Contributions from
the Column
Tribune

EU Commission wants to coordinate development policy

Europe’s misguided approach to bilateral trade diplomacy


10/2005
  

[ European Union ]

A stepchild of integration

In terms of development policy, Europe has many voices. The European Commission is just one of many donors from the European Union. The Commission wants to coordinate policy more consistently and is proposing reforms with the goal of increasing the effectiveness of development cooperation and strengthening the international influence of the EU.


[ By Alexander Baum ]

Poverty and underdevelopment in developing countries, along with the ensuing problems, have repercussions for Europe. In recent years, this awareness has grown – as has the understanding of Europe’s global interests. Neither has so far led to a coherent, common development policy, even though catchwords as “Millennium Development Goals”, “debt relief” or “donor harmonisation” stand for a new momentum in the international development debate. What is more, there even is a consensus in many areas on objectives and methods.

To outsiders, Europe’s approach in development policy and its implementation into concrete development cooperation programmes seems complex and difficult to figure out. Its structure is partly to blame. While the EU does have a single trade policy, for example, member states and the EU share responsibilities in the field of development. Each government pursues however its own interests, drafts its own strategies and implements them with its own agencies. Adding to the confusion, there is also a common development policy run by the European Commission. There is, however, no comprehensive European policy to provide the framework for both levels, for the EU and its members.

The goal of a common EU development policy was first mentioned formally in the EU Treaties in 1992. Nonetheless, even EU development cooperation remains fragmented as it operates through two different systems which have grown historically and, up to now, have separate budgets and procedural rules.

The European Development Fund (EDF) goes back to the beginnings of the European Community. Within the framework of the Cotonou Agreement, it funds cooperation with former colonies of member states in Africa, the Caribbean and the Pacific (ACP countries). Members normally replenish the fund every five years after specific negotiations, which do not necessarily run smoothly. The EDF is an inter-governmental fund and, in principle, financed by voluntary contributions by EU member states. Its legal base is not in the EU Treaties, as these explicitly do not concern cooperation with the ACP countries under the Cotonou Agreement. The EDF covers a total of about 40% of the EU’s common Official Development Assistance (ODA).

On the other hand, the annual EU budget funds cooperation with all other developing countries. ACP countries, however, also receive aid from this source, albeit on a much smaller scale than through the Cotonou Agreement. In the countries concerned, EU programmes are hence carried out through two different systems in parallel. The EU budget funds about 60% of the EU’s common ODA.

In November 2000, the EU Council of Ministers and the Commission for the first time adopted a Joint Statement on development. This declaration does not bind bilateral development cooperation by member states. It was nevertheless a major step forward, because development goals were defined in writing for the first time.

There has since been a thorough reform of the EU’s development activities which are managed by the European Commission. To the extent that the legal framework allows, the procedures have been harmonised for the EDF and the EU budget, and for the programmes which they fund. Nevertheless, the two systems still coexist. In addition, European coordination has certainly improved. But the uneasy relationship of common development efforts and those of the individual member states has not been settled. Europe still lacks a common vision for development which could be implemented jointly and consistently.

The current situation remains unsatisfactory in the light of global challenges and untapped EU potential. The Commission has therefore proposed a number of reforms. They concern greater European integration in the field of development, the specific role of the EU and the coherence of all measures in the EU’s external relations.


Integration

The Commission wishes to replace the Joint Declaration of 2000 with a “European Consensus”. It would amount to a binding strategy defining the policy framework for member states and the EU itself. Uniform guidelines could be developed on the basis of agreed thematic priorities, such as food security, the environment or economic growth and trade. That would lead to a better division of labour in the target countries and regions. Rules for funding and implementation would also be standardised. Doing so would not call into question the individual member states’ development cooperation. At the same time, greater European integration would increase the joint impact.

Previous experience supports the plausibility of this proposal. Until now, the EU has basically been the twenty-sixth European donor, next to its member states. The Joint Statement defined the EU’s strengths for the first time (including, for instance, support for macro-economic reforms in partner countries, regional integration and trade support). The European Commission has been focusing on these sectors since, with some measure of success. However, it has not succeeded in involving the member states in a truly complementary approach with a real division of tasks, because national governments have resisted all attempts to restrict their scope of action.

The Commission recently published a “Donor Atlas” which documents fragmentation, loopholes and overlaps in the development programmes of the various parties involved. EU members tend to focus on the same target countries. In contrast, important sectors, such as basic education and health, appear to be under-funded.

Today there is broad international consensus on the general objectives of development policy (recorded, for example, in the United Nation’s Millennium Development Goals). There is also a general agreement on the features of efficient and effective development cooperation (documented in the OECD’s Paris Declaration on Aid Effectiveness). The key elements are that:
– developing countries must assume “ownership”,
– their policy goals and their implementing structures should serve as a basis for the involvement of all donors, and
– donors and recipients should reach a binding agreement on the results to be achieved, thereby defining the basis of cooperation.

