Select Committee on International Development Appendices to the Minutes of Evidence




Memorandum submitted by Dr Stephen J H Dearden, Manchester Metropolitan University, Department of Economics

  Turning first to the Communication from the Commission outlining the principles of EC Development Policy (COM(2000)212) it must be recognised that many of the criticisms of the EC in this area are acknowledged and addressed. The document identifies the need for coordination with other international donors, for complementarity with EU Member States own development policies, for a focus upon those tasks where it has a comparative advantage, the tailoring of policy to the particular needs of each developing country, and above all, for the primacy of the objective of poverty reduction. However prospective performance will depend upon the detailed proposals that follow from these broad policy statements. The Communication on Reform of the Management of External Assistance (m) is the first of a series of such proposals, to be followed by papers focusing upon "the coherence between development and other EU policies and the perspectives for the EC's external spending" (p 6).

  But this initial core policy statement should principally be judged by whether it answers the criticism that the EC has itself identified—"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 away." (p 5). Does this paper provide the framework to ensure that development policy is guided by clearly defined objectives and priorities and not focussed upon the instruments of policy? Does the "Integrated Framework for Community Activities" (p 23) meet this need or are the objectives too broad to be operationally useful? Is there sufficient recognition of those cases where objectives are conflicting and a trade-off must be made?

  Are the priority activities for Community aid (paragraph 4.3) consistent with the outlined objectives; are they too broadly drawn and is the failure to indicate priorities a fundamental flaw?

  The Commission recognises the need to concentrate upon a limited number of core areas (p 6). How are these to be identified? Paragraph 2.4 merely outlines the general advantages that the Community might have in relation to individual Member State's delivery of an aid programme, but it fails to recognise that "value added" must also consider all of the weaknesses and disadvantages that the Community has experienced in the implementation of its development policy and which are outlined so comprehensively in the document. There is a failure to distinguished between the Commission's coordinating role in regard to the development policies of individual EU Member States (eg p.13 paragraph 2.2.3); those areas where subsidiarity should apply and responsibility should lie with Member States; where comparative advantage suggests a Member State should fulfil the lead role in a particular developing country; where other international bodies have greater competence or where there should be direct administration by the Commission itself. The call for additional administrative resources, accompanied by a "threat" to reduce the "volume of aid programmes managed by the Commission" (pm 17), emphasises the need to address the issues of where the Commissions comparative advantage or "value-added" in development policy really lies. Some of these issues may be addressed in the strategy papers being formulated on "fostering complementarity between EU Member States and the Community" (p 10).

  The recognition of a "poverty focus" makes an important contribution in providing a coherent objective for EU development efforts, but how far is it clearly defined? What difficulties arise in creating a robust measure of progress in this area? Are there any difficulties with the adoption of the OECD's quantifiable objectives (p 9). If too widely drawn will a "poverty focus" become meaningless (p 16)? The distinction between primary, secondary and tertiary poverty focuses appears meaningless (p 20). Is insufficient emphasise given to the potential conflict between the environmental and poverty reduction objectives, for example in the inevitable increase in energy use associated with economic development (p 18)? The answer to some of these questions should be offered in the future work on a methodology which the Commission indicates that it is undertaking (p 20).

  How will the Community approach the problem of recipient governments which lack any real commitment to poverty reduction as their principle political objective—ie. where there is a failure to "establish ownership of the policy"? What is implied by "policy dialogue, capacity building and adequate implementation systems" (p 17). Similar, and far more problematic issues arise in assessing the fulfilment of "good governance" criteria. Transparency and consistency in the assessment of Developing countries progress in this area is essential. Overtly inconsistent and "political" assessments will undermine the EU's credibility and the effectiveness of its development policy. It is also important to distinguish between "institution building" and "good governance". Technical assistance may help with "institution building" but "good governance" involves more fundamental political and social change. Here the explicit requirements of commitments to "human rights" is an important contribution (p 27). The enhanced role for "civil society" in recipient countries is emphasised and the approach that will be taken to reinforce their capacities and involvement. The Committee might seek further elucidation of the detailed "methodology and framework" (p 28) that is to be adopted.

  How is the EDF to be integrated into the general budget, given its different contributory basis, and what general principles are to be applied in order to rationalise the number of budget heads? (p 31).


