COMMITTEE of PUBLIC ACCOUNTS debate -
Thursday, 9 Nov 2000

Vol. 2 No. 29

1999 Annual Report of the Comptroller and Auditor General and Appropriation Accounts.

Vote 38 - Department of Foreign Affairs.

Vote 39 - International Co-operation.

Acting Chairman

The committee is now in public session to examine the 1999 Annual Report of the Comptroller and Auditor General, and the Appropriation Accounts, Votes 38 and 39, Department of Foreign Affairs and International Co-operation. The relevant documentation received from the Department of Foreign Affairs has been circulated - correspondence dated 7 November from the Department of Foreign Affairs regarding information requested at examination 98, Appropriation Accounts, that is, a breakdown by location of passports issued outside the State. The second item of correspondence is dated 7 July and requests that examination 98, Appropriation Accounts, lists Irish embassies and consulates. The third item of correspondence dated 11 July, requests the examination 98, Appropriation Accounts, re passport figures. Addendums have been circulated with that information.

Witnesses should be aware that they do not enjoy absolute privilege. The attention of members and witnesses is drawn to the fact that as from 2 August 1998, section 10 of the Committee of the Houses of the Oireachtas (Compellability, Privilege and Immunity of Witnesses) Act, 1997, grants certain rights to persons who are identified in the course of the committee's proceedings.

Notwithstanding this provision in the legislation, I should remind Members of the long standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the House, or an official, either by name or in a situation which would make him or her identifiable.

I would like to welcome Mr. Padraic MacKernan, Secretary General of the Department of Foreign Affairs, and ask him to introduce his team of officials.

Mr. MacKernan

I am accompanied by Mr. Martin Greene, Assistant Secretary in charge of the Development and Co-operation Division; Ms Margaret Hennessy, Head of Administration; Mr. Noel Kilkenny from Administration; Mr. Derek Feely from the Administration/Finance Section; Mr. Frank Sheridan, Development Co-operation Division; and Mr. Tony Taffe, also from that division.

Acting Chairman

Thank you. Also present, from the Department of Finance, are Mr. Paddy Howard and Mr. Niall Mac Sweeney, both of whom are welcome. Perhaps Mr. MacKernan would like to make an opening statement.

Mr. MacKernan

Thank you Mr. Chairman. As you and your colleagues know, I am responsible for Vote 38, Foreign Affairs, and Vote 39, International Co-operation. Members heard from the Comptroller and Auditor General in his report that the outturn figures for 1999 were £70.547 million for Vote 38 and £117.8 million for Vote 38. You are talking about £70.5 million and £117 million, respectively, between the two Votes. The combined Votes fund the Department, its diplomatic network and its programmes. The Department's programmes fall into four principal areas: citizen welfare abroad, peace and reconciliation in Northern Ireland, bilateral aid and contributions to international organisations, including the United Nations.

I would like to mention a number of issues which arise from the 1999 accounts. Overall, the Foreign Affairs Vote 38 came in under budget by £909,000. Within the Vote, there were, of course, variations with some overruns and some underspends. Throughout the administrative budget, the weakness of the euro had quite an impact. For example, the salaries of Irish and locally recruited staff in our missions in non-euro countries were somewhat higher in Irish pound terms than provided for in the Estimates. There were similar negative effects on local purchases and the cost of renting offices and homes for our staff in such economies - typically, the United States, Canada, Australia, Japan and other expensive countries which are not in the euro zone.

Within the administrative budget, Members will note that provision for salaries, wages and allowances, subhead A1, was exceeded by £886,000. This was due to a number of factors, including the weakness in the euro and increased overtime in the Passport Office due to a 17% increase in demand for passports. There was also an overspend of £248,000 in the travel subhead, A2. In this instance, in addition to the weak euro, the Vote had to bear the cost of a then newly opened embassy in Mexico for which financial provision did not commence until this year. The travel overspend was more than offset by a saving of £318,000 under subhead A3, incidental expenses. Most of the savings resulted from lower than expected incoming official visits, in other words, there were fewer official visits inwards than we had anticipated originally.

The euro also played a role in the overspend in subhead A6, which covered the cost of our premises, most of which are abroad. When I spoke to the committee in May, I reported that an underspend under this subhead in 1998 resulted from a delay in the purchase of new premises in Berlin following the movement of the Federal German capital from Bonn to Berlin. That purchase went ahead in 1999 and contributed to the excess in that year under this subhead.

The committee will have noted that there was an overspend of £52,000 under subhead C, support for Irish immigrant groups abroad. This arose from a desire to maintain the dollar values of the grants to the groups in the US and Australia. The declining euro had threatened to erode the dollar value of these grants.

There was an underspend amounting to £2.28 million in respect of subhead F3, EU programmes for peace and reconciliation. The shortfall in expenditure was due to a slower than anticipated rate of draw down of funding by projects and by Co-operation Ireland. However, I would like to reassure the Members of the committee that this underspend does not result in any loss to this very worthwhile programme. Funds not spent in any particular year are reprofiled into spending for the following year.

1999 was the year when our campaign for membership of the United Nations Security Council took off in earnest. Our recent success in the campaign was the result of a systematic campaign led by the Taoiseach, the Minister for Foreign Affairs, Deputy Cowen, and his predecessor, Deputy Andrews. It was a campaign which was fully supported by all Ministers and Ministers of State in their official journeys abroad. Of course, Oireachtas delegations abroad also played their part in what was genuinely a national effort to secure for Ireland a place on the UN Security Council for 2001 and 2002.

As the Minister told the Dáil on 18 October, our election was a recognition of the esteem in which Ireland is held internationally. Membership of the Council will place Ireland at the centre of decision making of the body with primary responsibility under the UN Charter for the maintenance of international peace and security. Since we joined the United Nations in 1955, our vocation and commitment has been to play a distinctive role in areas such as peace-keeping, nuclear disarmament, human rights and development co-operation. The Minister emphasised that the values which have inspired our foreign policy for many years under successive Governments will guide our actions in the Council. I think it is a demonstration of our commitment to these values over the years which evoked the response of the General Assembly in terms of the Vote it gave us.

Security Council membership not only for permanent members but for any member, is a very onerous task. The Council's ongoing agenda includes the situation in regional trouble spots, bilateral territorial disputes, sanctions, regimes and thematic issues in current international relations, such as humanitarian assistance, protection of civilians in armed conflict and peace and security, particularly in Africa. A typical month on the Council involves consultations on a number of these ongoing matters drawing up new mandates for peace-keeping and other UN missions, as appropriate, and briefing and reactions to the latest events.

