered if there was sufficient parliamentary or media interest in what you are doing to make you have produced such a document, or might in time make you produce such a document? Picking up on the point that Graham Ward made about taking risks, I recall the famous sailor who won the gold medal in the Olympics, who said, „If you are not across the line one time in six, you are not close enough to the line.‟ It seems to me that if you are under the pressure to produce that sort of a report for a wider public, then perhaps you should be?

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Peter Mackenzie-Smith Just one observation: nobody has mentioned Iraq, and would not that have been a country in which a Know How Fund or an Arab Partnership fund might have been effective at the time of our invasion?

Sir John Vereker Okay, let us park that one.

Lord Waldegrave I just want to make a quick comment about the inter-departmental wrangling that is recounted in the book. You have one advantage that we did not have, which was that everybody, every Minister in 1989 and 1990 wanted to be photographed with Lech Wałęsa and Václav Havel and to be photographed at the Berlin Wall. Every single Cabinet Minister went there, and of course, they had to say something; then they came back and said someone else had got to pay for it. I doubt whether you have a constant queue waiting to go to Benghazi or even Cairo, let alone Damascus.

Which is a good thing and a bad thing.

More seriously, there is a sort of worry at the back of my mind. Britain had never invaded Poland or beaten up the Hungarians much. We had had some wars with Germany, but we were not public enemy number one in most young people‟s minds. It is rather hard to argue with an intelligent young Arab from any of these countries that any British or western intervention in their part of the world, perhaps since the end of the Ottoman Empire, has had any beneficial effect at all.

We are also seen, perhaps unfairly, as the sponsor of Israel. Mr Balfour is not actually in this room; we have William Pitt.13 There is the Balfour Declaration, we have got baggage in relation to Israel as they see it. I know some regimes are friendly to us and some we invented like the Jordanians – but there are a declining number of those. There were a few more in my day.

What makes us think that there is something we can offer that they really want from us, in the way that – perhaps unfairly and perhaps it is a caricature – they looked to British Parliamentary Democracy in Central and Eastern Europe, they looked to Thatcher, they looked to us standing up to the Russians; looked to our part in the dissolution of the Russian Empire? You have in the Middle East, to put it mildly, a few more problems with the history than we had in Eastern and Central Europe, have you not?

Keith Hamilton One thing that strikes me, looking at the Arab Partnership, and comparing it with the Know How Fund, if you look at the problems the Know How Fund confronted, they were in a broad sense fairly clearly defined by the collapse of communism; and you also have very clear objectives, transforming the way economies are run and the institutions of the economies; as well as transforming the political culture then prevalent – also, in terms of dealing with countries, for the most part, with a fairly well-defined sense of nationality, national identity.

But looking at the Arab world, I look at a world which seems to be going through a process not dissimilar to what happened in 19th Century Europe: you are looking at problems that stem from urbanisation, vast demographic changes, popular conservative forces confronting other elements, a radical conservatism in some cases. How do you define what you want to achieve until that process has worked its way through?

13

There is a portrait of William Pitt the Younger in the conference room where this seminar was taking place.

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John Peaty How do you square the circle of Ministers‟ interest in high-profile, high-impact projects with the boring, long slog of creating what we take for granted in this country such as a Census Office, a Land Registry, an Ordnance Survey?

Sir John Vereker Tim, I just wondered whether you ever wake up in the dead hours of the night, assailed by what the Catholics would call „Fundamental Doubts‟, with capital initials, which go something like this: Western democracy is far from perfect and is regularly subject to pretty well focused criticism from outside. We should not ignore that. Meanwhile, stable governments with whom we can work in the Middle East have not always been democratic. If you put these two things together, do you have doubts about whether the objective to create the building blocks of democracy might actually be misconceived?

So there we have it. We have it put to the panel that we should have included Iraq, that the whole thing was too bureaucratic; that the UK is public enemy number one in the Arab world anyway; that the transformation is far more fundamental than it was in the former Soviet Union; and that in any case, Ministers will insist that you do high-profile things rather than the hard slog.

I am going to invite the panel to answer these questions in reverse order of panellist.

Graham, may I invite you to kick off?

Graham Ward Perhaps before addressing those, I would just like to add a comment on the use of social media and mobile telephony and things like that. Tim mentioned how it can be used in terms of initiating change as one of a portfolio of means to enable that; but also in terms of delivery of aid, we have seen a lot of very useful intervention coming through electronic means, getting funds to those who should be receiving funds: use of mobile banking, getting information and feedback on impact, whether schemes are actually working, being able to involve directly and communicate directly with intended beneficiaries of aid programmes. It is a very useful way in which mobile and electronic communication can help, and indeed fight corruption, using that sort of thing as a way of reporting corruption amongst those who are involved in the overall delivery chain of aid. We have found, again, that can be very useful there.

