House of Commons - International Development

Select Committee on International Development Ninth Report

NINTH REPORT

The International Development Committee has agreed to the following Report:—

THE EFFECTIVENESS OF EC DEVELOPMENT ASSISTANCE

1. This is the third occasion on which the International Development Committee has examined the development policies of the European Community and, as our Report will show, we remain exasperated at the lack of progress. In our previous Reports — on the Renegotiation of the Lomé Convention[1] and on the Future of the EC Development Budget[2] — we noted that between 25 and 30 per cent of the budget of the Department for International Development (DFID) is spent by the European Community. For the year 2000-2001, DFID's best estimate of this expenditure[3] is £728 million or 25 per cent of its budget. The Committee, with its objective of examining the expenditure, administration and policy of DFID, is concerned to ensure that this money is spent as effectively as possible so as to further the aims and objectives of DFID as outlined in the Development White Paper. This inquiry has afforded the opportunity to revisit some of the issues arising out of the Committee's previous Reports and to examine the extent to which the Committee's concerns have been addressed by DFID and the European Community.

2. In the course of this inquiry, we heard evidence from the Rt Hon Clare Short MP, Secretary of State for International Development, and Anthony Smith, Head of EU Department, Department for International Development. We also visited Brussels on 6 July and heard evidence from a number of Commissioners and Commission officials: Mr Poul Nielson, Commissioner, Development and Humanitarian Aid, the Rt Hon Christopher Patten, Commissioner, External Relations, Patrick Child, Office of Chris Patten, Constanza Adinolfi, Director, European Community Humanitarian Office (ECHO) and Dr. Jürgen Schüler, Acting Director, Common Service for External Relations (SCR). We are grateful to all those gave both written and oral evidence to the Committee in the course of its inquiry.

Background

3. EC development assistance is funded from two separate sources: the European Development Fund in the case of the Lomé (now the Cotonou) Convention and Category 4 of the European Budget for all other development assistance. Additionally, in 1998, a new, separate Category was established for pre-accession aid — Category 7. Whilst contributions to the EDF are predominantly funded by Ministries of Development and Foreign Affairs, budgetised aid is, for the main part, drawn from Finance Ministries, with the exception of Denmark, the Netherlands and the UK. In the UK, whilst the money is paid by the Treasury, the expenditure is attributed to the budget of DFID. The fact that contributions to the EC Development Budget are, for the main part, drawn from finance ministries is important because, as George Foulkes MP, Parliamentary Under-Secretary of State, DFID, noted, "The EC development programme levers in a percentage of money from other countries that may not have effective development programmes, may not put resources into development and may not have the mechanism for delivering development programmes. If the EC development programme can be made more efficient and effective, the great prize will be resources from those countries that would not normally contribute money for development".[4]

4. In the course of the Committee's previous inquiry into the Future of the EC Development Budget, we noted that Category 4 of the EC budget — external action — had increased significantly[5] (from 1.9 billion in 1990 to 6.4 billion in 1999 and 8.2 billion for 2000[6]). The primary reason for this increase was the extension of EC development assistance to the countries of Central and Eastern Europe (primarily through the PHARE programme), the former Soviet Union (TACIS) and the Mediterranean and Middle East (MEDA). Budgetised expenditure on African, Caribbean and Pacific (ACP) countries and countries in Asia and Latin America has fallen as a proportion of external assistance (but, in the context of a rising budget, has not been reduced in absolute terms). We were told that in 1996 the EC provided $0.70 per capita to low income countries, $1.40 to middle income developing countries and $4.50 to other countries. In percentage terms, the proportion of EC ODA going to low income countries had fallen from 75 per cent in 1987 to 51 per cent in 1997. In 1996, none of the top seven recipients of ODA were low income countries; the largest beneficiary of EC development assistance was Morocco.[7] We concluded that "the current external action policy of the Community is to give more to the better off and less to the poor" and went on to recommend that the Commission improve the poverty focus of its development policy.[8]