Security Council resolutions are negotiated in very great detail given that they are binding on the membership of the UN and, accordingly, carry significantly more weight than General Assembly resolutions. They are, in fact, norms of international law so a great deal of pre-negotiation is required. Major crises mean that the Council goes into almost continuous session sometimes - for almost 24 hours at a time.

I am confident that our experience in the United Nations since 1955 and our UN membership since 1973, including five presidencies, will be highly beneficial over the next two years. Deputies from all sides of the House were of great assistance to our Security Council campaign and we would welcome their help whenever possible during our time on the Council.

I know it is intended to deal with Votes 38 and 39, so perhaps, with your permission, I might make a few points on Vote 39. Undoubtedly, the most important development pertaining to this year is the decision by the Government to move to the UN target for aid of 0.7% of GNP and to an interim target of 0.45% of GNP by 2002. In 1999, a development of significance in the Vote was a Supplementary Estimate of £6 million to cover additional cost arising from the refugee crisis in Kosovo. We can elaborate on these and other issues in any questions Deputies may like to ask in relation to the Vote. I would be glad to try to answer them.

Acting Chairman

Thank you, Mr. MacKernan. We do not have a paragraph from the Comptroller and Auditor General on the two Votes thus showing a clear slate and a clean sheet. It is another good sign for the Department. As you mentioned in your submission, the campaign for a seat on the UN Security Council started in earnest in 1999 but I think it has gone on for a while. The campaign was organised in a methodical, positive and professional way. You have had a major role to play in that campaign. I compliment and congratulate you on the allocation of that seat to Ireland. It was a major objective and I compliment you on behalf of my colleagues on how you achieved that. As I said, we do not have a paragraph from the Comptroller and Auditor General.

Deputy Cooper-Flynn

I welcome Mr. MacKernan and his team. I join with the Chairman in congratulating the Department on the role it played in securing membership of the UN Security Council. It was a proud moment for the country as the seat was keenly contested. That has been well recognised in the media. Will you tell us about our strategy, as a country, if we have one, for our two year membership of the UN Security Council?

Mr. MacKernan

In relation to the campaign, I thank you for your compliments to the Department but they are also due to yourselves, the Taoiseach, Ministers, Ministers of State and Members of the Oireachtas who took part in the campaign. Their involvement was crucial given that we have a relatively limited diplomatic network. When Deputies, Ministers and Ministers of State, not necessarily our own, went abroad, they took the opportunity to mention the campaign. That ingredient - the involvement of Members of the Oireachtas and Ministers - was a distinctive feature of the Irish campaign. It was not that others did not do the same but it was done in a very systematic and comprehensive way by us.

As to the strategy of the Council, for two years a number of issues emerged which had an impact on that strategy. As I said in my opening remarks, membership of the Council means being a member of the body charged under the charter with the primary responsibility for the maintenance of international peace and security. Its decisions in relation to international peace and security are what are called peremptory norms of international law and are, therefore, binding on the membership. When one is dealing with conflicts, that requires the need to take account of the nature of the conflict, the diplomatic means that can be deployed to resolve it, the particularity of an issue and so forth. It must also take account of the fact that the Council operates a unanimity principle. In other words, the decision is required by the agreement of five member states which have the so-called right of veto. There is a very delicate negotiating process involved in any conflict.

The first responsibility of a non-permanent member of the Council is to be effective and efficient in carrying out the job. The agenda of the Council could be broken down into two parts initially. The first is in relation to ongoing issues which the Council has already seized. For example, in relation to Africa there are 50 individual issues before it, many involving armed conflict or the consequences of armed conflict and various tensions. There is an ongoing agenda in terms of Indonesia, East Timor and so on. Obviously, the conflict in the Middle East stretches back virtually to the birth of the UN and it is going through a particularly dangerous and difficult period that is likely to continue. There is an inherited agenda there. One deals with issues that are more ongoing, for example, themes in relation to children in armed conflict, issues arising from small scale arms dissemination, mines, the continuing problems in regard to nuclear disarmament and the issue of UN reform. When we go on the Council, others are leaving it and some of those leaving are countries with which we have a particular affinity or have been involved with in peacekeeping operations or in the reform of the peacekeeping function of the UN. A major report has just been published on that subject and that theme will have to be dealt with. It will be on the agenda over the next two years.

Our strategy in regard to that issue is to try to accommodate what is an acknowledged experience and skill in peacekeeping and a disinterested approach to it. We are accepted as a country that has no axe to grind on behalf of any military alliance or group. We will try to bring our experience to bear on the work in that way, in the strict sense of the term "disinterested". Beyond that, one cannot have a strategy other than the upholding of basic values in one's approach to UN issues, those that arise contingently because there is a crisis. The general aim behind Irish foreign policy is to try to ensure the rule of law rather than the rule of force prevails in the world. That is a central role of the Security Council and has been the central approach of Ireland whether on or off the Council over the years.

That is a thumbnail sketch of our strategy - to deal with the agenda already there, the long-term issues the Council faces and the crises that arise from time to time, unfortunately, with great regularity.

A strategy must also take account of the fact that Ireland will have the presidency of the Council for a month at a time and during that period the Irish representative will be the ambassador to the UN or it could be the Minister or the Taoiseach. One may have to make specific plans about how to deal with a particular issue that is coming to a head but generally there is so much business to be dealt with at UN level that the most important strategy is to ensure that one has the knowledge and the communications in place between Dublin, New York, Brussels, Geneva and so on to be efficient and effective. We will bring to bear our experience from holding the Presidency of the EU where one does not try to change the world but one tries to do what is on the agenda.

Deputy Cooper-Flynn

Was it through outlining this two year strategy to other countries that we won their support for Ireland's seat on the UN Security Council? How does one win such support?

Mr. MacKernan

There are issues about which the general membership, that is the membership of the UN which is not on the Council, is concerned. For example, the UN General Assembly consists of 189 member states. When the vote took place 173 countries voted. Some did not have a vote because they had not paid their dues but we will leave that aside. In terms of the lobbying campaign, in the month leading up to the vote the Minister had 50 to 60 bilateral meetings in ten days with other Foreign Ministers, permanent representatives and so on. As a result of these meetings member states had certain expectations of our membership. One of the issues that members states are very concerned about is that the proceedings of the Security Council should be more transparent and there should be more communication and feedback about what takes place at Council level because a great deal of what happens there happens in private sessions. Many member states are concerned that they do not have a right of audience when issues in which they are involved or indirectly affected by are being discussed in the Council. We will try to ensure that feedback is provided.

