THE FUTURE OF THE EC DEVELOPMENT BUDGET
Multi-Annual Financial Envelopes
26. The greater part of Category 4 expenditure is
allocated on a regional basis. The main regional programmes are:
(a) Asia and Latin America
(ALA) — provides financial and technical development assistance
and economic cooperation with countries in Asia and Latin America.
(b) MEDA - programme of assistance to countries
in the Mediterranean and Middle East regions.
(c) Phare — provides technical and infrastructural
development assistance to applicant states (Hungary, Poland, Czech
Republic, Slovakia, Bulgaria, Romania, Slovenia, Latvia, Lithuania
and Estonia) in their development of legal and administrative
institutions related to the adoption and application of the Aquis
Communautaire. Phare also provides development assistance to Bosnia,
Macedonia, Albania and Croatia.[62]
(d) Tacis — the European Union's programme
of technical assistance promoting economic reform and recovery
in the former Soviet Union and Mongolia.
(e) South Africa — provides support to
South Africa in promoting growth and transformation following
the 1994 democratic elections.[63]
27. Most of the main regional and thematic budget
lines are covered by legislation agreed by the European Council
and Parliament. The following regulations, coincidentally, are
all due for renewal this year:
(a) The current Food
Aid convention expires at the end of June 1999;
(b) The Phare programme expires at the end of
1999;
(c) The Tacis regulation expires at the end of
1999;
(d) Decisions on the new MEDA programme will
be made during the first half of 1999;
(e) The ALA regulation is to be renewed in 1999.[64]
28. In a number of cases these regulations will include
a multi-annual budgetary allocation, or 'envelope', for the programme.
Phare, Tacis and MEDA all have multi-annual financial envelopes.
The financial envelope for ALA was not renewed when it lapsed
in 1995. As a result, resources for the ALA programme are allocated
on an annual basis in the budget.
29. Financial envelopes make good sense in principle.
Richard Manning told the Committee that "the more you can
move away from short-term perspectives the better....a medium
term planning frame is almost essential if you are going to deliver
aid effectively."[65]
Philip Lowe, said that "some degree of predictability on
either side is essential for good financial management."[66]
NGOs appear broadly to agree with this. Helen O'Connell of One
World Action told us in oral evidence: "we think that the
concept of the financial envelopes, where you have an agreed amount
of money for up to five or six years, is useful. It enables long-term
planning. It enables those managing the budgets and those spending
them to plan ahead."[67]
30. In the past, discussions of the Category 4 total
have taken place without any consideration of how the overall
amount is to be allocated among the various programmes. Discussions
on financial envelope allocations for the aid various programmes
have then taken place in a totally uncoordinated way, entirely
separate from each other. Furthermore, none of these discussions
have been associated with discussions on replenishments of the
European Development Fund, which take place outside the budget
process, but which are crucial to an overall assessment of the
Community's development work.
31. Philip Lowe told the Committee, "I consider
that it is incoherent from a political point of view not to address
the needs and requirements of ACP countries under the European
Development Fund at the same time as you look at what assistance
is needed under Chapter 4 of the budget for those countries and
other countries. It is remarkable that Agenda 2000 does not go
into detail on the development of the European Development Fund
budget at the same time."[68]
This omission is particularly foolish given the fact that up to
40 per cent of the Community assistance channelled to ACP countries
by DGVIII now originates from the budget rather than the EDF.[69]
Such an integrated approach was in his view necessary "if
we are to move towards the objectives of poverty eradication and
progressive integration of those [developing] countries into the
world economy."[70]
32. Richard Manning suggested to us that, "The
Commission and the member states ... should be encouraged to take
decisions over all the period ahead as to what the priorities
are within the external assistance budget rather than have a debate
one day about what we are going to do about the Mediterranean
and debate the other day on what we are going to do about the
former Soviet Union. We should like to bring those decisions together
and have a clear process by which at the end of the day the Commission,
member states and the European Parliament come to a view."[71]
He explained that, "One of our problems is a lack of clarity
as to how the Commission resolve internal differences between
Directorates-General over the priorities between the different
external assistance programmes. The system is not particularly
transparent and a single resource setting operation for the external
side would be extremely useful."[72]
33. Not only is the planning of these envelopes uncoordinated,
they also cover only some of the Category 4 budget (amounting
to nearly 50 per cent of the total). This has meant that, in the
past, agreements to provide a particular level of assistance over
several years through those programmes which are covered by financial
envelopes have resulted in a marked decrease in the resources
available for the remainder of Category 4. Richard Manning told
the Committee that decisions taken at the Edinburgh summit of
1992 and the Cannes summit of 1995 on the multi-annual financial
envelopes, when taken with the greater austerity of the Commission
recently, have "resulted in something of a squeeze on some
of the budget lines".[73]
DFID regarded "the present financial arrangement [for the
ALA programme] as unsatisfactory. Because there is no envelope
for ALA, the programme gets squeezed by other programmes (MEDA,
Phare, Tacis)".[74]
Richard Manning argued for the introduction of such a multi-annual
financial framework for the ALA programme.[75]
This was also proposed by NGO witnesses.[76]
34. We agree with DFID's call for a financial
envelope for the ALA programme. It is also, however, only an interim
solution. The disarray of the EC budgetary process will continue
for as long as the Community delays the introduction of a single
resource allocation process. This year, through happy coincidence,
there is the possibility of agreeing not only the Financial Perspective
but also a number of the regional programmes so that they relate
coherently together and form part of a single development strategy.
We recommend that the RELEX DGs produce a strategy paper for
Category 4 expenditure to 2006 which includes the proposed financial
envelopes for those programmes to be renewed in 1999. The paper
should, however, relate these decisions to all other aspects of
Category 4 expenditure as well as the European Development Fund.
In the longer term we recommend that the EC move to a single resource
allocation process which includes, on a multi-annual basis, both
the overall Financial Perspective and the particular development
programmes.
62 Aid to Croatia is currently suspended, see Evidence
p.9 Back
63 Evidence
pp.8-11 Back
64 Evidence,
pp.8-12 Back
65 Q59 Back
66 Q144 Back
67 Q195 Back
68 Q100 Back
69 Q277 Back
70 Q105 Back
71 Q40 Back
72 Q35 Back
73 Q19 Back
74 Evidence
p.11 Back
75 Q60 Back
76 Q165 Back
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