5. DFID, in its memorandum to the Committee, was critical of this increasing emphasis on the near abroad, "A decade ago poor countries in Africa and Asia were the major recipients of EC aid. Now an increasing share is going to better off countries, e.g. in the southern Mediterranean. The EC's poverty focus compares unfavourably with the bilateral programmes of EU member states [and] is at odds with the EC's own stated objectives and stated support for the internationally agreed DAC poverty reduction targets".[9] Other witnesses agreed. The Overseas Development Institute (ODI) noted that, if the growing share of EC expenditure directed towards Central and Eastern Europe and to the former Soviet Union (classified as Official Aid by the OECD Development Assistance Committee) is taken into account, the share of total spending reaching the poorest countries was no more than 40 per cent.[10]

6. Concerns about the quality and effectiveness of EC development assistance are not new. In June 1995, the Development Council invited the Commission to undertake a series of evaluations of its external assistance programmes, covering aid programmes to Africa, the Caribbean and the Pacific (ACP countries), the Mediterranean (MEDA), Asia and Latin America (ALA) and Commission-managed humanitarian assistance, with a view to determining how these programmes could be better planned and implemented.[11] The evaluations, including a final synthesis report, were discussed by the Development Council on 17 May 1999. The Development Council Conclusions of May 1999 stressed the need for an "integrated and strategic up-to-date statement on development policy"[12] and emphasised the importance of translating the policy statement into concrete action. The Conclusions made a number of further observations, noting "the organisational fragmentation of development cooperation within the Commission causes difficulties for coherent and integrated Community development cooperation" and that "the Commission is not sufficiently resourced to manage efficiently and effectively all of the development cooperation programmes it is currently undertaking".[13] The Council went on to recommend an annual report on EC development aid, a recommendation made by the Committee in its previous Report on The Future of the EC Development Budget.[14]

7. These Council Conclusions have led to the publication of a number of recent proposals from the Commission including a "Communication on the European Community's Development Policy"[15] (henceforth referred to as the Statement on Development Policy) and a "Communication on the Reform of the Management of External Assistance".[16] A further important consideration in examining the effectiveness of EC development assistance is the reorganisation of the Commission following the resignation of the Santer Commission in March 1999 and the subsequent programme of the Prodi Commission to modernise the culture, organisation and management of the institution. A key element of these reforms has been Vice-President Kinnock's programme which culminated in the publication of a White Paper, "Reforming the Commission",[17] which was published in January 2000 and adopted by the Commission in March.

8. This Report examines the reorganisation of the Commission and then goes on to examine the policy framework of EC development assistance (in the context of the Statement on Development Policy) and the proposals for implementing the strategy (in the context of the Communication on the Reform of the Management of External Assistance).

9. As we have already established, UK contributions to the EC development budget are attributed to DFID. Recent changes in the management of the EC development budget have raised a number of interesting questions about these procedures. Expenditure on Category 7 (pre-accession aid) is no longer managed by DGs Development or External Relations but by DG Enlargement under Commissioner Verheugen. George Foulkes, in a recent debate on EC Development Assistance, stated that "PHARE is now part of the pre-accession budget, along with separate funds for infrastructure and agriculture: ISPA and SAPARD respectively ... Their aim is not development, but helping applicant countries to converge with EU policy and EU standards".[18] Expenditure on PHARE to countries in transition countries forms some 21.5 per cent of DFID's contribution to the European Development Budget. By contrast, just 5.8 per cent of DFID's bilateral expenditure is to countries in transition.[19] We note that funds for pre-accession aid are attributed to DFID's budget. We are obviously concerned that official aid provided by DFID, bilaterally and multilaterally, to pre-accession countries be genuinely poverty focussed development. We ask DFID in its response to explain how both its own and the EC's programmes in pre-accession countries contribute to the elimination of poverty. We will return to this subject in the future.