Many of the countries that we lobbied and who voted for us are also concerned about effective and efficient peacekeeping operations by the UN. A major reform proposal, the Brahimi Report, has been tabled, which we will try to bring forward. Other member states have certain expectations of us and those are some of them.

Deputy Cooper-Flynn

Apart from the prestige a country obtains as a result of having a seat on the Security Council and playing a major role in decision making, what other advantages are there for Ireland?

Mr. MacKernan

Countries seek to be on the Council so that their values and approaches can influence the way in which international problems are dealt with. It gives one an opportunity to do this at the coal face rather than indirectly, and a rapid response is often necessary. In the General Assembly, the ship moves slower. We have an advantage in that we can deal with current major issues in a focused way and form alliances within the Council. I do not use the term "alliance" in any military sense, I am talking about alliances with like-minded countries, and that is advantageous.

Nowadays because campaigning for membership of the United Nations is so competitive the diplomatic effort involved, including not only staff of the Department of Foreign Affairs and missions abroad but the Taoiseach and other Ministers, means close contact is made with a great many countries with which we might not have an opportunity to deal closely on a serious issue. You gain a great deal in terms of international profile. Countries bring their concerns to you which can also be advantageous.

Deputy Cooper-Flynn

In your submission you mention that we have a lower number of incoming official visits. Why is that? Is it that we do not extend invitations or that they are not accepted? I, together with members of other committees, would have occasion to travel to some of these countries and it would appear that the various embassies looking after Irish delegations and doing work on behalf of the country, trying to encourage industry to locate here and so on, operate on a very tight budget. As regards the posts of ambassador and third secretary, are we attracting the best possible people to these jobs? Are we paying a high enough salary? Do you believe the embassies are adequately financed?

Mr. MacKernan

Inward visits fall into two categories. One is reciprocal visits, for example, if the President visited country X, after three or four years Ireland might or might not be included in the Head of State's programme of that country. Sometimes anticipated visits are cancelled because of a particular situation in the country concerned. Other visits are of a more ad hoc nature. A Minister may want to come on a working or official visit. The volume of such visits in 1999 was not as great as it might have been.

Deputy Cooper-Flynn

Is there a reason for that?

Mr. MacKernan

No. As regards the funding of embassies abroad, we try to have a cost effective service. Without going into too much detail, the average cost of running a mission abroad is £500,000 and the cost of setting up one is approximately the same. When a mission is set up, one is talking about salaries, allowances and so on. Our network is modest in terms of its extent and our embassies are small in terms of the number of personnel. The average is two diplomatic officers and support staff. In the main, while we try to ensure they are cost effective, they must be able to spend money to meet the needs that arise.

Salaries and allowances are set for civil servants and the salary of a first secretary or counsellor corresponds to that of a person in the general service. First secretary is the equivalent of an assistant principal and counsellor is the equivalent of a principal officer. The salaries of many ambassadors correspond to that of an assistant secretary. Foreign service allowances are to cater for the cost of living abroad. If there is a higher cost, cost of living allowances are provided for that purpose. Other allowances are in place to meet actual expenditure, for example, children's foreign allowances. If children are abroad at school, it costs money to keep them. Educational allowances are also paid as a portion of the tuition costs which might be higher in other countries. In the case of all our missions, ambassadors have a representation allowance, that is, money spent on official entertainment and there are similar allowances for other diplomatic staff in embassies. These levels are agreed with the Department of Finance. If you wish to encourage them to be more flathiúil, please do so but we believe they are adequate. We engaged in a systematic review of the foreign service allowance system to make it more responsive to situations diplomats encounter abroad and to ensure greater transparency and accountability in expenditure. For example, we will introduce a vouched system of representational expenditure. In other words, where representational expenditure is vouched for it will be paid.

There is another dimension to representation. The ambassador, first secretary or counsellor and their spouses will incur greater expenditure abroad than at home.

Deputy Cooper-Flynn

I do not wish to labour the point but do you evaluate each embassy? The cost of living in some countries, such as Japan, compared to Korea is vastly different. Is each embassy looked at individually?

Mr. MacKernan

Yes.

Deputy Cooper-Flynn

And evaluated accordingly.

Mr. MacKernan

Yes.

Deputy Cooper-Flynn

Has there been any significant increase in recent years?

Mr. MacKernan

No. Often there is a decrease. It is not happening at present but if the value of the dollar declined vis-à-vis the punt, the allowances would be adjusted downwards accordingly because they would get more for their punt. Adjustments are made to take account of the depreciation of the punt vis-à-vis the dollar. This is done on a systematic basis with the agreement of the Department of Finance. There is an evaluation of the cost of living and operating in a particular foreign country, again with the agreement of the Department of Finance. As far as the current operation is concerned, it is on the basis of consultants’ reports, experts in this area identified and commissioned by the Department of Finance.

Deputy Cooper-Flynn

Did a team of consultants look at this recently? If so, who are they and when they did carry out their report?

Mr. MacKernan

We looked for quotations, tenders and so on but the Department of Finance settled on two consultancies. One is Eurocost and the other ECA. The Department said we could use one or other of those. It is with the Department of Finance and that is where the Deputy should address her questions.

Deputy Cooper-Flynn

They have not carried out their report yet.

Mr. MacKernan

They have.

Deputy Cooper-Flynn

Would it be possible for us to get a copy of the report?

Mr. MacKernan

It is a little complicated. It is a system of measurement of the cost of living and operating in an individual capital by comparison with the cost of doing so in Ireland. Ireland is set at 100 and it is either above or below that. Their findings are used as the basis of a case we make to the Department of Finance. We negotiate with the Department. That is happening at present. One hopes the outcome will be an upwards adjustment in the allowances but in some cases it could be downwards. The outcome will be published.

Deputy Cooper-Flynn

Perhaps we could have a copy of that when the findings are completed. I hope it takes into account not only the cost of living but also the number of delegations each embassy receives each year and the level of trade between Ireland and those countries. If we have a big trade relationship with an area it would necessitate a great deal of entertainment. It would be dreadful to think that because we were scrimping and scrapping for the sake of a few pounds our links with these countries would be jeopardised.