I will not attempt to answer all of the other questions, but just some observations on some of them. One of them related to reporting on progress, and one of the things that struck me over the nearly three years that ICAI has been operating, is how reluctant government is in this country to be proud of what the ODA funds are actually achieving. We see remarkably little of it; we see quite a lot of apology, almost, as various media attack ODA, but we see very little actual taking the initiative and being proud of what it is that is being achieved and being proud of what it is that is being achieved from the point of view of the intended beneficiaries. That is very important: it helps to focus the programme in the first place if you are looking at what can come through there, and it actually helps to get people understanding what the real benefits are to individuals in other countries. If individuals in this country can understand what is happening to individuals in other countries in terms of the benefits to them, I think that would help.

The effect of history – one of my Commissioners, a chap called Mark Foster went into the Occupied Palestine Territories; we did a report recently on DFID‟s involvement in the OPTs, and found himself not quite as soon as his plane landed but pretty shortly afterwards, being asked to apologise for the Balfour Declaration. He dodged it with a diplomacy that I am sure the FCO people would have been proud of. He started off by saying, „I was not actually born at the time of the Balfour Declaration, therefore could not claim to have influenced it one way or the other‟. But I think that question brings out some important points: aid as doing with, not doing to, is hugely important in our view in terms of achieving long-lasting benefits, working with the intended beneficiaries in terms of individuals on the ground, in terms of national government, regional 30 October 2013

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government, local government; a lot of work being done up-front, so that anybody who can affect the programme – be that an institutional body or an individual human body – anybody who might be affected by the programme, which may or may not be the same people, getting them involved at the beginning. Some of the most effective delivery of aid, and some of the greatest impact from aid that we have observed has been where this groundwork has been done at the beginning, involving people – a bit laborious at the beginning – but once it has been done and once everyone is onside about what needs to be done and how it can be done, finding much more sustainability of the benefits of the programme.

Also working with local organisations, local NGOs, in terms of the delivery of the aid, helps, because local people, local institutions can see that the country is working with this. So it is not being done to them by a former colonial power; it is actually a partnership. I think just the name, APPF, „partnership‟, is hugely important in terms of making these things work, and those sort of involvements are also really important in terms of defining what it is that should be achieved.

Lastly, doing the boring bits might be one way of summarising the question: yes, it is important. An awful lot of life is actually pretty boring; if you sat back and thought about whether you could write a novel about what you had been doing today, either at home or at work – but it is hugely important. Having a portfolio is clearly important as a way of doing that; one needs to have things that can be drawn to people‟s attention, but also to have the long-term stuff, and understanding that the long-term stuff needs to be done well is hugely important. We did not get to today‟s democracy, however perfect or imperfect, in an instant; in this country we have had ups and downs over centuries. I do not think it is realistic to expect institutions and modes of behaviour in any other country to happen of an instant either. This is long-term stuff, but as long as we approach it with a view to sustainability, and a real holistic approach involving everybody who is going to be affected, then we stand a better chance of delivering the benefits to the intended beneficiaries on the ground, which is the whole point.

Michelle Burns I just wanted to pick up on two points. The first one was this notion of being public enemy number one. I have only been with the Arab Partnership Participation Fund for six months, but what I have been very struck by is the level and extent of the appetite to get involved and to be funded by us in the region. It is extensive and our results are very much speaking for themselves; we are viewed as a very effective group of individuals to work with, and that is very much reported in the ICAI review. So I would not go so far as to say we are loved everywhere, but I would say that the appetite is there and it is more than we thought it would be – would you not agree, Tims? – and ultimately we are working with some really great people who are doing a great job for us. We are making headway on that level.

The second thing, about the bureaucracy question: yes, we are civil servants and it does happen, but I agree with the sentiment that was put forward by Graham. We have a responsibility to be able to make sure that we have that information available so that we can look back, in the same way as the Know How Fund has done in the book. Without that information, we are not only losing a lesson-learning implement from our perspective, we are actually not being respectful to those who help fund us and make it a reality.