Consequently, target countries should coordinate their development cooperation with all donors. EU members who oppose European integration of development activities use this as an argument against a stronger European profile. In their view, the priority should be – for EU and member states alike – to get just involved in donor alignment “on site”. All the European actors would then, however, remain present everywhere and the huge burden of aligning numerous donors in the target countries would not be reduced. Unfortunately, only a few developing countries are already able to manage donor coordination competently and self-confidently.

Development cooperation, moreover, does not only amount to transferring money. All donors identify development problems and ways to solve them, set priorities and make financial decisions. All donors must justify their actions to their parliaments and the general public. These factors limit the opportunity for recipient countries to really stay in the driver’s seat. In addition, the efforts of recipient governments cannot compensate for the fragmented nature of the policies pursued by the EU and its member states with the result of loopholes and overlaps. It obviously is a European task to disentangle this sorry state of affairs.

In other policy fields affecting vital interests, the EU is already considerably better coordinated. This is even so in the case of foreign affairs and security, which are the subject of a joint strategy formulated in December 2003. Combined, the EU and its members provide more than half of total international ODA and, with this outlay, could achieve considerably more leverage.


Europe’s role

In the Financial Perspectives 2007 – 2013, the Commission has proposed a clear, if moderate, increase of financial resources for external actions in the EU budget. The idea is not to redeploy development funds from the national to the European level but rather to safeguard the EU’s ability to act.

Nonetheless, it is foreseeable that the EU share of European ODA will decrease in future. In last May, the member states made a commitment to increase their ODA from the current 0.36% on average to 0.56% of gross national income by 2010. In contrast, a dramatic reduction in the Commission’s proposal for the EU budget for external aid was discussed in the current negotiations on the Financial Perspectives 2007 – 2013. It would lead to an increase in bilateral ODA with the EU’s development co-operation, at best, remaining constant in real terms. This is not a good sign for the international role of the EU in future.

Moreover, there is also the issue of increasing the efficiency of the EU’s common ODA. The Commission has proposed, among other things, to simplify the instruments for cooperation with developing countries in Asia, Latin America and the ACP countries. The legislative proposal to this end currently under discussion would replace well over a dozen individual laws and is meant to result in significant simplification. Moreover, the EDF would be included in the EU budget, although some member states adamantly oppose this. If the Commission’s proposal on the EDF was to fail, European development cooperation with the ACP countries would remain a special case for any foreseeable future – and an expensive post-colonial anomaly which runs completely counter to European integration.

The EU’s annual development budget currently amounts to roughly ¤ 7 billion or 20% of total European development expenditure. Member states disburse 80% bilaterally or as transfer to multilateral institutions such as the World Bank. It is hard to ascertain whether the EU’s contribution in relative terms is optimal. However, two aspects are significant:
– International crises and threats normally affect the entire EU, so the pressure to act jointly has greatly increased in recent years. Be it the Balkans, Afghanistan, Iraq, Palestine, the Boxing Day Tsunami, Africa or AIDS – time and again the EU as a whole has had to face new challenges. It is obvious that the current budget is not sufficient to pursue the EU’s political objectives and interests credibly.
– The EU needs adequate financial strength to promote innovations and better coordination. Otherwise the Commission will neither be in a position to play its role as agent of common European interests and standpoints at the international level, nor to effectively coordinate as yet fragmented European development cooperation.


Political coherence

The European Commission is making a concerted effort to coherently link all areas of foreign policy. In the process, development should not be subordinated to other goals. Of course, the political environment has become considerably more complex than it was even five years ago for European development efforts. In particular, security challenges posed by international terrorism have fostered the notion that Europe has a strong interest in the development of poorer countries.

Naturally, advocates of development cooperation meant to stay independent of foreign policy concerns are uncomfortable with the idea of hooking up with policy fields in which European self-interests are much more direct and obvious. The fear of becoming instrumentalised by foreign policy or security interests is indeed justified, but seems excessive in practice. The drafters of the EU Constitution had made clear that development policy, because of its own raison d’être, should not be subordinated to other policy areas. This reflects the current political consensus within the EU.

Furthermore, development issues are linked to migration, trade and environment. Action in one area has impacts on the others, objectives in one area cannot be achieved without contributions from the others. True coherence of all EU policies with external effects requires the context of a development policy which is broadly applied and understood. It must not only relate to development cooperation in the narrow sense, but rather pursue a political vision. With its proposals for achieving improved coherence between policies and its draft Joint Declaration on an EU strategy for development the European Commission has made a conscious effort to create interconnections with other relevant policy areas.

European development policy is at a crossroads today. It will either remain fragmented and without a European vision – or the EU will live up to its potential through sensible integration and robust implementation. The challenges for the future are to control actively the inexorable process of globalisation and to ensure that it benefits all, rather than creating greater inequality and more serious instability. The EU must act in common if it is to do justice to this task.


Alexander Baum
is a European Commission official in the Directorate General for Development. This article reflects the personal view of the author.
Alexander.Baum@cec.eu.int


EU Donor Atlas
http://europa.eu.int/comm/development/body/tmp_docs/Donor_Atlas.pdf#zoom=100