Gérard Depayre
European Institute, Washington, DC

October 2, 2003

EU as the larger contributor of foreign aid

The EU (Commission and Member States) already provide 55% of worldwide Official Development Assistance (ODA) ($26.3 billion out of $52.3 billion total). At present, the EU provides 0.33% of its national income as Official Development Assistance (compared with a US contribution of 0.11%). The EU has committed at Monterrey to increase it further to reach 0.39% not later than 2006, with a view to meeting eventually the UN/OECD target of 0.7%. The US President’s Millennium Challenge Account would, when fully implemented, bring the US Official Development Assistance to a level of more or less 0.22% of national income (presently the US provides $10 million annually, 19% of total foreign aid).  

European Commission’s Goals

The EC is strongly committed to working with the rest of the international community to achieve the Millennium Development Goals (MDGs) as established by the UN Millennium Summit. The main priority of the Community’s assistance is the MDG of poverty reduction (to reduce by half the number of people who live on less than $1 per day by 2015). The other MDGs such as improved access to health, education, water and sanitation (all interlinked to poverty reduction) are also priorities for the European Commission. Areas of concentration are trade and development, regional integration, macro-economic support, transport, food security and institutional capacity building and good governance.

Modalities

European Commission in its practice on development cooperation tries to ensure that development considerations and not political strategies remain the dominant criteria for decisions about its development policies and programs. The EC has embraced the Poverty Reduction Strategy Paper (PRSP) approach, launched by the World Bank (WB). This approach focuses on ownership and participatory approach: foreign aid is programmed on the country’s own poverty reduction strategy which should be the result of a participatory process e.g. involvement of civil society, NGOs, perhaps the Parliament. The PRSP approach also stresses a real partnership between donors and the recipient countries to ensure that donors take into account the political environment and local structures and values. On conditionality the Commission argues that aid needs to be rigorously monitored and evaluated for output and impact (how many children graduated from primary school) and not in terms of input and money spent (how many schools were built). In this respect the EC is moving away from project support (a possibility to raise its flag) in favour of budget support as a more sustainable way to deal with the broader policy and institutional issues that have led to the problems in the first place (lack of hospitals or schools etc). Selectivity is practiced in choosing recipient countries. All EC co-operation or partnership agreements between the EU and developing countries include a specific provision that can lead to the suspension or limitation of co-operation. At the same time the EC is well aware that there is a danger of ignoring “failed states” as the events of September 11 have taught us. It takes the approach that “failed states” should not be forgotten. It maintains a political dialogue with “failed states” and provides financial support for institutional capacity building through non-state actors.

The Commission has taken the lead in pressing for further European Union action on untying aid. A Commission communication (Nov. 02) proposes an almost complete untying of Community aid (subject to the agreement of the recipient country and on a reciprocal basis between donors). Moreover, the Communication calls for the rules of the internal market to apply also to the Official Development Assistance of the Member States and advises them to untie their bilateral programs. The Communication also advocated a complete untying of food aid and food aid transport.

The European Union as a whole is one of the world's main humanitarian aid donors; the Humanitarian Aid Office (ECHO) is the service of the European Commission responsible for this activity. It provides quick humanitarian assistance (€540 million in 2002) through its partners in the field (UN, NGOs etc). The police framework of ECHO makes clear that the sole objective is the relief of human suffering. Decisions must be taken impartially, subject only to the needs and interests of victims. The Commission has already raised concerns on the involvement of the US military on delivering humanitarian assistance to Iraq.

With respect to the food aid we believe that aid should be provided as grants and, wherever possible, purchased locally or within the broader region. Otherwise, one risks disrupting local markets and making the problem worse in the long term. We argue that food aid “in kind”, that is direct food parcels from donors, should only be used on an exceptional basis, in response to the needs of well-defined vulnerable groups or in response to an emergency in the framework of the UN system.

Conflict prevention/Conflict resolution

Several of the poorest countries in the world are in conflict. In its communication on conflict prevention the EC maintains that, as conflict and poverty (lack of resources) are interrelated, preventive mechanisms to hinder the explosion of conflicts or preventing them from further spreading must be developed as well as the financial means which support these mechanisms.

At Community level, the Commission is in the process of reforming its instruments to ensure a swift Community reaction to crisis or pre-crisis situations. An important step was taken with the adoption last year of a Rapid Reaction Mechanism (RRM), allowing for quick initiatives in peace building, reconstruction and development. The RRM is now fully operational and has been used during 2001 in the Balkans, Afghanistan and the Democratic Republic of Congo to bring quickly a host of measures to bear on a conflict situation. The Commission has stated recently its political decision that for the first time ever $250 million from the 9th European Development Fund be put into a “peace support fund” for peacekeeping capacity building of the African Union and other regional peacekeeping organizations. Moreover, Liberia peacekeeping operations ($8 million) are about to be financed from the European Development Fund, the first time ever that this occurs.

At the EU level, examples of successful cases of EU’s peacekeeping operations are the replacement of the NATO forces by EU peacekeeping forces in FYROM and the deployment of French troops in the Democratic Republic of Congo (Bunia).