Select Committee on European Scrutiny Ninth Report



Report on the implementation of the European Commission external assistance during 2000.
Legal base:
Document originated: 6 November 2001
Forwarded to the Council: 7 November 2001
Deposited in Parliament: 28 November 2001
Department: International Development
Basis of consideration: EM of 14 November 2001
Previous Committee Report: None
Discussed in Council: 8 November Development Council
Committee's assessment: Politically important
Committee's decision: Not cleared; referred to the International Development Committee for its Opinion

  9.1  Publication of an Annual Report was one of the principal recommendations of the May 1999 Development Council. This first report covers activities during 2000. It is the first time that information on all the EC programmes has been put together in a single document.

  9.2  In its introduction, the Commission makes no reference to the Development Council's Conclusions, but describes the document as a pilot exercise which follows its decision to reform its management of external aid.[27] These reforms, including the establishment of the EuropeAid Co-operation Office on 1 January 2001, did not start during the period covered by the report but reference is made to them.

  9.3  The first chapter summarises the European Community's new development policy and provides an update on the Commission's reforms. It emphasises that the fight against poverty has become the main objective of the EC's development policy.

  9.4  Experience had shown that, if donors were to be effective, it was not possible for them to address all the issues connected with poverty reduction. Aid had, therefore, been focussed on the six priority areas set out in the Commission's Communication of 26 April 2000:[28]

"—  the link between trade and development;

  • support for integration and regional co-operation;

  • support for macro-economic policies which has a direct link with strategies to reduce poverty;

  • transport;

  • food security and sustainable rural development; and

  • the strengthening of institutional capabilities, notably in the areas of good governance and the rule of law."

  9.5  Poverty reduction is the central objective of the Cotonou Agreement, which sets out the legal framework for trade and development co-operation between the EU and ACP countries over the next 20 years. The Commission has also been active in drawing up the Poverty Reduction Strategy Papers, an initiative of the World Bank.

  9.6  Introducing the section on improving the management of external aid, the Commission says:

"At the same time as defining new directions for the Community's development policy, an ambitious reform of the way external aid is managed has been launched, aimed at improving project quality and cutting the time taken to implement them.

"A first step towards unification of the services tasked with executing the third country aid programmes, and towards improving management was the setting up, in 1998, of the Common Service for External Relations (SCR). The SCR set to work to eliminate payment delays, reduce commitment backlogs, harmonise and simplify contracting and subsidy-granting procedures, and rationalise information systems (see details in the Annex)[29].

"On 16 May 2000, the Commission decided to go a further step and set in motion a major reform programme. The concern was, in particular, to:

  • considerably improve the quality and adaptability of project management;

  • significantly reduce the time taken to implement projects;

  • provide harmonised financial, technical and contract management procedures to meet the best international standards of ethics and responsibility; and

  • strengthen the impact and visibility of the European Union's co-operation and development aid."

  9.7  This reform programme has four main thrusts:

"—  a total revision and unification of external aid programming, in line with the objectives and priorities of European Union policies;

  • integrated management of the entire operations cycle;

  • setting up a single department (EuropeAid Co-operation Office) tasked with the project cycle from identification to evaluation; and

  • large-scale devolution of project management towards the Commission Delegations."

  9.8  A box provides a helpful synopsis of assistance to the candidate countries, which in 2000 amounted to _3 billion.

  9.9  Since 1 January 2001, DG Development and DG External Relations have been responsible for setting policies and multi-annual programming, while the EuropeAid Co-operation Office is responsible for managing the remainder of the operations cycle.

  9.10  The EuropeAid Co-operation Office is a Commission Department supervised by the Commissioners for External Relations, Development and Humanitarian Aid, Enlargement, Trade and Economic and Monetary Affairs. The External Relations Commissioner, Chris Patten, and the Development and Humanitarian Aid Commissioner, Poul Nielson, are President and Chief Executive Officer, respectively. It is tasked with identifying and preparing projects and programmes, preparing financing decisions, implementation and monitoring, and project and programme evaluation. The creation of this office is described as a central element of the reform of the foreign aid management mechanism. It implements the full range of the Commission's external aid instruments, with the exception of the pre-accession programmes (Phare, Ispa, Sapard), the humanitarian activities, macro-financial aid, the Common Foreign and Security Policy (CFSP) and the Rapid Reaction Facility.