Tim Williams Picking up on Lord Waldegrave‟s point about what we have to offer. The Arab Partnership essentially has two offers. One is the demand-led government to governance work, which comes from the Arab Partnership Fund, which Michelle is running, and that is mostly with civil society. As she has rightly said, and I know from many visits to the region myself, there is a massive appetite amongst different forms of civil society to work with UK-experience, and to learn and to be engaged with us, who I think they see as a reasonable partner, let me put it that way, and possibly a good partner.

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The other way that we work, the way that DFID mostly works with the funding part of this that we have, is that we are supporting international financial institutions: World Bank, Islamic Development Bank, African Development Bank, Arab Monetary Fund etc. We have some programmes with them, but we do a lot of trying to influence what programmes they have. So we are not working directly as we might do in Tanzania or Uganda. Our profile, our approach, has been informed by the fact that we did not want a big, great dolloping footprint all over the sand. It would not have gone down well, as you have essentially picked up. I think that is one way that we are approaching this particular dilemma here.

I think there was a comment by Keith about this similar issue to do with, maybe in Eastern Europe it was relatively simple compared with the really fundamental, deep problems that go on in MENA, compared to Hungary or Poland coming back into the fold. As I mentioned, I think that we have learned that analysis is really important: think a lot before you jump and then you will probably get it wrong anyway. But the analysis and the strategies are our way of managing that. It is not perfect, by any means, and we recognise that this is a real challenge. We do not know where things will go; the concept of stable states is not the same thing as a liberal democracy, and I do not think we are going to see liberal democracies suddenly flower all over North Africa or the Middle East any time soon. But maybe a nudge in that direction, we can support. Hopefully our analysis will help us make fewer mistakes than we would do without.

The last thing I will pick up: Sir John, you talked about these fundamental doubts, this concept of faith. Yes, of course. Certainly from my side, it would be wrong to say that you could think through that we are definitely doing the right thing at this stage. Just taking the case study of where we went and what we did in Egypt has been really complicated, and what we do tomorrow in Egypt is really complicated, with the programme. I think what we are doing policy-wise in Libya or in Syria; all of these areas are now very deep challenges. We would like to see to see liberal democracy and we know that is not going to be the case, but we would hope that the values in terms of the fundamental push of the programme, to work on openness, some form of more open society, is economically more active and inclusive, is the way forward – but doubts, yes, definitely.

Tim Stew I very much liked the assumption in your question, John, which was that I have slept at all in the last three years.

Leaving that to one side, I would agree with the other Tim: absolutely, there are doubts there in some respects. However - and this perhaps plays into the question about what is the achievement, what is the focus - what sits at the heart of our agenda, the key thought, is that in practice, for the UK‟s long term security and prosperity interests in the region, as well as the region‟s own security and prosperity interests, it is better for this government to be dealing with governments that have legitimacy, which is based on the consent and participation of their people, rather than repression. That may seem quite a simple thought; I am not sure that has always been applied as a measure of how we do foreign policy in the Middle East. But it is a fundamental thought, and that is the one that means I do get to sleep occasionally, because that is what we are driving for.

That plays in to Lord Waldegrave‟s question about how we do we know that they will trust us, that they want this. Michelle has touched on that already. I have spent 25 years in this organisation, most of that has been working on the Middle East, and for most of that, equally, I have been delivering messages to Arab leaders, to Arab diplomats, which are about British policy which Arab leaders and diplomats do not really very much like. I have very much enjoyed the fact that for the last three years, in fact, we have had a good news story in the Middle East; that has been the Arab Partnership. It has taken some time to gain that reputation and we do not take that for granted at all. Inevitably there is some cynicism, and some credibility questions by some in society, of course because we have our history. But as those people get drawn in and work with us, as Tim has said, this is not necessarily a white, British diplomat turning up in the middle of Saudi Arabia, in Riyadh or Jeddah or somewhere and saying, „Right, this is what you are going to 30 October 2013

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do‟. We are working sensitively with those who can deliver for us on the ground, sometimes it is UK-implementers who are doing that for us; more often, it is local implementers that we are working with, helping to develop them in the process. So it is a sensitive approach and what we see at the minute is building in confidence and trust. The former Ambassador in Tunisia was fond of saying that as a result of the Arab Partnership, following the revolution, he had had an increase of 7,000% in his funding that he had available to do things with in Tunisia. But at the same time, leaving aside the funding, he said, „I now have more of a job than I had before the revolution because I have a significant agenda to talk to this government about‟. So, what we have seen is a real change in the bilateral relationship in some of our countries.

