18 9th European Development Fund
| (26388)
6589/05
COM(05) 51
+ ADD 1
| Commission Communication on the EDF performance review and proposal for the release of the remaining conditional balances of the 9th European Development Fund
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| Legal base | — |
| Department | International Development
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| Basis of consideration | Minister's letter of 19 July 2005
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| Previous Committee Report | HC 38-xi (2004-05), para 3 (15 March 2005)
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| Discussed in Council | 23 May GAERC
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
18.1 The Cotonou Agreement of June 2003 provides the latest framework
for a 20-year partnership for development aid to the 77 African,
Caribbean and Pacific (ACP) countries, funded mainly by the European
Development Fund (EDF). Through a €13.5 billion 9th EDF
covering the Agreement's first five years, the Community supports
the ACP governments in their attempts to create a "balanced
macro-economic context", expand the private sector and improve
the quality and coverage of social services. Regional integration
among the ACP States themselves is also an important objective,
as are the encouragement of gender equality and sustainable management
of the environment and of natural resources.
18.2 Longstanding concerns by Member States regarding
the implementation of previous EDFs led to the decision to hold
back €1 billion, the disbursement of which the Council would
decide on the basis of a performance review, carried out by the
Commission, at the mid-point of the expenditure cycle —
the so-called "conditional €1 billion".
Earlier consideration of the 'conditional €1
billion'
18.3 The EU Water Initiative was launched during
the World Summit on Sustainable Development in Johannesburg in
2002. The aim is to contribute to achieving the Millennium Development
Goal (MDG) of halving by 2015 the number of people without access
to safe water and sanitation. The Initiative's main objective
— poverty reduction — is also that of the Cotonou
Agreement. In its Communication of 23 April 2003, the Commission
proposed the establishment of the EU-ACP Water Facility, sourced
from the €1 billion reserve and conditional on the mid-term
EDF performance review. The General Affairs and External Relations
Council on 19 May 2003 agreed 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.[43]
18.4 A further Commission Communication of 26 January
2004 provided more information on how the Facility would operate.
Our predecessors were concerned about the staggered financing
package and were not convinced that conditionality would really
be attached to the disbursement of a second and any subsequent
tranches. So they asked the Secretary of State for International
Development (Mr Hilary Benn) to provide them with the further
information the Government was seeking concerning management of
the proposed facility, and kept the document under scrutiny.[44]
His letter of 5 March 2004 outlined the arrangements he was seeking:
· an
alternative, staggered financing package that would see up to
€500million (£335 million) of the conditional €1
billion (£670 million) used for the Water Facility, allocated
in two equal sums;
· an initial
€250 million (£168 million) to be allocated on the basis
of information provided by the Commission on 9th EDF commitments,
disbursements and contracting and management reforms designed
to improve quality; and
· a second
€250 million for the Water Facility by March 2005 in the
light of a full performance review evaluating the use of 9th EDF
resources and linked to the outcome of the 2004 mid-term reviews
of Country Strategies.
He noted that, at the same time as consideration
was being given to disbursement of the second €250 million,
the Council would also decide on the use of the remaining €500
million. On this basis, our predecessors cleared both documents.[45]
The Commission Communication
18.5 This Communication constitutes the Commission's
proposal upon which the Council would conduct its performance
review and decide whether to release all or part of the remaining
€750 million (£517 million) of the "conditional
€l billion". It contains the following proposals:
· a
second contribution of €250 million (£172 million) to
the ACP Water Facility;
· €64
million (£44 million) for the Centre for the Development
of Enterprise (CDE) and the Centre for the Development of Agriculture
(CTA) to meet operational expenses in 2006 and 2007;
· €18
million (£12 million) for development assistance to East
Timor in 2006 and 2007 following that country's accession to the
Cotonou Agreement;
· €250
million (£172 million) to support the establishment of an
ACP Energy Facility (the rationale for and elements of which
were outlined in a Commission Communication of November 2004);[46]
· €25
million (£17 million) to contribute to an international commodity
risk- management financing facility, which is designed to support
ACP countries "accessing market-based instruments for commodity
risk management through the temporary co-financing of their premiums";[47]
· €30
million (£21 million) for a capacity-building programme to
assist ACP states to "tackle the most burning issues"[48]
relating to new EU sanitary and phytosanitary rules, defined in
a new regulation on Official Feed and Food Controls that enters
into force in January 2006;
· €50
million (£34.5 million) for a programme of strategic capacity-building
support for African Union (AU) institutions which will "among
others, aim at increasing the effectiveness and operational capacity
of the AU institutions, at enhancing civil society participation
in these institutions and at strengthening their involvement in
pan-African problems";[49]
· a contribution
of €63 million (£43.5 million) to the "Education
For All Fast-Track Initiative a global partnership, launched
in mid-2002 to help low-income countries reach the education Millennium
Development Goal of giving all children a complete primary education
by 2015".[50]
The Government's view
18.6 In his Explanatory Memorandum of 9 March 2005,
the Parliamentary Under-Secretary of State at the Department for
International Development (Mr Gareth Thomas) said the Communication
provided helpful reassurance about improved EDF performance and
demonstrated important progress on the selectivity of sectors,
increased use of budget support, the benefits of devolution and
greater staff numbers in the field. He did not comment on the
Commission's proposals in order not to prejudge the outcome of
the Performance Review, and undertook to inform the Committee
as discussions progressed.