Mr. MacKernan

I agree but there are special funds set aside in particular embassies that can be drawn on. These can be used to take care of, for example, a visiting delegation. It is no longer taken out of the allowances of the individual officer. However, that does not apply across the board in missions where there is a regular and predictable stream of incoming delegations.

Deputy Cooper-Flynn

Do ambassadors and embassy staff travel business class? They should do so because, if a major industrialist from the country is travelling business class, it is important that our ambassador should not be in economy class. I know one can argue for and against that.

Mr. MacKernan

The general rule is that Irish civil servants - foreign service officers are civil servants - are required to travel by the most economical and effective route and class possible. Generally speaking, that is economy class. However, if a person is going on a very long journey taking seven hours or more they are entitled to travel business class. In some instances business class works out cheaper than economy, for example, travelling to and from Brussels. It is done on a cost effective basis. An ambassador or head of mission travelling to his or her post for the first time is entitled to travel business class.

Deputy Cooper-Flynn

There were reports of one of our consuls abroad charging for visas or passports. The explanation given in the media was that it was a cost for courier services. What is the position? Are there regulations in writing by which consuls must abide? Was any action taken in this case?

Mr. MacKernan

We are talking about honorary consuls. They have a limited range of functions and are usually in countries where we do not have extensive diplomatic representation. Among their functions are the issuing of visas and passports in conjunction with the Department of Foreign Affairs and, in the case of visas, the Department of Justice, Equality and Law Reform. There are fees for these services. Honorary consuls are not paid a salary but an honorarium of, on average, £500 a year to cover their communications costs and so on. They are entitled to a percentage of the fees collected in respect of consular services. The case mentioned by the Deputy involved a charge made to the person seeking the visa for a courier service. This occurred in Karachi. The honorary consul was new. He accepted applications for visas in June. The new consulate has been open to the public since September. Early in June the embassy in Teheran noticed the consulate was charging applicants not only visa fees but courier service costs. He should have been paying the latter himself for which he would be refunded by the Department. After consultation with the Department, the embassy told the honorary consul in August last to discontinue the practice and he did so. He is now in the process of refunding the excess payments, amounting to £3,000, to the 133 people involved.

There are regulations for all honorary consuls. Generally speaking, and in this case, the appointment is honorary, unsalaried, non-pensionable and is limited in duration to three years since the date of issue of the exequatur, that is the commission, by the Pakistani authorities. The initial period of three years may be renewed. The appointment may be terminated, for any reason, by the Minister for Foreign Affairs upon the giving of three months' notice in writing to the appointee and no compensation will be payable on such termination, and so on. The terms and conditions that apply to all honorary consuls are quite detailed. A great many Irish people travel to Spain. Problems arise, such as people losing passports, falling ill, becoming involved in accidents, and so on. The honorary consuls perform an important and valuable service for which they receive an honorarium. Ireland has visa abolition agreements with most countries. In this case a new official was taking up duty and payment was made for costs incurred for courier services. The normal practice would be for the honorary consul to absorb the cost and be reimbursed by the Department. There was nothing untoward in what happened, merely a glitch.

Deputy Cooper-Flynn

The charges were not spelt out clearly when this honorary consul took up his or her posting.

Mr. MacKernan

They normally would have been spelled out but the person overlooked it.

Deputy Cooper-Flynn

In Teheran 35 Irish passports were issued. I presume they were not all issued in the past year. An honorary consul might have to look after three applications in a year. He is not the busiest person in the world.

Mr. MacKernan

These were visas.

Deputy Cooper-Flynn

If we only have 35 passport applications I am sure we will not have too many visa applications.

Mr. MacKernan

Passports are different.

Deputy Cooper-Flynn

Is it a busy consulate?

Mr. MacKernan

Passports can only be given to Irish citizens. Visas are a different matter.

Deputy Cooper-Flynn

Would that office issue many visas?

Mr. MacKernan

It is quite busy. There are about 1,000 a year.

Deputy Cooper-Flynn

You mentioned that they get a percentage of the fees collected. What is that percentage?

Mr. MacKernan

It is about 50%. The relevant paragraph in the regulations states that an honorarium of £500 and a sum equal to half of the consular fees collected during each period of six months will be paid after receipt and checking of the account of the consulate for that period. However, this is subject to a maximum payment of the equivalent of IR£100 for any one fee. In other words, 50% of the consular fees charged are for services provided. Otherwise somebody would have to be employed full time. As of 6 October this year, the number of applications for visas by Pakistanis was 2,100, of which 133 were issued by the consulate in Karachi. Earlier this year a new consul was appointed in Karachi.

Deputy Cooper-Flynn

What is the fee charged by the consulate for a visa?

Mr. MacKernan

Forty-five pounds.

Acting Chairman

In setting up a mission, is an independent evaluation carried out of its benefits, location, etc?

Mr. MacKernan

The first consideration is the advantage to the State in having a resident diplomatic mission in a country. For example, we will soon open a resident mission in Norway, which has been represented in Ireland on a residential basis for more than 20 years, if I remember correctly. Previously we covered Norway from Denmark, which is not that far away. Our interactions with Norway are becoming more frequent and complex and the lack of a resident mission meant there was a gap in our diplomatic representations in northern Europe. If Norway had joined the EU, we would have established an embassy there. It is a combination of obligation and opportunity.

Last year, at the behest of the committee, we produced a cost benefit analysis, in so far as it is feasible, on our lack of representation in Latin America. It clearly indicates that when compared with countries of a comparable size which have representation in certain countries in Latin America we are losing out by not having representation. Obviously there are issues of opportunity and necessity involved.

On the issue of EU enlargement, a number of countries where Ireland is not represented are seeking membership. A few years ago we opened resident missions in the Czech Republic and Hungary, which will be part of the first group to become members, while earlier we established a resident mission in Poland. The level of trade, investment and involvement in these countries indicates that this was a wise step. In anticipation of EU enlargement, it would be prudent to look at the setting up of resident missions in those countries. If there are trade and investment opportunities involved, there is an obligation to be represented in a country which has become a member of the EU.