Why not Iraq? Well, Iraq is included within the Arab Partnership remit, absolutely. Should we have taken this approach earlier? Yes; there are a whole series of questions there, I do not really want to get onto invasions and so on, but the approach that we are taken is non-invasive it is non-imposing, it is about trying to respond to the demands on the ground. We do that in Iraq as much as anywhere else. Clearly, the security situation there is as bad as Syria at the moment.

In terms of transparency, we got ourselves in the unusual situation of reporting directly to the Foreign Affairs Committee, as a result of the Foreign Affairs Committee‟s inquiry into the Arab Spring a couple of years ago. We ended up briefing them and they asked that we then provide transparency on what we are doing year-by-year through an annual report, which Michelle‟s team has recently completed. Absolutely, the pressure is always on – in between time, there is strands of government that keep us on track and make sure that we are keeping the pressure on ourselves, on the posts and embassies that we deliver this through, and the implementers that we deliver this through, to make sure that we are really still doing what we want to do.

Finally, let me just say in terms of that pressure between high profile, high impact, and the dull but worthy. Yes, we have got better at presenting to Ministers what may be slightly dull, but making it look a little bit more interesting. That is one aspect of it. The other is that, in practice, as we design the portfolio, we did not quite go down a route of, „What is quick and dirty and what is going to be long-term transformative.‟ I cannot remember who it was – it was somebody in the KHF team who was kind enough to share this wisdom with me – that perhaps you need a little bit of a balance between those two things, that is what they found in the early days of the KHF. That stuck very much in my mind. So, absolutely, we are looking at scaling-up, we are looking at a smaller number of bigger projects, which are longer-term and which are going to have a transformative approach. We also need to bear in mind that this is £110 million over four years; the Saudis and Emirates and Kuwaitis have just given Egypt $12 billion. Let us be realistic about what we can do with our seed corn funding. We can influence, we can make some change on the ground. Some of that is going to be slightly in the quick and dirty category, which may help our Ministers in terms of presenting, „Here is something that we have delivered, some instant impact‟.

Is it having a longer term impact? Well, we will try to build in sustainability and make sure it does, but there is also the long-term, more worthy transformative. So what I am relatively relaxed about is that in the span of portfolio we have got, it really goes from the quite short-term, very much grassroots, right up through DFID‟s work with the economic facility, through big influencing of big international financial institutions who have considerably more funds than we do to effect significant change on the ground.

Sir John Vereker I am sure you will all want to join me in thanking my fellow panel members for their work this afternoon.

Before I hand over to Patrick to wind this up, let me just say one final thing from me. I do very much admire the ability and willingness of the Foreign Office to devote time and attention in this way to learning from experience. The fact that we have a book in front of us, written by a professional historian, the fact that senior staff and people who are no longer on the payroll are prepared to devote a day to helping this process is hugely impressive. It is only possible if we keep decent records, and in that context, I would like to share with you what Keith said to me, when I 30 October 2013

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wrote to him saying I was prepared to chair this panel only on the understanding that there was some DFID evaluation included in his book. „DFID archives use much the same system as the Royal Archives at Windsor and the Soviet Foreign Ministry in Moscow. You say what you are interested in, and they supply you with what they think might satisfy you.‟ Tim, you might take that message back.

Patrick Salmon I have to thank all the panellists and chairs and the many contributors from the floor for a wonderful engagement with Keith‟s book. What this was not was an exercise in self-congratulation; it was quite the opposite of that. It was a highly reflective and self-critical exercise. We have run quite a few of these seminars now: this has been the one in which the lessons have been most direct and it was evident in the last session just now that people who are working currently in the Arab Partnership, are looking back to the Know How Fund very explicitly.

What we are getting therefore is a sort of interaction; I do not know what Keith felt about this, but it may have been quite disconcerting to have all those people from your documents talking at you and saying what they thought had been going on. It was interesting also that the people on the last panel had read your book and got a lot from it, both the early version and the published version. What I am saying is – and I am very grateful to Sir John for those last comments about the importance of history – that it emphasises the importance of official history as well as internally-written history. We could have had a lot more of this over the last decades, and we could have had a lot more history to learn from. Unfortunately, there is a limit to how many can be written.

Everything comes back to Keith. The Know How Fund existed, a present day Arab Partnership exists but, in a sense, the mediation between the two has been Keith‟s book, and we certainly would not be here without him today. I thank everybody, but I particularly thank Keith.

This Full Transcript was produ http://www.ubiqus.co.uk / infouk@ubiqus.com

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Edited by Professor Patrick Salmon and Dr Isabelle Tombs

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