  9.11  Chapter 2 covers the thematic budget lines in priority areas, such as democracy and human rights, partnerships with non-governmental organisations (NGOs), gender equality, health (aids and demography), drugs, refugees and rehabilitation, food security, environment and forests.

  9.12  Chapters 3 to 7 cover each of the EC's large geographical programmes including: South Eastern Europe (the Balkans); Eastern Europe and Central Asia; Africa, Caribbean and the Pacific (ACP); Asia; and Latin America. Financial data are in Chapter 8. The Annexes provide some background information, including some on the EC's evaluation and external audit programmes.

  9.13  At the end of the section on South Eastern Europe, the Commission concludes:

"EU activities in the Western Balkans have expanded rapidly, now that democratic governments have been elected in Croatia and the Federal Republic of Yugoslavia, while the level of EU activities in the NIS for example, remains broadly unchanged. The more favourable political climate in the Western Balkans is reflected in the doubling of assistance from 2000 to 2001: from about _400 million through the Obnova/Phare programmes to _800 million through CARDS, their successor programme. The European Agency for Reconstruction is well staffed and was therefore able to deliver EC emergency and reconstruction assistance speedily and effectively in FRY during 2000.

"The CARDS programme in the Western Balkans will continue to be a large, politically sensitive and visible EC assistance programme. However, in an environment of rapid and recurring political tension, it will be a major challenge to continue speedy and effective delivery of the right sort of assistance. Gradually, as stability begins to return to the region, our assistance is focussing less on emergency support and reconstruction, and more on broad-based and sustainable development, in particular, on institution-building. This assistance is embedded in the overall framework of EU relations; it is being used to further the objectives of the Stabilisation and Association Process and the growing number of Stabilisation and Association Agreements signed, or under negotiation, with the countries in that region."

  9.14  The Commission's conclusion on the section covering the Partner States of Eastern Europe and Central Asia reads:

"The TACIS programme, covering the countries of Eastern Europe and Central Asia, is now a well-established programme with an annual commitment budget of around _450 million. It is adapting to the evolving needs of the region, including recognition of the growing differentiation between the countries. Enlargement of the EU to the east is leading to a shift of focus towards the Western NIS in terms for example of border management, spill-over environmental concerns and cross-border initiatives. Greater attention will be paid to promoting investments, including the co-financing of investment projects with international financial institutions. Investment support will also be extended to the social sectors, where the needs are huge after a decade of very sharp economic decline. At the same time, the overall focus on promotion of reforms is being strengthened. More prominence will be given to providing high-level policy advice, and to other activities in connection with the implementation of the Partnership and Co-operation Agreements but also to long-term institution building, in particular to support of the rule of law. As devolution continues, more and more assistance will be delivered through the local Commission's Delegations."

  9.15  The conclusion to the section on the South Mediterranean, Near and Middle East is "a positive assessment in spite of structural difficulties". The Commission comments:

"The Barcelona Process has been able to demonstrate several remarkable successes — although five years is not long enough for it to deliver all its promises. Initial expectations were high, boosted by the bright prospects of agreement that the Middle East Peace Process appeared to offer in the mid-90s — perhaps they were too high to live up to.

"The crisis situation in the Middle East has seriously endangered the Peace process and had a strong detrimental effect on regional co-operation in general. These shortcomings were so substantial that they called into question the political determination of both sides to achieve the goals they set in 1995.

"On the positive side, despite serious political odds, the Union has been able to initiate and formalise continuous dialogue amongst its 27 partners. The multilateral approach is now more widespread — even prevailing over traditional bilateralism. All EU Member States recognise the strategic importance of the EU's southern neighbours, so substantial financial assets have been committed to the Mediterranean region and the first encouraging results of the reform efforts in the Mediterranean Partners are now tangible.

"On the other hand, it has been more difficult than anticipated to establish a free trade area, illustrated by the slow progress in negotiating Association Agreements, as well as the slow ratification procedures for Agreements already signed. Here, both the Mediterranean Partners and the EU Member States share the blame. South-south integration is still moving forward at a snail's pace, thus failing to attract sufficient inward investment.

