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    The OECD/DAC Responds: Interview with Jean-Claude Faure


    © International Trade Centre, International Trade Forum - Issue 4/2001

    Jean-Claude Faure is Chair of the Organisation for Economic Co-operation and Development's Development Assistance Committee (OECD/DAC). In this interview, he responds to questions about the DAC's recent Recommendation on untying aid to the least developed countries.

    Q Is tied aid now considered a "bad" development policy?

    A One cannot say that all tied aid is "bad" and that all untied aid is "good". But, in light of the arguments in favour of untied aid, over time many donors have been increasing the relative importance of untied aid in their programmes. Additionally, the practice of tying aid now appears out of line with the new thinking on development cooperation, as set out in the 1996 DAC strategy, Shaping the 21st Century: The Contribution of Development Cooperation.

    It is worth mentioning that despite this positive trend during the 1990s, the growing share of untied aid in total bilateral aid has levelled off since 1997. This is due to the fact that some large donors gave important amounts of tied technical assistance in 1998 and 1999.

    Q Will donors now use untied aid as an excuse to decrease aid to the least developed countries?

    A OECD donor member countries expressed their intention that their aid to the least developed countries will not decline over time as a result of the implementation of the Recommendation.

    Q How has the aid procurement community reacted to efforts to untie aid?

    A The business community has also expressed its interest in untying aid in a multilateral framework with credible provisions for transparency and monitoring. Competitive firms will benefit more from access to a combined pool of untied aid than from a reserved access to more limited national tied aid funds.

    Q Your current plans call for creating a level playing field for procurement. Does this mean multinationals from rich countries will dominate the market?

    A No, not really, but DAC members consider that reinforcing partner country responsibility for procurement, with appropriate guarantees for effectiveness, accountability, probity and transparency, is intrinsic to this initiative. Similarly, promoting local and regional procurement in partner countries is a shared goal. DAC members will work with partner countries to identify needs and to support efforts in both areas.

    Q Will the OECD sanction any member who is found not to be complying with the Recommendation?

    A No, the OECD works through "peer pressure", which has proven to be very effective. Furthermore, OECD countries only sign up to Recommendations that they intend to implement.

    Q Is the next step for the OECD/DAC to extend the Recommendation's coverage beyond the least developed countries to include all developing countries?

    A The Recommendation will be reviewed at regular periods. No doubt some donors and a lot of developing countries will argue for an extension of both the coverage of programmes and of other developing countries.

    Whether this will be accepted by donors that are less in favour of untying will depend to a large extent on the effectiveness of the Recommendation.

    Q Will the OECD now promote local procurement to developing country businesses?

    A This issue was discussed, but members didn't think it would be correct to eliminate one distortion and create a new one.

    Q Will the OECD/DAC now pursue initiatives to support developing country efforts to succeed in the procurement market?

    A The DAC has agreed that partner country-led procurement of goods and services supported by aid is an integral part of broader efforts to promote ownership, partnership and aid effectiveness. In order to identify priority areas for assistance from donors, it will first be important to have a clear understanding of the dimensions of the problem and the essential standards that have to be met to meet the objectives of this work. Such a needs assessment will contribute to the basis for subsequent discussions to develop the required guidance for donors.

    As a precursor to this work, a study has been undertaken on the implications of donors' own accountability requirements on the capacity needs for partner countries' procurement systems, and ways and means to promote improved access by companies in developing countries to commercial opportunities supported by aid. This study will be presented to the DAC in November 2001.

    Jean Milligan, Forum contributing editor, interviewed Jean-Claude Faure, who was elected Chair of the OECD/DAC on 19 January 1999.

    Mr. Faure is responsible for overseeing the work of DAC, the main OECD body through which donor member countries ensure the effectiveness of their efforts to achieve sustainable economic and social development.

    Jean Milligan is a freelance writer and editor specializing in humanitarian and development issues. She can be contacted at milligan@bluewin.ch