  The paper offers little enlightenment in regard to the trade issues where the EC has competence. The conflict between the ECs development objectives and WTO obligations is currently a central concern. The WTO framework will constrain the REPAs (p 12) that will succeed Lome. How is the EC intending to approach the current round of WTO negotiations in regard to the needs of the developing countries? How will development policy address the problem of adjustment for developing countries required to open up their economies to reciprocal free trade? Has the Commission identified those developing countries where the opening up of trade will present particularly acute problems eg involving significant devaluations, combined with import dependence, resulting in substantial and persistent falls in living standards?

  Nonetheless the requirements of the WTO may be seen in a positive light. The move to a regionalisation of Lome may offer the EC an opportunity to develop a more coherent treatment of its relations with developing countries. The complex pattern of individual Association agreements and Lome might now be rationalised with discrimination on the grounds of income level, as required by the WTO. This is entirely consistent with the primacy to be given to a poverty focus and would end the historic anomaly of the preferential access and aid prioritisation of those developing countries with which the Member States had historic ties. What are the political constraints upon the Community in refocusing its development policy? However, is there a danger that a move to regionalisation of policy may fail to recognise the differential needs of particular developing countries (paragraph 4.2)?


  (Page nos. "pm")

  Paragraph 2.3 provides a check list of identified problems on the implementation of EC development assistance against which the proposals for reform (COM(2000)212) should be assessed.

  In the concern to increase the rate of disbursement of funds it is important that the monitoring of the quality of the interventions are not neglected (p 14). There is always the danger that there will be an inappropriate focus upon the administrative problems of expenditure and auditing over the needs for evaluation of the effectiveness of the aid programme in its achievement of the objectives of development policy.

  The distinction between auditing and evaluation is an important one. There is always a danger that administrators will focus upon the former rather than the latter. The development of a robust and effective system of evaluation for assessing the contribution of project and sectoral aid to the achievement of EC development objectives is an essential requirement. Responsibility for "identifying best practice inside and outside (benchmarking)" is to lie with the Quality Support Group (pm 12). However this group is to be small in number and its views will not bind the DGs. By contrast the Evaluation Unit within the Common Service for External Relations (SCR) would appear to have an enhanced role (pm 12). How is this to relate to the Quality Support Group? Is it appropriate that the Evaluation service should be within the implementing SCR? Is there any ambiguity in the relative responsibilities of the Evaluation Unit and the Court of Auditors?

  There is a clear commitment to systematic evaluation and the full utilisation of the feedback that this should provide. (p 32). Does the proposed structure under the administrative reform provide this? Who will be responsible for the development of a consistent methodology?

  Another major criticism of the current administration of EC aid has lain in the division of responsibilities between the various DGs and ECHO. ECHOs role in short term emergency assistance has increasingly overlapped with the long term role of the EC's other development agencies. This is particularly important as ECHO will continue to manage its full project cycle outside of the SCR successor. Again this problem has been identified as one which must be addressed and awaits a further "communication" from the Commission (p 22).

  The Committee might wish to seek an amplification of the Commission's thinking as to the "most appropriate type of body for implementing aid in the long term" (pm 9). Is this only a reference to the implementing body? There appears to be a suggestion that it might be "floated out of the Commission itself" (pm 17). The Committee might wish to explore the Commission's thoughts on this apparently radical alternative.

  Does the fundamental structure of the division of responsibilities between geographical policy-determining DGs and the implementing SCR successor deserve reconsideration? Is there a case for one DG overseeing external aid and responsible both for policy and implementation? Are the attempts to develop joint working methods (pm 21) a second-best solution to the problems created by the current structure?

  The shift of emphasise from project aid to sectoral support may raise greater difficulties in monitoring and evaluating performance. Issues of "fungibility" and additionality arise (p 29). How are these to be addressed? Such monitoring would be expected to form part of the process of review that will feed into the Country Strategy Papers. A further document on the framework for these Papers has yet to be presented by the Commission (p 30).


  The following areas might receive the Committees further attention.

    —  Are the objectives and priorities of EC Development Policy clearly identified? How is progress towards their achievement to be monitored?

    —  Has the Commission identified its core responsibilities, reflecting its comparative advantage?

    —  How are we to define and achieve "good governance"?

    —  How is the EDF to be integrated into the general budget?

    —  What is the EC's approach to the current WTO round of negotiations in relation to the objectives of its Development Policy and its existing obligations?

    —  Do the administrative reform proposals create the structure for independent and effective evaluation of EC development policy?

    —  Is the current division of responsibility between geographical DGs, ECHO and the SCR an optimal long term management structure

  Dr Stephen J H Dearden

  Manchester Metropolitan University, Department of Economics

  June 2000

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