The previous Committee's Conclusions
18.7 Our predecessors felt that, given the UK's G8
and EU Presidencies, and the recent publication of the report
of the Commission on Africa, there was a degree of momentum behind
the Water Facility and the proposed Energy Facility, and that
the debate was therefore likely to be about only €250 of
the €750 million concerned. Pending the Minister's report
about the outcome of the performance review and any consequential
proposals, they kept the document under scrutiny.[51]
The Minister's letter
18.8 In his letter of 18 July 2005, the Minister
says that:
"following receipt of additional information
from the Commission on ACP States' performance against Millennium
Development Goal targets derived from joint annual reports, the
General Affairs and External Relations Council adopted Conclusions
on 23rd May concerning the performance review. I enclose a copy
for your information. Noting the improvement in EDF commitment
and expenditure rates and emerging evidence of enhanced quality
and effectiveness of EC external assistance, the Council called
on the Commission to provide more information in this regard through
its future programming reviews. Moreover, the Council also stressed
that a continued improvement in effectiveness should be a key
objective for the successor funding arrangement to the 9th EDF.
Given these factors, the Council agreed to release the remaining
€750million (£505.7m) conditional funds under the 9th
EDF. The ACP-EC Council of Ministers met on 24-25 June and gave
political agreement to the EU proposal, which the Government fully
supported, for the use of the conditional funds."
18.9 The proposals described above were approved,
subject to reduced allocations for:
· the
establishment of an ACP Energy Facility, now allocated €220
million (£148 million); and
· operational
expenses in 2006 for the Centre for the Development of Enterprise
(CDE) and the Technical Centre for Agricultural and Rural Cooperation
(CTA), now to be €32 million (£22 million).
18.10 The Minister says that
"the reduction in these proposals allowed
the Joint Council to agree to allocate €62 million (£42
million) to the replenishment of the Global Fund for AIDS, TB
and Malaria (GFATM), as proposed by EU Member States in order
to demonstrate ACP-EU commitment in the fight against poverty
diseases."
18.11 Finally, he says that Member States will now
need formally to adopt the EU Council Decisions on the allocation
of these funds for the purposes envisaged, which he expects to
be done in September. With Parliament in recess, he says that
he may need to override the scrutiny reserve resolution.
Conclusion
18.12 We are grateful to the Minister for this
further information, which indicates that a thorough analysis
of the "conditional €1billion" has taken place.
The Commission proposals appear well-balanced, and have been
sensibly adjusted at the margin in order to support higher priorities.
18.13 We accept that, since we are clearing with
this document the Council's proposals, it would not be unreasonable
for the Secretary of State to agree the implementing Council Decisions,
if they come to the Council during the summer recess.
43 (24491) 8864/03; see HC 63-xxviii (2002-03), para
2 (2 July 2003). Back
44
(25313) 5757/04; see HC42-xi (2003-04), para 5 (25 February 2004). Back
45
(25313) see HC 42-xii (2003-04), para 14 (10 March 2004). Back
46
(26101) 14040/04; see HC 38-iii (2004-05), para 14 (12 January
2005). Back
47
COM (2005) 51, page 9. Back
48
Ditto, page 9. Back
49
Ditto, page 10. Back
50
Ditto, page 10. Back
51
See HC 38-xi (2004-05), para 3 (15 March 2005). Back
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