The Reorganisation of the Commission

10. At the time of the Committee's last visit to Brussels in December 1998, there were four Commissioners, in charge of four Directorates-General, responsible for development cooperation, as well as the European Community Humanitarian Office (ECHO) and the SCR (Common Service for External Relations). In our Report on the Future of the EC Development Budget, we noted that "a management structure which is subject to no overall policy coordination cannot be conducive to a coherent approach to policy, budgetary allocations, or implementation".[20] We went on to recommend that "the only way to ensure that development priorities receive due attention in future discussions surrounding budgetary allocations is to create a separate Directorate-General for Development, with exclusive responsibility for official development assistance ... This Directorate-General should be responsible both for budgetised EC aid and the EDF, and should introduce all those tools of accountability taken for granted in other organisations: a comprehensive and detailed policy statement; an annual report; a transparent budget and a European Commission document equivalent to 'British Aid Statistics'".[21]

11. Following the reorganisation of the Commission in mid-1999, the Commission now has two Commissioners, overseeing two Directorates-General, who are concerned with development. Whilst primary responsibility for implementing its policies has fallen to DG Development, headed by Poul Nielson, responsibility for non-ACP country desks lies with DG External Relations, headed by Chris Patten. ECHO has been brought under the control of Commissioner Nielson but remains a separate office.

12. Referring to the reorganisation of the Commission, Clare Short told the Committee, "As you will all remember, one of our objectives was to have fewer Development Commissioners, because the responsibility was so fractured that you could not get any coherence into budgets and objectives. We made progress there in getting down to two: Neilson and Patten. I personally would have preferred one, because there is still a split between Asia and the Balkans, and you get politics between the two parts of the Commission rather than people putting the whole programme together and having a sense of priorities".[22] This was a sentiment that was shared by the ODI who argued that "the new Commission appointed in 1999 arguably mishandled the reallocation of responsibilities. This was not just a missed opportunity, but left the Commission constantly trying to adjust to the second-best".[23] Their memorandum went on to state "the contours of the Patten/Neilson boundary are not consistent with international best-practice, which is to bring policy and implementation together, for all developing countries, and to maintain close policy and operational relationships between development and humanitarian departments". In particular, the ODI was concerned that the arrangements might:

(a) encourage boundary disputes, especially over policy;

(b) complicate administration and increase internal transaction costs; and

13. We welcome progress made in the reorganisation of the Commission which has seen the number of Commissioners concerned with development cut from four to two. We do not, however, regard this arrangement as being fully satisfactory or final. The ultimate goal of the EC must be the creation of a single DG, headed by a single Commissioner with exclusive responsibility for expenditure in all developing countries.

14. A further problem is that EC development policies are funded from Category 4 of the EC budget which in fact has two objectives — the near abroad and development. Chris Patten explained, "First of all, we have to be in the business of projecting stability and that is largely projecting stability around the EU. It is the Balkans, it is the Caucasus, it is the Mediterranean, and all those are not very poor countries. But secondly, and vitally important, we have to be in the vanguard of the fight for multilateralism, and in particular the fight against global poverty which distinguishes us if you like from the United States".[25] In recent years, expenditure on Central and Eastern Europe and on the Mediterranean has more than trebled.[26] The Communication on the Reform of the Management of External Assistance explains that "the balance of external aid spending is heavily influenced by the political priorities of the European Parliament, Member States and events in the world that are beyond the Commission's control".[27] This is reflected in both the Agenda 2000 priorities for the first years of the new century (discussed in our Report on the Future of the EC Development Budget[28]) and in the Statement on Development Policy which says, in the very first paragraph, that "the EU's objective interests have led it to give priority to the stability and development of neighbouring countries and to aid for countries in crisis in the regions nearest to the EU".[29]