"Too many small-scale projects were set up in the enthusiasm of the early stages of the Barcelona Process, without care being taken to set priorities. As a result, implementation was generally slow, and the low absorption capacity of the Partners also delayed the disbursement of available funds in previous years. Nevertheless, this tendency has been reversed in the year 2000 as a result of a considerable effort to 'clear up the weight of the past'. The EU Council of Ministers decided to endow MEDA with _5.350 million for 2000-2006. These grants from the European Community budget are accompanied by substantial lending from the EIB, whose lending mandate over the same period is _6.400 million. The EIB has promised to contribute a further _1.000 million from its own resources. This means that a total of nearly _13 billion will be available for the Euro-Mediterranean Partnership to use over the seven-year period starting from 2000."

  9.16  On Asia, the Commission refers to the Communication, which it has since adopted, updating its 1994 strategy paper, Towards a New Asia Strategy.[30] Since 1994 political dialogue with key partners in the region has intensified, and trade and investment relations have expanded. There has been a modest growth in development and economic co-operation but much remains to be done. The political dialogue needs to be deepened and broadened, co-operation in the WTO strengthened and the EC aid programmes to the area must "achieve their full potential". The degree of mutual awareness between the two regions remains "insufficient".

The Government's view

  9.17  The Secretary of State for International Development (Clare Short) says in her Explanatory Memorandum of 14 November that the Government welcomes the report as an important step forward. However, she then adds:

"the report falls short of the needs spelled out by the Development Council, most recently in conclusions adopted in May 2001. These said that the report should cover the results and achievements of EC aid, progress on the EC's six priority areas and on co-ordination, complementarity and coherence, and give a perspective on the year to come. Most importantly, there is no attempt to measure impact or say how the Commission intends to measure impact in future, or to discuss priorities or compare the different regional or sectoral programmes.

"At the Development Council on 8 November I welcomed the production of the Report, but also made it clear that the text was not as good as it should be and should be improved next year in line with the framework set out in the Council's conclusions of May 2001. Other European Ministers made similar points. The Council adopted procedural conclusions, which emphasise the importance of the Annual Report in building public confidence and call for the Commission to work with the Member States, other donors, and the European Parliament to establish performance indicators".

  9.18  The report, which is a Commission staff working document, is due to be published early in 2002. In a letter dated 20 November, the Minister regretted that the UK had agreed conclusions on this document before obtaining scrutiny clearance, due to the late issue of the document.


  9.19  By bringing together in one paper the budget for each area, the report highlights the effort being put into each. Particularly striking is the figure of _13 billion to be made available for the Euro-Mediterranean Partnership over the seven-year period from 2000. This emphasises the importance of parliamentary oversight of the Barcelona Process, and we call on the Government to set a date for the debate in European Standing Committee B which we recommended in February on this issue and which has still not taken place.[31]

  9.20  We are surprised that the Commission did not follow the Conclusions of the May Development Council, or even refer to them in its Introduction, and support the Secretary of State in asking for next year's report to include the information the Council required.

  9.21  In all, however, our preliminary view is that this first annual report provides a valuable comprehensive account of the Commission's external assistance. It demonstrates the extent of this work and the degree of re-shaping of policy and delivery which has taken place over the last year or two. It will be interesting in next year's report to see the extent to which the reforms are beginning to take effect. By all accounts, particularly those from non-governmental organisations, the delays in payments, which the Common Service for External Relations was supposed to eliminate, are as bad as ever. Meanwhile, the report provides a considerable body of information on the period immediately before the reforms were instituted and we consider it appropriate to refer it to the International Development Committee for its Opinion, in the context of its inquiry into The effectiveness of the reforms of European Development Assistance.

  9.22  Meanwhile, we do not clear the document.

27  (21359) - ; see HC 23-xxvi (1999-2000), paragraph 16 (26 July 2000). Back

28  (21117) - (21291) 8333/00; see HC 23-xxii (1999-2000), paragraph 3 (21 June 2000). Back

29  On page 185 of the Commission report. Back

30  (22710) 12380/01; see paragraph 26 of this Report. Back

31  (21492) 11381/00; see HC 28-vii (2000-01), paragraph 1 (28 February 2001) and (22007) 14778/00; see HC 28-vii (2000-01), paragraph 4 (28 February 2001). Back

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