As regards setting up a resident mission, this is done by the ambassador. For example, we recently opened a mission in Singapore. The job of finding the premises was carried out by the ambassador to Singapore who had already served in Malaysia and was familiar with the scene, so to speak. It is done on a common-sense, rational basis and on the need to be represented and the opportunities which arise from this. We still do not have a resident mission in Brazil and we probably should have a resident mission in Chile, which is becoming a very important country. Enlargement of the EU will involve countries such as Slovenia, the Baltic states and Cyprus.

Acting Chairman

In other words, it is ongoing.

Mr. MacKernan

Yes. One must look ahead and see what is happening having regard to the fact that provision has to be made for staffing, etc.

Acting Chairman

How are resident missions evaluated and audited?

Mr. MacKernan

The accounts returned by the embassies are scrutinised by the Department. From time to time when I am on business abroad I avail of the opportunity to carry out a spot check of particular aspects of an embassy's work. We have international auditing commitments and some years ago when I was in New York on business I stayed on for an extra day to carry out an audit of the embassy's receipts. It was good to be able to carry out that audit on the spot as there was a demand for Irish passports at the time and the embassy had collected many fees. There are other ways to evaluate and audit embassies on the spot which cannot be done in the case of mission accounts. I am referring to issues such as refunds of VAT, employment of local staff, compliance with local laws, etc. On occasion I have had to write to the accounting officer but no major issues have arisen. It is fair to say that the extra day spent carrying out the audit was worthwhile in value-for-money terms.

Acting Chairman

Which proves that out of sight does not mean out of mind.

Mr. MacKernan

The Department has an inspection unit which also operates as an internal audit unit. We systematically inspect all our missions abroad. To date we have inspected 45 missions, while an inspection will shortly be carried out of the new embassy premises in Abuja, Nigeria. The inspection involves a meticulous examination of the systems in place, the accounts and the efficiency of the mission in relation to itsbusiness plan and its workings with the Department.

Acting Chairman

That is welcome news. On the Security Council and the role we can play in it, many are concerned about nuclear armament. All conflicts have one item in common, that is, the conventional arms supplied by a small number of countries, such as the USA, the United Kingdom and the Czech Republic. We describe several of these countries as allies. I do not know your programme of work, but is it intended to lobby these countries to stop manufacturing arms? I presume their argument will be about economics, jobs, etc. Can we persuade them to cut back and not supply arms to these countries?

Mr. MacKernan

This matter has very complex ramifications, but I will try to address it as succinctly as I can. Many countries, such as the Czech Republic and the United States, manufacture arms. The Irish Army uses Austrian rifles, which I believe are very good. Sweden also has a major arms industry. The issue is not whether countries manufacture arms, although there is a side issue of the kind of weapons that are used, high velocity rifles, anti-personnel mines and so on - the specific aspects of what are called inhumane weapons - and the kind of damage that they inflict; what is really at stake is getting agreement and putting a practice in place whereby countries will not inject or sell arms for profit into areas of instability and where there are armed conflicts. When we talk about conventional arms, in the main we are talking about small arms such as machine guns, rifles and grenade launchers rather than massive armoured tanks and so on. Many of the wars that have plagued Africa in particular have been conducted with small arms. It is a matter, therefore, of securing agreement to try to regulate the flow of arms and prevent them being exported to countries where there is chronic instability and ongoing conflicts.

There is an agreement, called the Wassanar agreement, a group of 32 countries which have agreed to co-ordinate their export control rules relating to arms and monetary goods. They agree on the countries to which they will not export arms or dual use goods, that is, goods that are harmless in themselves but which can be used for military purposes. It is a matter, therefore, of securing international agreement for restraint in these areas. It is also a matter in the countries concerned of public opinion being scandalised by this practice and the fact that some of the bloodiest conflicts have not been major conflicts involving huge armed forces and military stockpiles but campaigns conducted with rifles, machetes and so on, often in the arms of children.

You are quite right, therefore, that we are in the fortunate position of not manufacturing arms or ammunition here, but there have been times when the Department of Foreign Affairs and other Departments have had to work to ensure dual use goods made here, which can be used for military purposes, are controlled. There are destinations to which vehicles which are still manufactured here cannot be sent as permission will not be given. There is no need to go into detail because we are conscious that we are talking about individual firms.

Acting Chairman

I would like to see this issue placed high on the agenda. It is generations since anybody was killed by nuclear explosion while hundreds of thousands have been killed by other means. There is hypocrisy almost in the approach adopted by some countries. While I appreciate that the issue is both complex and difficult - given that the situation here has been under better control in the past four or five years, we are entitled to preach - we should seek to exert our influence to ensure it is placed high on the agenda.

Mr. MacKernan

We have also been affected by the infiltration of arms. I accept everything you say and have pointed to some of the systems in place in the agreements among like minded countries to try to stem the flow of conventional arms into troubled spots.

Acting Chairman

Given the job you did in securing a seat for us, you obviously have major influence worldwide. You should, therefore, encourage our Ministers to do what I ask.

Deputy Durkan

I congratulate all concerned in the acquisition of a seat on the United Nations Security Council. It is only when something like this happens that the influence Ireland can exert is generally recognised. The degree to which Irish opinion is respected and accepted worldwide has grown in recent years.

Given the enlargement of the European Union, an issue on which the Chairman touched, to what extent has the necessary funding been made available to ensure we have an embassy in each African country? Their embassies and missions are very active and doing extremely well. We also have an agenda and a message which we have to spread throughout Europe, among the existing members of the European Union in particular, as well as Africa. We would obtain good value for money from locating, as a priority, an ambassador and embassy in each of those states.

Mr. MacKernan

We are trying to do exactly that. We are represented in many, if not all, of the applicant states which are most likely to be first in on a non-residential basis. The issue is how and with what rhythm resident embassies should be established in the countries concerned. The applicant states include, for example, Slovenia and Estonia, Latvia and Lithuania in the Baltics. I will not be exhaustive, but we are covering Romania which has a resident embassy here from a third country. One has to look at the matter, therefore, in a systematic way and plan the timing of the opening of embassies. That is what we are doing.

Deputy Durkan

You also mentioned Brazil, which is a huge country with a huge population and potentially a huge market.

Mr. MacKernan

That is correct.

Deputy Durkan

To what extent is cost effective investment being looked at in countries with which Ireland has a growing volume of trade in particular with a view to the opening of an embassy as a matter of urgency?