15. A number of witnesses commented on the viability of this dual focus of the EC's External Action Budget (Category 4). Eurostep were particularly scathing. In their memorandum they state that "If the proposals are implemented as defined within the Communication to the Commission on the Reform of the Management of External Assistance, the EC development programme will lose its independent characteristics and be defined by the external political priorities of the European Union ... Without doubt there is conflict within the Commission between perspectives on development cooperation and external political priorities, in which the latter is becoming increasingly the dominant determinant".[30] Similarly, Glenys Kinnock MEP told the Committee that the Development Committee of the European Parliament was concerned that "the EU's external assistance will be increasingly dominated by political and strategic priorities in Eastern and Central Europe, the former Soviet Union and the Mediterranean countries".[31]

16. Clare Short was also aware of the influence of political priorities in Category 4 expenditure, "We have a series of problems here. I think one is the clash between the perspective of foreign affairs ministers and development ministers. Foreign affairs ministers of all countries tend to have short timescales and to like gestures. If a crisis is in the headlines, they want big announcements and big sums of money to be thrown out to wherever the latest issue is, say the Balkans".[32] She was particularly acerbic about the proposal to allocate 5.5 billion for reconstruction in the Balkans, "we have this ridiculous argument going on with Commissioner Patten calling for a spend of 5 billion, and it is not a costed programme. We know then that it is not realistic, there are no details of how it is meant to be spent, it would break the ceilings on current commitments, and it would pre-empt lots of money that ought to go to poorer countries. It is back to gesture politics".[33] She went on to state, "the skewing of the whole of the development programmes of the Commission against the poorest countries and the obsession with the near abroad remains, and the proportion of spending in middle income countries against developing countries is a disgrace".[34]

17. Commissioner Patten was not confident that the situation was likely to change in the near future, "I look at what we are doing around the world and I hear what Europe's Foreign Ministers collectively promise the world and it is difficult to see how we can do it with less. Let us suppose that there is a Camp David settlement next week. There are Council conclusions as long as your arm promising more assistance for a Middle East peace settlement if it happens. We have made tremendous promises to the Balkans and now the Council is jibbing at the financial consequences of that".[35]

18. EC external assistance policies are clearly determined more by political priorities than poverty alleviation. Pre-accession aid and the stability of the regions surrounding the EU are indeed important political objectives, but it is vital that they do not interfere with or detract from developmental objectives. The aims of the Statement on Development Policy are unlikely to be achieved in the absence of a dedicated development budget which would enable outcomes to be audited against developmental objectives. At present, development funds are drawn from a budget which also covers expenditure on external action. All too often Category 4, initially envisaged as a source of finance for community development programmes, is 'raided' by the Council of Ministers to fund political initiatives that they do not wish to fund bilaterally, amounting to what Clare Short described as 'political gestures'. Any failure in poverty focus can simply be explained away as 'external action' rather than 'development'. For the Statement on Development Policy to be effective there must be a budget for expenditure in all developing countries dedicated to its principles. We therefore recommend the establishment of a single development budget category, with the sole aim of poverty reduction and the delivery of aid in line with the Statement on Development Policy.

19. Whilst we welcome the rationalisation of the Commission, the present geographical division cannot make for good development policy. The fact that responsibility for Asia — which contains half of the world's poor — remains outside DG Development is inexplicable.[36] We again recommend that all developing countries be brought within the compass of DG Development.

Statement on Development Policy

20. The development programmes of the EC have evolved in the absence of any overarching strategy. This is reflected in the conclusions of the OECD Development Assistance Committee Peer Review which stated that the EC lacked an overall statement on development policy. This echoed the criticisms of a number of NGOs, of EU Member States and, indeed, the Committee, both in its Report on the Future of the EC Development Budget and some time before that in its Report on the Development White Paper.[37] Chris Patten told the Committee, "we have seen a trebling by and large of our external assistance ... over the last few years. A consequence of that is that today we spend twice as much in Poland preparing for accession as we spend in Latin America and Asia combined. Maybe that is the right priority but maybe it is not the right priority, but that is the situation which we inherited ... There may be perfectly good reasons why we spend twice as much in Egypt as we do in Russia. There may be very good reasons for that but I am not sure that Ministers have ever made the judgment".[38] The Statement on Development Policy itself acknowledges this problem, citing "the lack of an overall Community strategy and the fact that the objectives of Community development policy are too numerous, too vague and not ranked in any way.[39]

