9 PROGRESS ON "THE MONTERREY
CONSENSUS" ON DEVELOPMENT ASSISTANCE
(28554)
8451/07
+ ADD 1
COM(07) 164
| Commission Communication: Keeping Europe's promises on Financing for Development
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| Legal base | —
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| Document originated | 4 April 2007
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| Deposited in Parliament |
18 April 2007 |
| Department | International Development
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| Basis of consideration |
EM of 24 April 2007 |
| Previous Committee Report |
None; but see (25441) 7108/04: HC 42-xvi (2003-04), para 5 (31 March 2004) and (26496) 8137/05, (26497)
8138/05 and (26498) 8139/05: HC 34-i (2005-06) para 4 (4 July 2005)
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| To be discussed in Council
| 14-15 May General Affairs and External Relations Council
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| Committee's assessment | Politically important
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| Committee's decision | Cleared; but further information requested, tag to the debate on the proposed EU Code of Conduct on Division of Labour in Development Policy
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Background
9.1 Prior to the European Council in Barcelona in March 2002,
the Commission issued a Communication in which it set out possible
commitments which the Member States might sign up to in advance
of the International Conference on Financing for Development in
Monterrey on 18 March 2002. The aim, which the Commission claimed
was subsequently achieved, was to work towards a positive outcome
to the Conference. The commitments made at Barcelona were reflected
in the final declaration of the Conference, the "Monterrey
Consensus".[18]
9.2 The Member States made eight commitments covering:
aid volume; coordination and harmonisation; aid untying; trade-related
assistance; global public goods;[19]
innovative sources of financing; reform of the international financial
system; and debt relief.
9.3 The Commission is mandated to report annually
on the extent to which EU Member States and the Commission implement
these commitments. This is the fifth such report. It is based
on the response of all 27 Member States to a monitoring questionnaire
of late 2006; a detailed analysis of the survey is contained in
the accompanying Commission Staff Working Paper.
The Commission Communication
9.4 In its introduction, the Commission notes that
the "Monterrey Consensus" commitments are "core
parts of the European Consensus for Development" —
the EU being the biggest aid donor in the world, with its share
of total ODA growing and "long-term, far-reaching commitments
on development finance and their timely delivery to contribute
to the achievement of the Millennium Development Goals (MDGs)".
Looking ahead, it notes that the UN High Level Dialogue on Financing
for Development in late 2007, the Third High Level Forum on Aid
Effectiveness in Accra and the "Monterrey follow-up"
conference to be held in Doha in 2008 will again discuss how to
scale up aid and to deliver aid more effectively and efficiently.
9.5 The Communication notes that:
- in 2002 the EU committed to
a target of 0.39% of their combined Gross National Income (GNI)
to Official Development Assistance (ODA) by 2006.[20]
- in 2006 the EU exceeded this target increasing
their ODA to 0.42% of GNI and by disbursing, in 2006, a record
high of €48 billion. In 2005 Africa received the most substantial
part of EU aid. Overall one third of EU ODA was used for social
and administrative infrastructure to fight poverty and 10% for
humanitarian assistance.
- in 2005 the EU set further targets of collectively
0.56% ODA/GNI by 2010 to bridge the financing gap for finally
attaining the 0.7% ODA/GNI goal by 2015.[21]
These commitments account for almost 80% of promised G8 aid increases
for Africa. "The EU is on track to meet both".
- one Member State dedicated in 2006 just over
1% of its GNI to ODA. Three others reached over 0.8% ODA/GNI.
Other Member States, "who seemed to be off track just a few
years ago have scaled up their aid substantially". The ten
new Member States have collectively doubled their aid since their
accession in 2004.
- the Union "also leads the international
Financing for Development process because it is already implementing
aid better and faster": signing the Paris Declaration on
Aid Effectiveness, introducing joint analyses and multi-annual
strategic planning of country assistance provided by the EC and
the Member States and
working on an EU Code of Conduct on Division of Labour in Development
Policy.
9.6 But this progress "cannot be taken for granted
and should not hide certain issues":
- big variations in aid budgets
between Member States;
- the use of one-off measures which sometimes disguise
the overall trend in aid volumes; and
- the need for more effective aid disbursement
to ensure that aid reaches those who need it.
9.7 So, although the EU ratio of ODA to Gross National
Income (GNI) reached 0.42% in 2005, one year ahead of schedule,
debt relief to Iraq and Nigeria and post-tsunami aid contributed
to this outcome. And while the EU is on track to meet the UN target
of 0.15% ODA/GNI to least-developed countries, to double aid to
Africa and to meet the collective EU target of 0.56% by 2010,
individual countries have yet to meet their commitments. While
the UK allocated 0.52% of its GNI to ODA in 2005, Greece, Italy,
Portugal and Spain missed their individual targets to achieve
0.33% ODA/GNI by 2006. The Commission also comments that when
the high levels of debt relief have passed, an increase in other
forms of aid will be needed to meet the targets.