Mr. MacKernan

I referred to the report we produced last year at your behest on the issue of our scant presence in Latin America. Brazil, which was one of the countries mentioned, is on line for a resident embassy. We should have had one there long ago, but for a variety of reasons we did not. At one time we covered it from Canada and, subsequently, from Lisbon - a long distance operation.

As I am sure you will recall, over the last year a systematic Asia strategy was embarked on encompassing investment, trade and commerce opportunities. It was undertaken comprehensively and systematically by my Department with the very great involvement of the Department of Enterprise, Trade and Employment, Enterprise Ireland and so on. What came out of it, in terms of representation, was the opening of a new mission in Singapore about which I have talked, the opening of a consulate general in Shanghai, the commercial capital - if that is the correct word to use - of the People's Republic of China, the strengthening of the numbers in the mission in Beijing by way of an additional counsellor and the opening of a consulate general in Sydney. A similar exercise is being conducted in relation to Latin America. I am confident that out of this will come the obvious need to set up in Brazil, which we hope to do next year. Opening an embassy in Brazil will be complicated as Brasilia, like Abuja and Canberra, is the political capital but not the commercial centre. In the case of Brazil it is not sufficient to open an embassy in the capital; it will also be necessary to open a consulate general with a big economic component in Sao Paulo or Rio. We are looking ahead and dealing with the issue systematically.

When opening a resident mission - we have opened ten, including consulates, in the past five years - we have regard to the economic and trade dimensions. This means securing the involvement and participation, where possible, in the embassy of officers from Enterprise Ireland. The diplomatic and economic presence go hand in hand. We deal with the issue in a systematic way, but it costs money and we need the support of our colleagues in the Department of Enterprise, Trade and Employment in making the case and the support of the Department of Finance in making the money available. While ten missions in five years is a reasonable figure, we are still far short in terms of our representation in comparison to states of a similar size with the same level of economic development.

Deputy Durkan

We should record our appreciation of the work of embassies and honorary consuls. My colleagues in the Joint Committee on European Affairs and I, as Chairperson, have had occasion to avail of their services.

On the cost effectiveness of bilateral aid as opposed to multi-lateral aid, NGOs are very conscious of the need to target aid in such a way as to ensure maximum benefit for the people for whom it is intended, as opposed to directing it into a huge amorphous area for which nobody can be held accountable. International aid should be seen to go to people in need rather than be seen to be an indirect subsidy by unrepresentative and undemocratic administrations. To what extent is this area being fine-tuned?

Mr. MacKernan

We have a modest but significantly growing international aid effort, including multi-lateral contributions to the United Nations and the EU. The Deputy focused on the bilateral aid programme. One has to deal with the realities in a country. Our aid is delivered in the main to a number of priority countries. Our programmes are intended to enable these countries to achieve sustainable development, to ensure that they develop in terms of good governance, the rule of law, democracy etc. and to create the conditions in which they will be efficient economically and will be well governed, thereby making it increasingly possible to avoid corruption. To achieve this in what we regard as a priority country means working with the relevant government. It also means working with the NGOs who do valuable work. It is not an either-or choice; one has to work with the government to ensure the aid is spent effectively and honestly. This is a priority for us.

It is important to avoid stereotyping the governments and countries which receive aid. There is a risk of inverted racism and a moral colonisation regarding the people with whom one is working and of perceiving their governments as somehow infantile. The idea is to enable countries to govern themselves well and to develop. I am not attributing these remarks to the Deputy, but at times sweeping statement are made that if one spends money in a country it will disappear into a politician's pocket. That is not the case and if that was said about countries in northern Europe, including Ireland, I am sure we would be very indignant. The governments with which we deal are trying to clean up their act and achieve sustainable development.

Our aid effort is a mixture of bilateral programmes which are carefully targeted and carried out over time by Department of Foreign Affairs aid officers and NGOs which do valuable work. One operates in countries which are, by definition, developing economically and in terms of the application of the rule of law, good governance, democratic standards and human rights, if there was not a problem, we would not be there.

Deputy Durkan

I accept that. I appreciate that democracy is growing in some of these countries and that we need to encourage this growth. However, NGOs have expressed concern about the degree to which a democracy exists and the danger that funding deemed for certain sectors in a community is not directed to them, unless it goes a particular route. While they may point the finger at northern Europe and various other places, it is imperative always that aid goes to the sectors for which it is intended. Otherwise NGOs and governments will find it very difficult to justify the disbursement of aid.

With regard to the EU aid programme and the degree to which we are involved in this, allegations have been made that for some unknown reason EU disaster funds do not seem to be allocated for up to a year after the disaster. We need to use our influence in this area as failure to allocate funds immediately gives a bad vibe to international aid. To what extent are we using our influence within the EU to ensure that its aid programmes are put into operation as fast as possible?

Mr. MacKernan

The Deputy is referring to the European Development Fund. There is no doubt that the effective and rapid delivery of aid from this fund leaves a good deal to be desired and there is a need to make it more efficient, rapid and responsive. That is of concern to Chris Patten, in particular, whom I heard talking about it in a different context in Istanbul. We are concerned about that and that the reforms should be carried out there.

I give an account of the need for reform, as we see it. In May last year the Development Council, that is, the Council of Ministers, requested the Commission to prepare a draft policy on EU aid in response to a series of independent evaluations which had indicated that the lack of such a policy caused problems of fragmentation and inconsistency in the implementation of the aid programme. Following consultation, the Commission issued a formal communication in April this year.

In May the Council determined that it would issue a policy statement to govern all EU aid programmes, which would encompass the emergency aid about which the Deputy was talking. Work has commenced on the Council framework, which will make poverty alleviation the focus of all EU aid programmes and is expected to be adopted in November. The point the Deputy is making has been taken. Evaluations uncovered serious flaws in the implementation of EU development aid.

Deputy Durkan

What flaws exist? What are the causes for the delay? If £1 billion or £5 billion is committed to what are generally accepted to be very needy causes, such as flood disasters, it should be a simple matter.

Mr. MacKernan

The flaws that were uncovered related to unspent balances of about £20 billion and excessive bureaucracy causing significant delays in delivery. Bureaucracy does not occur just in the Commission - there can also be nit picking in capital cities, although I will not name the countries.

The Commission responded to these concerns in a detailed communication entitled, The Reform of the Management of External Assistance. Its proposals included the reduction of bureaucracy and the decentralisation of decision making to Commission field offices on the ground. There is also recognition of the need to reduce member state micro-management of decisions in order to reduce delays in aid delivery. Additional staff will be allocated to ensure unspent balances are exhausted by 2007. In the longer term, a separate office outside the Commission may be established to administer EU aid.