21. In May 1998, the Development Council required the Commission to produce a statement on EC development policy by the first half of 2000 for discussion in the meeting of the Development Council. The Commission produced an initial draft on 28 February 2000 which was revised in light of initial consultations with member states and civil society. A final, revised, draft was published on 26 April 2000.[40]

22. The Statement on Development Policy has been broadly welcomed by the Government, academics and NGOs alike. Clare Short told the Committee, "the draft Development Policy Statement, the new Statement, is good. It targets all the kind of policy objectives the Government and the Committee overlap on".[41] The ODI stated, "the document tackles the right questions, and has sensible things to say about issues such as (a) the current development challenges, (b) the EU's comparative advantage, (c) strategic priorities, and (d) priorities for internal implementation. In particular we very much welcome:

the unambiguous focus on poverty reduction;
the need for a global approach to development policy, consistent throughout the world;
the emphasis on identifying the EU's comparative advantage, particularly the critical mass, political weight, and link to trade;
the supporting strategic framework;
the emphasis on the three legs of European cooperation with developing countries, viz. political, trade, and economic;
recognition of the need for greater poverty focus in spending aid money;
the call for simplification of instruments and reduction in the number of budget lines;
the proposals for greater delegation to field offices and the commitment to better reporting; and
the suggestion that member states take more of a hands-off, policy based role in managing the EU Programme".[42]

23. The UK Platform, EC NGO Network / BOND stated that the Statement on Development Policy provided an "admirably frank admission of the problems which have led to the Commission's underperformance".[43] At the outset, we welcome the production of a clear statement of the developmental aims and objectives of the EC as an important first step towards improving the accountability, poverty focus and effectiveness of EC development assistance.

Poverty Focus of EC Development Policy

24. The Statement on Development Policy says that "Refocusing priorities in Community development aid policy is a necessity ... Community development cooperation must do fewer things and do them better in order to ensure greater impact ... such refocusing must be based on a combination of two main criteria: first, the areas chosen must contribute to the objective of poverty eradication and sustainable development; second, in the areas chosen Community action must have added value".[44] To this end, it includes an "Integrated Framework for Community Activities", which is reproduced in the table below.

25. The Statement on Development Policy states that "the general objective of development cooperation is to encourage sustainable development that leads to a reduction in poverty in developing countries ... consequently the Community must take an increased focus on poverty reduction in all of its development activities".[45] It continues, "the overarching objective is to refocus the Community development policy on poverty reduction and on aligning the policy framework in different regions".[46] This is a considerable improvement on an earlier draft on the Statement which had suggested "a refocusing of Community development policy on the aim of poverty reduction where that proves necessary" [our emphasis].

26. The Statement on Development Policy also includes an analysis of the nature of poverty. It defines poverty as being more than a lack of income and resources but that the definition should include "deprivation of basic capabilities and encompass non-monetary factors such as lack of access to education, health, natural resources, employment, land and credit, political participation, services and infrastructure. It also cover the risk dimension and the notion of vulnerability. Reducing poverty therefore implies addressing these economic, political, social, environmental and institutional dimensions".[47] We discussed the multi-dimensional nature of poverty in our Report on Women and Development.[48] We welcome the new Commission's commitment to poverty reduction as the overarching objective of its development policy, and its analysis of the definition of poverty which encompasses other aspects in addition to income levels.

