Richard Weber, director of EuropeAid's Mediterranean and Middle East division, speakes to Niveen Wahish about how European Union financial assistance to Egypt has evolved Richard Weber, director of Europe Aid's Mediterranean and Middle East division, was in Egypt this week to take part in a conference on how a 64 million euro grant from the EU will be used to develop the South Sinai region. He was also here to sign over some 112 million euro to the Egyptian government for restructuring and modernising the spinning and weaving industry, enhancing the capital market authority and the Central Bank of Egypt, as well as supporting the work of the Social Fund for Development. The MEDA programme, the European Union's principal financial instrument for the implementation of the Euro-Mediterranean Partnership, offers technical and financial support measures to accompany the reform of economic and social structures in the 12 Mediterranean countries that are partners with the EU in the Euro-Mediterranean Partnership. Implementation of MEDA began in 1995 with the Barcelona declaration and its initial 3.4 billion euro budget. The first phase ended in 1999. In 2000, MEDA II began, with an allocation of 5.35 billion euro for the period between 2000 and 2006. The funds available to Egypt through MEDA II are around one fifth of the total funds going to Mediterranean partner countries. With the Euro-Mediterranean Partnership's Association Agreement now in force, how do you envision MEDA funds being disbursed to Egypt in the next phase? Egypt is the largest recipient of MEDA funds since the programme began in 1995. The money available to Egypt under the MEDA programme adds up to 1.2 billion euro. That is a substantial amount of money; especially if you keep in mind that apart from the MEDA programme, the EU has also delivered loans by the European Investment Bank that represent roughly double the amount of the grants. This is clearly an acknowledgement of the fact that Egypt is the main partner and the most important country in the region. Nonetheless, in the budget plan for the next six or seven years it is clear that the amount available for Egypt will be largely increased. This will be in the framework of what we call the "Neighbourhood Policy". We will create a new instrument that will replace the MEDA programme. Under that instrument money to Egypt will be largely increased, but I cannot give you exact figures, because it is being discussed with the finance ministers of the member states, like the rest of the budget. How would you categorise Egypt's efficiency in using MEDA funds? In the past, particularly under MEDA I, Egypt was slow in using the funds. And evidently, if you are slow to use the funds, it is difficult to provide more funds. But starting three years ago, there has been a lot of progress in conceptualising how the money will be used and putting projects into place. This year, we will disburse more than MEDA has ever disbursed in Egypt, around 150 million euro. By the end of the year we also expect to have signed roughly 300 million euro worth of new projects. These represent the best results ever achieved with Egypt. Are there specific areas where you prefer to channel MEDA funds? We are in a partnership and we do not decide on our own. The best way to get results is to have people committed to what you are trying to achieve for them, and the best way for them to feel committed involves their feeling responsible because it is their priorities being met, and not yours. We try to answer to Egypt's priorities, which mainly reside in economics and reform, and the socio-economic balance for the poorer sectors of the population. So, broadly speaking, the scope of intervention is towards support of economic reform in areas such as taxes, customs and banking designed to modernise Egypt's economy. And also to support attempts to relieve the poorer sectors of the population's situation in terms of education and health. We also support projects in the areas of environment and good governance. Do you prefer the assistance to take the form of technical assistance? We prefer to use it where it is most efficient. Under MEDA I, Egypt's performance was not so good. We bear part of the responsibility for that because at the start, we estimated more funds for technical assistance than were necessary. Technical assistance will be needed, clearly, but it is best at the level where it is really needed. We must avoid it becoming a captive market where the donor gives money, but in fact the money goes back to the donor. That is a recurring criticism of foreign assistance. What we did with MEDA II, when I took over in 2001, was to avoid enormous technical assistance programmes at the disposal of governments. It is better to tell them that if they need equipment or machinery or budgetary support, we are available; and increasingly, we advise them to take budgetary assistance because it is more efficient. We understand that our partner has a plan for his country, and is not in a position to change it to please the donors. We found it better to discuss the development plan, find the sector you want us to intervene in, and then put money in your budget for that specific sector. How do you see the reforms taking place? Are they reforms you have recommended the Egyptian government take in the past? Economic reform is a well-known process that is needed to simplify things. And behind all the technicalities connected with the world of economy, there are two simple ideas, albeit very difficult to put into place: to simplify things, and to avoid having multiple authorities doing one thing. Customs, for example, is not easy to reform, it is not easy to change bureaucracy, but we have been through this in Europe, and it is clearly one of the most efficient ways to boost the economy. Same goes for fiscal policy: if you have less taxes, but with a broader basis, it is much easier for small and medium enterprises, firms and even average people, to make their declaration, and tax collection will be more efficient. Same goes for privatisation: the public sector should devote its activity to the most important matters that cannot be trusted to the private sector because it is in the general public's interest. We know that privatisation is a difficult process, because you must be very careful to not do it in a way where people lose their jobs. All the reforms announced in the last two months, started by the previous government, seem to be heading in the right direction, and we hope that there will be action. How do you see the Euro-Mediterranean partnership developing in light of a lack of progress with the peace process? If you take the peace process as a reference for the development of the Euro-Mediterranean partnership, it's a shame. But although there has not been progress on the peace process, we believe that we must make progress in other areas. Perhaps by making a lot of progress in other areas, we will have progress in the peace process. Take the example of the EU, which started out with two countries, Germany and France, which were involved in several conflicts, but managed, through economic cooperation, to transform this deep lack of trust between their two people, into perfect collaboration and friendship. We believe this process is possible because we lived it and it succeeded. And if it succeeded in Europe, then there is no reason why it should not succeed here. Has the Industrial Modernisation Programme (IMP), funded with some 250 million euro, achieved its goals? At first, it was a real problem, because it did not actually start. We signed the funds for IMP in 1998, but it only started two years ago, so four years were lost. That is over now. Now we believe the Industry Modernisation Centre is a working instrument ready to deliver results for the good of Egyptian industry. However, we should not think that because we have the IMP programme, Egyptian industry's problems will be solved. It can only contribute to the solving of the problem, and that is why the Egyptian government has now embarked on such a big package of reforms. Although MEDA money goes to the government, is there any intention to channel parts of it to the private sector? No. We are not going to deliver money to the private sector. The private sector may be more efficient, but they are not representative of the Egyptian public. This money is for the people of Egypt. As long as the government is representing the people of Egypt, it is the government that will decide, and put the money where it is needed. The private sector can make use of European Investment Bank loans.