We contribute about £40 million per year to EU development aid and have been pressing for an early response to the evaluations. We have been particularly critical of the bureaucratic delays in delivery. At the Development Council in May, we welcomed both the Commission communication on development aid policy and its reform proposals. We agree that poverty eradication should be the focus of all EU aid programmes and have suggested that the action programme accompanying the policy statement should identify how this focus should be strengthened. We have also suggested that a greater focus should be placed on the fight against infectious diseases, particularly HIV-AIDS, and called for greater resources to be channelled to the poorest countries.

We are conscious of the problem. The Commission has identified many of the ingredients of the problem. The next step is to address and resolve that problem.

Deputy Durkan

I take that point. The important thing to remember is that this criticism was made publicly on more than one occasion recently. It reflects poorly on the European Union, particularly a Union that has prided itself on breaking new ground and being able to respond. There are no great logistical problems in these areas and they should be able to respond much more quickly. The bureaucracy that entangles the whole system is to be decried.

We have been involved in and supportive of the OSCE, the WTO, the commission for the prohibition of chemical weapons and the biological and toxin weapons convention. What is the extent and effectiveness of our policy in relation to the latter two areas?

Mr. MacKernan

Is the Deputy talking about chemical weapons?

Deputy Durkan

Yes, the prohibition of chemical weapons and the biological and toxin weapons convention.

Mr. MacKernan

The biological and toxin weapons convention has outlawed all biological and toxin weapons, that is, weapons that are used deliberately to spread disease. We contribute to the cost of negotiations to conclude a protocol establishing verification procedures to ensure compliance of states parties with the convention. However, even if countries universally sign up to these conventions, it is quite another thing to implement them. There is, for example, a chemical weapons convention in force. The Organisation for the Prohibition of Chemical Weapons is the executive body charged with overseeing the implementation of the chemical weapons convention, which bans all chemical weapons. A ban was put in place on the spread of chemical weapons or weapons of mass destruction. However, it must be monitored and a systematic effort must be made to try to ensure compliance with these conventions. Countries can be quite ingenious in getting around them, especially if they are quite willing to sign up to conventions but are not really willing to live up to them. Members can think themselves of some of the countries I have in mind.

There is an inspection system in place in regard to chemical weapons and other types of weapons. Surprisingly, we have been inspected three times, in 1997, 1998 and earlier this year. We expect to receive an average of one inspection per year to ensure we are not producing chemical weapons or not effectively controlling the ingredients that can be used to manufacture chemical weapons.

Deputy Durkan

Did we pass the test?

Mr. MacKernan

We did. It is quite a complex area. Certain chemicals or pharmaceuticals, such as insecticides, can be transformed into very deadly weapons of mass destruction of a most inhumane kind.

The answer to the Deputy's question is that we contribute to both international efforts. The key to the success of these efforts is verification and the co-operation of countries that have been identified as having weapons of mass destruction programmes with the inspectorate. That is one of the problems, for example, at the heart of the antagonistic or adversarial relationship between the Security Council of the UN and Iraq because Iraq has not been complying.

Deputy Durkan

We were involved with the OSCE as well. What is the extent and effectiveness of the OSCE? What suggestions have we made to improve its efficacy?

Mr. MacKernan

The OSCE grew out of the Conference on Security and Co-operation in Europe, the so-called Helsinki Accords. They were put in place in 1975 and followed up by a series of review conferences. An important element of the work of the CSCE was to engender co-operation and a sense of confidence in the intentions and actions of the member states which were party to the CSCE. There were 35 states initially.

In the meantime, a great deal of change has occurred. The state of affairs that obtained when the CSCE started has changed utterly. The disappearance of at least one of the military pacts, the Warsaw Pact, since the end of the Cold War has brought about a new situation where there is an organisation for security and co-operation in Europe which is intended to achieve a number of goals, not simply the military ones. They include engendering a sense of co-operation between states and dealing with problems that have arisen as a result of the changes that have taken place in Europe, such as the break up of countries that were previously integrated, for example, Yugoslavia.

This is an ongoing co-operation between the member states. Its headquarters are in Vienna - we have an ambassador there - and they engage in all sorts of peace making and crisis prevention operations at the diplomatic level. It is working reasonably well but it is working against a background of the break up of states which had previously been held together mainly by external threat. Its achievements are significant but still fairly modest. They are going to be necessary over a long period of time.

Deputy Durkan

Is Ireland owed money by the UN at present for overseas services?

Mr. MacKernan

We are.

Deputy Durkan

To what extent?

Mr. MacKernan

We are owed £8.2 million. We were paid £6 million last year. We are owed money in relation to a number of ongoing operations, notably UNIFIL. I will give the precise figures for arrears. As of 30 December 2000, Ireland was owed £8.6 million for the cost of providing Irish personnel to UN peace-keeping missions abroad. The only missions for which Ireland is currently entitled to reimbursement of troop costs by the UN are the United Nations Interim Force in Lebanon, UNIFIL; the United Nations peace-keeping force in Cyprus, UNFICYP, and the United Nations Transitional Authority in East Timor, UNTAET.

During 1999, the UN repaid arrears of approximately £5.5 million to Ireland, almost entirely in respect of UNIFIL. The problem of arrears owing to Ireland and other troop contributing states in respect of peace-keeping is the result of the ongoing financial crisis within the UN caused largely by the failure of certain UN member states, notably the United States, to pay their assessed contributions and arrears owing to the UN. Further reimbursement payments to Ireland on a phased basis will be made as funds become available to the UN. The overall amount owing to Ireland has been on a downward trend over the last few years. While it is significant money, it is not enormous and the reason for it is the financial crisis the UN has been going through for a long time.

Chairman

I wish to refer again to the question raised by Deputy Durkan on the international aid programme. There have been many Dáil debates on it and people have been worried about how we are participating in campaigns, for example, the campaign on international debt relief. The examination carried out by the OECD's development assistance committee has some surprising findings. With regard to the NGOs, the DAC noted that some of them have strong international reputations and high profiles in Ireland and that, by the standards of the DAC, Irish official support for NGOs represented a relatively large share of the programme. That was welcome because that impression is not always given. However, it made eight recommendations and a number of them are obviously being pursued. Ireland should, for example, pursue its consideration of joining the African Development Bank. Is that still being vigorously pursued?