Integrated framework for Community activities

Central objective: Poverty reduction

Strategic areas deriving from the Treaty

A
Sustainable development, in particular through promoting equitable growth, investment, employment social and human development and environmental protection

B
Integration into the world economy, including through support to regional cooperation and integration

C
Fight against poverty

D
Democracy, human rights, rule of law and when necessary peace-making and conflict prevention

Guiding principles (mainstreaming)

1
Effect on poverty reduction

2
Support for institutional development and capacity-strengthening

3
Gender equality

4
Sustainable management and use of environment and natural resources

5
Enhancement of economic, social, political and cultural rights

Levels of action

*
Global, regional national, local

*
Partners and actors (public sector, private sector, civil society)

27. In the course of the Statement, the Commission has proposed three types of poverty focus:

(a) primary poverty focus: meaning more concentration of efforts on LDCs and other Low Income Countries;

(b) secondary poverty focus: meaning more poverty-focussed cooperation programmes in middle-income countries (MIC) where more than 20 per cent of the population live on under a dollar a day;

(c) tertiary poverty focus: meaning greater focus on poverty reduction in cooperation programmes in all other developing countries.

28. This analysis is immediately followed by the statement that "Improving the primary poverty focus is clearly limited by the setting of the political priorities and the consequences for the distribution of the financial resources to the regions".[49] The UK Platform, EC NGO Network / BOND found this unacceptable",[50] and ODI agreed that "the last sentence appears to let the Commission off the hook in allocating resources".[51]

29. We have in our previous Report made recommendations on the allocation of EC development assistance among developing countries, which has increasingly been allocated to less poor countries. The draft development policy accepts that "in relative terms, the emphasis on Community aid on the poorest nations has diminished. This is due to globalisation of Community policy and to new external priorities. There is however a clear limitation in an analysis of poverty-focus on the sole basis of the categorisation of the recipient country by level of income. A number of countries, especially in the middle-income bracket, have large percentages of their population below the poverty line".[52]

30. This theme has been expanded in a recent Commission Staff Working Paper on the poverty focus of EC development programmes[53] which noted that the poor do live to a large extent, but not exclusively, in low-income countries but that large concentrations of the poorest are also found in middle-income countries. Clare Short was not impressed with this argument. She told the Committee "I think we need much more intelligent debate in the international development system about the needs of the poor in middle income countries ... We have to ask ourselves what kind of support is needed. If we give large resource transfers, we are actually subsidising the continuing inequality. We have to help middle income countries with large numbers of poor people to engage in the reform process that includes their poor in the body of the nation and gives them the chance of an improvement in life".[54]

31. The Statement on Development Policy fails to elucidate on the concept of secondary and tertiary poverty focus except to state that the Commission will elaborate concrete proposals to this end. Whilst it is undoubtedly true that many middle-income countries do, indeed, have a considerable number of their populations living in poverty, this does not justify the current situation where, for the year 2001 the Commission is proposing to spend 961 million on Mediterranean and Middle Eastern Countries, 1.3 billion in the Eastern Europe and the Balkans (excluding pre-accession expenditure which, in itself amounted to 3.3 billion) — largely middle-income countries — yet, has proposed only 691 million from the Category 4 Budget for Asia, Latin America and Southern Africa combined despite the fact that, as Clare Short told the Committee, a third of people living in absolute poverty are in India alone.[55]

32. It is of course true that a significant number of the world's poor live in Middle Income Countries. However, we agree with the Secretary of State that the large-scale transfer of resources is not the most appropriate way to tackle inequality in such countries. Further consideration is required of the means by which inequality in Middle-Income Countries should best be addressed. We are concerned that existing proposals for three distinct poverty focusses may well be an attempt to maintain the status quo and to ring-fence resources for Middle-Income Countries. This suspicion is made all the greater by the fact that the proposals are immediately followed by the statement that "improving the primary poverty focus is clearly limited by the setting of the political priorities and the consequences for the distribution of the financial resources to the regions". To have three focusses is, simply, to be unfocussed. The proposals for primary, secondary and tertiary poverty focusses are at best useless and at worst dangerous. We recommend that the Commission's development strategy should be predicated on a single focus — the elimination of poverty — against which all development programming and implementation is audited and judged. This would undoubtedly result in a reallocation of resources from political priorities (in particular from MEDA and programmes for the Balkans and the New Independent States) to developmental priorities in low income countries.

