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Debate
Interview with Simon Maxwell: "It makes sense to channel money through the EU”
Comment 1: The true meaning of good governance
Comment 2: Doha: The trade of unbelievers
8-9/2006 |
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[ Simon Maxwell, Overseas Development Institute ]
“It makes sense to channel money
through Europe”
Europe is not living up to its potential role. Along with the World Bank and the UN, the European Commission could become the third pillar of the international aid architecture, if EU members pooled resources and made better use of common institutions. A recent proposal from the London-based Overseas Development Institute is to set up a new European MDG Fund, which could handle an annual sum of Euro 5 billion.
Why do you believe the European Commission needs yet another window?
2005 was a good year for international development. The main achievement was the commitment to increase aid. It was agreed that aid should double globally and reach $ 130 billion by 2010. 80 % of that commitment came from Europe, from members of the European Union. Today, however, only 20 % of all the aid we provide from European countries goes through the European Union. 80 % is spent either bilaterally or through other multilateral channels.
And 20 % EU funding is not enough?
Well, wouldn’t it make sense to give the European Commission a much bigger share? I think the European Union should become the third pillar of the international aid system, along with the World Bank and the United Nations. The way the industry works now makes the World Bank too dominant a player. I’m not saying that the World Bank is doing a poor job, but that some competition would be good – as in any other industry. The UN system is quite influential, and the EU should become more influential.
So the EU is not living up to its potential yet?
The EU is already a large player – it spends ¤ 7 billion a year. But with aid doubling, the challenge will be to handle much more money, even if we do not raise the EU’s share of aid expenditure. If you look at how the EU aid programme works currently, it has two main windows. Both are designed in ways that make it impossible for the programme as a whole to grow in the way I believe is necessary. We have the budget, as defined by the financial perspectives to 2013; and we have the European Development Fund, which has just been agreed and is also fixed. Together, these two do not give us the room for manoeuvre we need.
Why not?
The problem with the budget is that too much of the money is spent on countries that are not among the poorest, particularly in Eastern Europe and the Mediterranean. And when aid ministers have committed more money – as they did from the Financing for Development Conference in Monterrey onwards – the intention was always to focus on reducing poverty. So this is a major distortion in the European aid programme. In the case of the EDF, there is another distortion, which is that the money is only available to countries in Africa, the Caribbean and the Pacific. However, Asia is the continent with the highest number of poor. There are more poor people in India alone than in all of sub-Saharan Africa – and they are entirely out of the reach of the EDF.
So what would the new fund you propose do?
The EU needs a modality which avoids first the problem of not spending enough in the poorest countries, and secondly the problem of not spending enough in Asia.
That sounds reasonable in principle, but would the various member governments really want to subordinate their policy-making to the EU?
Well, they should. Multilateral approaches give us better, more efficient programmes. They are also a good way for countries to reach their national aid targets. Moreover, if we want to have a common foreign and security policy, it makes sense to channel money through Europe. Of course, governments have worried that the EU is not all that efficient and effective. But in the case of aid, we have seen important steps in the right direction in the past few years. Europaid was created. Last winter, a consensus on development issues was defined, passed by the Commission, the Council of Ministers and the Parliament. These are positive steps. More money could also be a good way to leverage further reform – which is undoubtedly needed.
Nonetheless, different member countries are pursuing different interests. France is particularly interested in Francophone Africa, Britain in Anglophone Africa. India is culturally and politically much closer to Britain than to Italy or Poland – whereas Spain has closer relations to Latin America than Germany or Britain. That is one of the reasons why it is so hard to draft a coherent EU policy.
But if you look at the policies and the practices of European donors, it is becoming increasingly clear that they all agree with the MDG idea of focusing on poverty reduction. Furthermore, they all agree with the OECD’s Paris Declaration on Aid Effectiveness. Its principles are ownership, harmonisation and alignment. “Ownership” stands for the recipient governments assuming responsibility and leading roles, “harmonisation” stands for donors coordinating their efforts, and “alignment” for using the target countries’ procedures and institutions. We used to talk about like-minded donors, who were mostly the Northern Europeans, on the one hand, and the Southern Europeans, who perhaps weren’t so interested, on the other.
And that is changing?
Yes, indeed. The Spanish for example, are becoming very active members of the like-minded club, much more poverty-focused. In any case, it is the job of leaders in Europe to make the case for a unified and poverty-focused common development programme. It is clearly nonsensical to say that we cannot have that only because at a certain stage in history some countries had such and such colonial relationships. We have constantly to advocate for a more modern, poverty-focused approach.
That is right, but South Asia, a region you just mentioned, matters much more to London than it does to Paris – and the view from Berlin is different yet again.
Nonetheless, EU members with no colonial background in that region are running substantial programmes there. Certainly, the Nordics are big donors in South Asia, and so is Germany.
Let me return to local ownership and alignment: do the governments that receive – and sometimes even depend on – aid have enough say in decision-making?
What I would love to see is an increase in aid funding through the European Union, which would somehow manage to involve them. One option would be to have a body rather like the ACP structure – or perhaps even the ACP itself, inviting other countries, which are not members, to join in for that purpose. Such a structure – involving treaty obligations, arbitration procedures and accountability through shared ministerial and parliamentary bodies – could be involved in discussing or even deciding the new fund’s policy. How to design such a body would, of course, be a topic in its own right and worth another conversation.
The idea makes sense, but I doubt that Europe’s governments are ready to set up such a fund and pass on control to the Commission – and perhaps even a body representing developing countries.
Let me say just one thing: Germany will have a unique position in 2007, because you have the G8 and the presidency of the European Union. In the UK last year, we saw what a tremendous opportunity that is. People argue about what was achieved in 2005 – especially on the trade side. But we did get a big increase in aid, and a very substantial agreement on debt relief, which was also approved by the World Bank and the International Monetary Fund. None of that happened by chance. It took three things: civil-society pressure, intellectual analysis and political leadership. There were demonstrations and the Live-8 concerts, we had the Sachs Report and the Commission for Africa, and Britain’s government was pushing the matter – Prime Minister Tony Blair, Chancellor Gordon Brown and Development Secretary Hilary Benn were real leaders. So now the challenge is for Germany to pick up the baton next year and take it to the next stage.
Germany’s Federal Government would probably find it easier to work in that direction if it felt the Government of the United Kingdom was a bit more constructive on European Union issues in general.
Well I can’t speak for the wider EU project, but the British government is really quite consistent about acting multilaterally and promoting a stronger role for Europe. For instance, Secretary Benn has unequivocally stated that, in future, “what the EU does will be central to our chances of achieving progress”. In the government’s white paper on development of July, it is said that “the UK will work with others . . . so that the EU can play a leading international role on development”. And Tony Blair has also repeatedly stressed his commitment to multilateral action.
Questions by Hans Dembowski.
Dr. Simon Maxwell
is the director of the Overseas Development Institute in London.
s.maxwell@odi.org.uk
On the Internet:
Simon Maxwell: “Where Europe stands in the New Aid Architecture and Why We Need a New ¤ 5 Billion European MDG Fund”:
http://www.odi.org.uk
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