Mr. MacKernan

We are currently engaged in a review of our development co-operation effort. The point you make about the African Development Bank, the desirability of becoming a contributor to it or joining it, is one of the issues that will be addressed there. Your other point was about the OECD peer review. We were happy with the outcome of that. It spoke with praise about the Irish aid effort.

It also made points, however, about the vulnerability of the aid arrangements here and the fact that the development co-operation division of the Department of Foreign Affairs is seriously understaffed by comparison with the aid efforts of other countries and also by reference to the amount of funding that is being deployed by the development co-operation division abroad. These sums of money will increase systematically and in great volume to achieve the 0.7% target by 2007. This has managerial and management implications of the kind that were pointed out, in terms of the system's vulnerabilities, by the OECD report. Part of the current review is to determine what type of staffing and extra management systems will need to be put in place both here and where the aid is being delivered and what is implied by this major increase.

With regard to the point about NGOs, it is a fair one. By comparison with other countries, a large proportion of our aid effort - about 15% - is provided to NGOs. That means that 15% of the aid budget is channeled to the NGOs for their own efforts. This is apart from, but obviously supplements, what the NGOs collect from the ever generous Irish public.

Chairman

The report seems to put a large emphasis on evaluation and monitoring results. I am surprised about that. We would always be concerned that too high a percentage might go into administration and so forth. They say there is a need for evaluation to ensure the money goes to the right place. While they note that reinforcing the existing organisations' structures is preferable in the short-term, in the longer term establishing an independent implementing agency is an appealing option from an operational point of view. Do you think we will go down that road?

Mr. MacKernan

With regard to the first point, we have systematic evaluation arrangements both external and internal. We evaluate the cost effectiveness of the projects and programmes. That is done in the following way. There is evaluation of ongoing activities which is called interim evaluation or reviews and completed activities, ex post evaluations. In other words, when a project is complete it is analysed as to whether it achieved what it was supposed to achieve, whether it was cost effective and so forth.

The evaluation and audit unit in the Department conducts thematic and sectoral evaluations, for example, looking at projects related to primary health, to education and so forth. One picks a theme and sees how the effort in that area is efficient and cost effective across the range of countries where we do that type of thing, such as the priority countries. Part of the programme is intended to secure maximum transparency in relation to Irish aid and for that reason these evaluations, both the ex post and thematic evaluations, are published.

The evaluations are undertaken at a number of different levels. We look at individual projects and projects in particular sectors. For example, all roads projects supported by Irish aid were evaluated in 1999. In all cases the evaluation reports are a major input into the planning of the next phase of programme development. We carried out 14 evaluations in 1999, including a major review of Ireland aid interventions in the water and sanitation sector.

The Chairman referred to an agency. I will make two points which have been made previously by the Minister. What we are discussing here are two Votes, Vote 38 and Vote 39, but that should not and does not imply that Vote 39 is a separate activity. International co-operation, international aid in particular, is an integral part of our foreign policy and the fact that so many countries in Africa were willing to support Ireland's bid for membership of the Security Council is due in no small measure to the effectiveness with which it is conducted and to the fact that we are seen as a country that practices what it preaches. This is an integral part of foreign policy.

In the past a number of countries have had separate agencies, for example, Denmark, which is a country not incomparable with ours. Both countries are alike both in attitude and size and, perhaps, prosperity. Denmark has reintegrated what had been separate agencies into its foreign ministry. In the past there were good arguments for "agentisation". However, in virtually every area affected by foreign policy, either our own or that which we conduct with the EU relating to Africa - I do not wish to keep harping on Africa but it is the best example - there is hardly a military or indigenous conflict that does not have a development dimension to it, either lack of development or problems of development that arise from the destruction wrought by wars. In those circumstances there will be an aid dimension to any conflict in which we are involved as a member of the UN, the Security Council or whatever. Whether in Kosovo or in Somalia, there will always be an aid dimension, and that will be part and parcel of trying to achieve foreign policy goals which we share in common with other members of the UN or of the EU in the conduct of the foreign common and security policy.

The desirability of "agentisation" or aspects of it is constantly under review. One cannot be dogmatic about it. What happened in the Danish situation is an illustration of where at one point the setting up of a Danish international development agency seemed to be the way to go, but making it part of the foreign ministry and integrating it into the Danish foreign policy effort as a whole was seen to be the wise course. The same happened in other countries. Most countries do things that way with one or two exceptions among which Britain might be one.

Acting Chairman

There are two other aspects. I was rather surprised by the first recommendation, that there should be a written implementation programme updating the current strategy document, Irish Aid Consolidation and Growth, which would give clear direction for future growth in the aid programme. I had presumed that would be a written document updated on a regular basis.

Mr. MacKernan

Our aid effort is encompassed by the overall departmental strategy statement where it is set out. The OECD report predates the commitment by the Government this year to achieving the interim target and the final target with all that flows from that. There are huge implications regarding effective delivery, monitoring, targeting. There is the question of whether to do more of the same in country X or move to other countries. All of that is under review. The overall place of aid is set out in the strategy statement of the Department as a whole, which is a published document.

Acting Chairman

The report states that Irish aid should maintain and enhance its focused nature and that even a modest extension of the number of priority countries should be evaluated carefully. I thought that if a problem flared up somewhere we would react spontaneously. The recommendation seems to be against that.

Mr. MacKernan

There are two issues here. One is emergency aid, where something happens that must be addressed. The other is whether to prioritise countries. We currently have seven priority countries in Africa, in addition to programmes in other African countries. The issue is whether to do more where we are already engaged, and expand educational programmes, primary health provision, road-building and so on, or to set up analogous programmes in other countries. If we were to add a priority country, perhaps in another area of the world, that would be evaluated very carefully both in terms of what needs to be done and in terms of cost-effectiveness and scale, and in relation to our available assets, not just financial assets but personnel as well, in relation to whether we have sufficient engineers, doctors, teachers and so on. We agree with the OECD about the need to look very carefully from a cost effective point of view before deciding to broaden the scope of our aid in terms of new countries. We must also look at the issue from the point of view of need.

Acting Chairman

I compliment the Department on its clean bill of health in the context of the report of the Comptroller and Auditor General. I propose that we should note Votes 38 and 39. Is that agreed? Agreed.