Conclusions on the Statement on Development Policy

33. The Statement on Development Policy represents a significant first step towards a more coherent and poverty focussed EC development programme. The UK Government must now press for further amendments to the Statement to remove the caveats and escape clauses which detract from its poverty focus. The Statement should not be endorsed until its commitment to poverty eradication is unequivocal.

Delivering the new policy

34. The Commission has proposed six core policy areas on which it proposes to focus its development policy. The six 'priority areas' are set out as: trade and development; regional co-operation; macro-economic support, including sector programmes in health and education; transport; food security and sustainable rural development; and institutional capacity-building, good governance and the rule of law. A number of cross-cutting principles will also apply namely: good governance, human rights and the rule of law, effect on poverty reduction, institutional capacity building, gender equality and environment. The Commission aims to ensure that this sectoral concentration should be fully reflected in Community programmes within a time span of four years.

35. Clare Short welcomed these proposals. She told the Committee "the EC has to accept that it needs to do less in order to be more effective, and not try to do a bit of everything and do it all ineffectively".[56] It is unclear, however, how the Commission intends to reconcile the priority fields identified in the Statement on Development Policy with the priorities set out by individual member states during each presidency of the EU.

36. We welcome the analysis, contained within the Statement on Development Policy, of the role of the EC in relation to other donors and in respect of its own strengths and weaknesses. This must be accompanied by a more explicit analysis of how the six core areas contribute to poverty reduction and the attainment of the international development targets, and how they relate to the Integrated Framework for Community Activities. The Government should now press the Commission to draw up an action plan, with clear deadlines, for the scrapping of planned projects incompatible with the core functions identified in the Statement on Development Policy and for the necessary refocusing of staffing and management structures. We further recommend that the UK press for an agreement by all Member States that during their respective Presidencies of the EU, they will pursue policies which are coherent with the core development policy areas which have been agreed within the Statement. We also urge the European Parliament, and its Development and Cooperation Committee, to ensure that no additional budget lines are approved which fall outside the six core areas set out in the Statement on Development Policy.

Coherence and Coordination within the EC and between the EC and Member States

37. A further theme of the Statement is the importance of ensuring coherence and complementarity between Community policies and between the development policies of the EC and the Member States. It states, "Art. 178 of the Treaty and common sense oblige the EU to check that the objectives of its development policy are taken into account when the implementation of other policies are likely to affect developing countries. This coherence-check is relevant for many areas of community policy including trade, agriculture, environment, energy, research and technological development, fisheries, immigration, asylum, conflict prevention, health, competition, consumer protection and humanitarian aid".[57] The Statement goes on to note where other policies are likely to have an impact on developing countries that "the least that can be expected is that those who make the decisions have full knowledge of these indirect effects"[58] and that where conflicts arise that "policies will have to be implemented in the least damaging way to developing countries" and that measures may have to be devised to offset the negative effects of other EU policies.

38. Clare Short was not so optimistic about the rest of the Commission taking developmental considerations on board. She told the Committee, "We have a million miles to go to get the rest of the Commission to seriously think about development and how trade policy and agricultural policy and all the rest will take account of the needs of developing countries".[59] We welcome the Commission's statement of intent that the impact of Community policies on developing countries should be considered throughout the Commission but are concerned about how this will be implemented in practice. We recommend that all EC DGs should sign up to the Statement on Development Policy. We consider the Commission's proposed Annual Report on Development to be a useful occasion for the Commission to report each year on progress towards coherence across the Commission on developmental issues.

