Select Committee on European Scrutiny Twelfth Report


14 EU Water Facility for ACP countries

(a)

(24491)

8864/03

COM(03) 211

(b)

(25313)

5757/04

COM(04) 43

Annexes 1-4


Commission Communication on the establishment of an EU Water Fund


Commission Communication on the future development of the EU Water Initiative and the modalities for the establishment of a Water Facility for ACP countries

Annex 1: EDF resources for ACP countries - situation at 31 October 2003

Annex 2: Draft Council Decision concerning the release of the conditional amount of €1 billion under the ninth European Development Fund for cooperation with African, Caribbean and Pacific countries

Annex 3: Draft Commission Decision amending Commission Decision No. C(2001) 1578/2 of 15 June 2001 on allocations to regional programmes and to intra-ACP cooperation under the financial protocol of the ACO-EC Partnership Agreement

Annex 4: Draft Council Decision on the position to be adopted by the Community within the ACP-EC Council of Ministers regarding a decision on the use of the reserve of the long-term development envelope as well as resources from the Investment Facility of the ninth European Development Fund for the establishment of an ACP-EU Water Facility

Legal base(a) —

(b) The Communication: —

Annex 2: Article 310 in conjunction with the second sub-paragraph of Article 300(2) EC; unanimity

DepartmentInternational Development
Basis of consideration(a) Minister's letter of 1 March 2004

(b) Minister's letter of 5 March 2004

Previous Committee ReportsHC 63-xxviii (2002-03), para 2 (2 July 2003) and HC 42-xi (2003-04), para 5 (25 February 2004)
To be discussed in Council23 March 2004 GAERC
Committee's assessmentPolitically important
Committee's decision(Both) Cleared

Background

14.1 The EU Water Initiative was launched during the World Summit on Sustainable Development in Johannesburg in 2002. The aim was to contribute to achieving the Millennium Development Goal (MDG) of halving by 2015 the number of people without access to safe water and sanitation. In Africa close to 40% of the population are without access to safe water, and worldwide more people die from unsafe water than from war.

Document (a)

14.2 In this Communication of 23 April 2003, the Commission proposed the establishment of an EU Water Fund to be sourced from the €1 billion reserve of the 9th European Development Fund (EDF). The sum was conditional as it could be released by the Council only after the mid-term review of the performance of the EDF in 2004, though the Commission hoped that the funds could be released early in 2004. It recognised that the legal provisions which apply to the EDF would have to be respected, and possibly modified, to allow the reserve to be mobilised for this purpose. It suggested that an appropriate way to manage the Fund might be to set up an executive agency.

14.3 The Communication was presented to the General Affairs and External Relations Council on 19 May 2003 , at which agreement was reached that the Commission should continue to investigate the options and to discuss the detail of the proposal in the Council working groups. This accorded with the views of the Government, which gave strong backing to the aims of the proposal.

14.4 We considered the document on 2 July 2003 but did not clear it.

Document (b)

14.5 This Communication of 26 January 2004 provides more information on how the Facility would operate, and proposes management and funding arrangements and the activities it would support. Two main types are envisaged: Institution building and non-investment related technical assistance and Support for investment projects and programmes and related technical assistance. We considered the document on 25 February and asked the Secretary of State for International Development (Mr Hilary Benn) to provide us with the further information the Government was seeking. We shared its concerns and its view on the activities proposed. A major concern of the Government was that the proposal would release the sum of €1 billion from the 9th EDF in advance of the performance review. We did not clear the document.

The Minister's letters

14.6 In his letter of 1 March, the Minister notes that the Commission Communication of 26 January 2004 (document (b)) supersedes the Communication of 23 April 2003 (document (a)).

14.7 In his letter of 5 March 2004, the Minister recalls that, whilst the Communication of 26 January 2004 seeks a political decision from the Council to create the Water Facility, the details of implementation will be subject to a subsequent financing proposal for approval by the EDF Management Committee.

14.8 The Minister says that his Department is seconding a senior water specialist to work, from 15 March, with Commission officials on the financing proposal. The Government intends to establish a constructive dialogue with the Commission in order to address the concerns to which the Minister drew attention in his Explanatory Memorandum on document (b).

14.9 The Minister then comments:

"Regarding the performance review, the details of an alternative, staggered financing package are currently being discussed in the Council ACP Working Group. The arrangement being considered would see up to €500 million (£335 million) of the conditional €1 billion (£670 million) used for the Water Facility. This would be allocated in two equal sums.

"An initial €250 million (£168 million) would be allocated now on the basis of information provided by the Commission on 9th EDF commitments, disbursements, contracting and the management reforms designed to improve quality. Good performance is reported in these areas during 2003. As implementation of EDF9 is still at an early stage having only commenced on 1 April 2003, Member States consider that the Commission has provided as much information as can reasonably be expected at this stage of the programming cycle and that this provides a suitable basis upon which to agree to allocate the initial €250 million.

"The Council would consider a second €250 million for the Water Facility by March 2005 in the light of a full review focused on performance. The Commission would present this by the end of 2004 and provide updated information on portfolio performance as well as analysis in terms of impact and evaluation of the use of 9th EDF resources. This would also link to the outcome of the mid-term reviews of Country Strategy papers that will also be undertaken in 2004 and which may themselves potentially release funds for reallocation. The Council would also decide on the use of the remaining €500 million of the conditional €1 billion at this stage.

"The draft Council Decision appended to the Commission's Communication would be revised to reflect this proposed financing arrangement. A decision is likely to be sought from the General Affairs and External Relations Council meeting on 23 March.

"I hope it will be possible for the Committee to give scrutiny clearance for this proposal on the basis of this additional information and on the understanding that I shall provide you with updated information on the technical proposal prior to it being considered by the EDF Management Committee. This would be a similar to the arrangement agreed on the Communication proposing the creation of a Peace Facility for Africa from EDF9 resources."[29]

Conclusion

14.10 The Minister undertakes to provide us with updated information on the technical proposal for financing this Facility before it is considered by the EDF Management Committee. The arrangement being discussed in the ACP Working Group, of a staggered financing package which would be allocated initially in two equal sums of €250 million, could well meet our concerns about the allocation of the conditional €1 billion from the 9th EDF. We are also reassured to learn from the Minister that it is the view of the Member States that the information provided by the Commission on the performance, so far, of the 9th EDF provides a suitable basis upon which to allocate the initial €250 million.

14.11 On the basis of the Minister's letters, we now clear both documents.


29   (24999) 14145/03; see HC 63-xxxvii (2002-03), para 15 (12 November 2003). Back


 
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