39. The Statement also notes that it is for the EC to promote coordination and ensure complementarity between the Community and Member States in the broader framework. It argued that the EC should not be seen as a sixteenth implementing actor in the areas of development cooperation but that coordination be enhanced at the level of country strategies, sectoral policy guidelines and at operational level in partner countries to ensure that developing countries, with limited manpower resources do not have to deal with too many donors. The issue of coherence has also been the subject of a further Commission Communication.[60]

40. The Statement on Development Policy also suggests that the EC would be prepared to finance Member States in certain situations and has accepted the principle of sector-wide approaches. ECDPM have argued that it is not enough to set areas of "comparative advantage" but that the Commission should also set "negative priorities" where Member States are better equipped to deal with particular issues. Clare Short strongly supported these proposals, "they need to look at their staffing. Let those be the areas of comparative advantage. After all, one of the advantages of the coalition of all these Member States, some of them with a good track record in development, is that where the Netherlands or Sweden have done some work on education in a country, the Commission ought to be able to trust that work and put some finance behind a big project to do, say, a universal primary education programme or whatever, and not have to crawl over all the details again".[61] We welcome the proposals in the Statement on Development Policy that the EC should be prepared to supplement the funding of the bilateral programmes of Member States a proposal which, if adopted, could go some way to eliminating backlogs in EC expenditure. Such proposals have, however, been around for some time. We recommend clear targets for the implementation of this policy proposal. We also request details of existing programmes where the EC is co-funding the development programmes of Member States.

Proposals for the Reform of the Management of External Assistance

41. Measures proposed within the Statement on Development Policy for increasing effectiveness include streamlining the complex range of EC aid financial instruments, procedures and institutional mechanisms and increasing accountability; taking a more consistent approach across EC programmes; focussing on impact, rather than on disbursing funds rapidly; allocating resources according to need and performance; increasing decentralisation from Brussels to the EC delegations; increasing complementarity with member states; concentrating on fewer areas where it can add most value; and producing an Annual Report on EC development assistance.[62]

42. Shortly after the publication of the Statement on Development Policy, the Commission produced a Communication on the Reform of the Management of External Assistance[63]. The Communication begins by stating that "because the exponential growth of RELEX spending has not been matched by appropriate changes in human resources, structures and management tools, the Commission faces a critical situation. Its management performance has deteriorated over time to the point of undermining the credibility of its external policies and the international image of the European Union".[64] As did the Statement on Development Policy, the Communication accepts that "EC external assistance programmes have a reputation for slow and unresponsive delivery, poor quality and excessively centralised and rigid procedures".[65] It goes on to explore a number of reasons why this has been the case. These include a recent explosion in the number of budget lines to be managed, inadequate staffing, bureaucratic management and accounting procedures and a tendency for EU Member States to "micro-manage" EC development programmes. The Communication then looks towards addressing a number of these issues.

1 Second Report from the International Development Committee, Session 1997-98, The Renegotiation of the Lomé Convention, HC 365-I Back

2 First Report from the International Development Committee, Session 1998-99, The Future of the EC Development Budget, HC 44 Back

3 Including both contributions to the European Development Fund and to the Development Budget Back

4 Official Report, 13 July 2000, c.271WH Back

5 First Report from the International Development Committee, Session 1998-99, The Future of the EC Development Budget, HC 44, para. 11 Back

6 Annual commitment appropriations (including pre-accession expenditure: 1,411 million in 1999 and 3,174 million for 2000), Communication from the Commission, 2000-2006 Financial Programming of Heading 4, COM(2000)268 Back

7 First Report from the International Development Committee, Session 1998-99, The Future of the EC Development Budget (HC 44), para.23 Back

8 Ibid, para.22 Back

9 Evidence p.2 Back

10 Evidence p.70 Back

11 Development Council Conclusions, 1 June 1995 Back

12 Development Council Conclusions, 17 May 1999 Back