9.8 It says that a number of "critical challenges
need to be tackled":
- longer-term predictability
of aid flows is a prerequisite to achieving the MDGs. All Member
States need to establish national timetables, by the end of 2007,
to ensure gradually rising aid levels year-on-year;
- in particular those Member States that have neither
reached the 2006 targets nor prepared for getting to 2010 milestones
need to demonstrate better how they will bridge the remaining
gap in the spirit of securing fair burden-sharing;
- additionality of debt relief: in 2005, the net
ODA volumes excluding debt relief grants of those three Member
States that together represent 55% of the EU's total aid, either
decreased (Germany -5.5%, France -0.7%) or only marginally increased
(UK +0.9%);
- in order to ensure the comparability of aid volumes
Member States need to strengthen their ODA reporting capacities
and methodology, with particular attention being paid to the 12
Member States who are not members of the DAC (OECD's Development
Assistance Committee); the Commission can assist this process;
- preparedness for efficient and effective use
of rapidly rising aid volumes: with Member States due to provide
90% of the additional EU aid bilaterally and with the lion's share
supposed to be programmable aid, EU donors must urgently review
their structures and operations and aid modalities to deliver
more aid, better and faster. This process needs to include:
- national plans to strengthen capacity to implement
scaled-up ODA, otherwise scaling-up remains a question of commitments,
but disbursement could lag behind;
- the speedy and practical application of the forthcoming
EU Code of Conduct on Division of Labour in Development Policy;
- increasing use of any different disbursement
channels, such as common European instruments that emerge, as
a result of the European Consensus;
- implementing joint policy objectives, such as
the EU-Africa Strategy (e.g., voluntary contributions to the EU
Trust Fund for Infrastructure in Africa or far-reaching EU Partnership/Association
Agreements);
- responding to global challenges, e.g. related
to external shocks such as climate change, natural disasters,
commodity price variations or major threats to public or animal
health; and
- facilitating delivery of joint EU commitments,
e.g. aid for trade.
9.9 The Report summarises progress on innovative
financing instruments such as the Advance Market Commitment for
vaccine development; progress on debt relief and Aid for Trade;
and progress on implementing the EU Aid Effectiveness Action Plan.
It also covers tools for responding to shocks due to natural disasters
and commodity price changes, progress on untying aid, EU coordination
on the boards of International Financial Institutions, and the
EU response to the Report of the International Task Force on Global
Public Goods. In each area the Commission makes suggestions or
recommendations for further progress. The Report does not propose
any further commitments or EU initiatives.
9.10 Overall, the Commission concludes that:
- "the speedy application
of the EU Code of Conduct on Division of Labour in Development
Policy is the best opportunity for a quantum leap in the effectiveness
of EU aid";
- the "nexus of trade and development must
be dealt with under the joint EU Aid for Trade Strategy, which
requires credible follow-up by all stakeholders"; and
- "greater efforts are necessary and more
active Member State participation is required in several areas,
e.g., regarding budget support and concepts to mitigate the impact
of exogenous shocks".
The Government's view
9.11 The Parliamentary Under-Secretary at the Department
for International Development (Mr Gareth Thomas) comments on the
Report in his 24 April 2007 Explanatory Memorandum as follows:
"We are broadly content with the Report.
It provides a clear picture of EU implementation of the commitments
on increasing aid, and other EU commitments relevant to the Monterrey
Consensus. We support most of the suggestions and recommendations
made in the Report.
"The Report notes inaccurately that although
the UK increased its aid excluding debt relief in 2005, the increase
'seems to go against' the Monterrey Consensus. The Consensus states
that, 'we encourage donor countries to take steps to ensure that
the resources provided for debt relief do not detract from ODA
resources intended to be available for developing countries'.
In fact, UK ODA excluding debt relief has increased every year
since the Monterrey meeting in 2002. We have made this point to
the Commission, and will seek to ensure that the UK position is
not misrepresented in future years.
"We also agree with the assessment of progress
on aid effectiveness, but would encourage the Commission to note
the need for acceleration of progress in meeting the existing
Paris Declaration targets. We welcome the Commission's intention
to deliver more aid through long-term budget support.
"We agree with the Commission that tools
for addressing economic shocks due to natural disasters and commodity
price changes have attracted little attention. We believe that
the IMF should advise developing countries on macroeconomic stability,
and that additional new instruments are not required. The Government
is seeking further information about the suggestion to develop
a joint EU Strategy for Disaster Risk Reduction.
"We welcome the Commission's call for further
progress on aid untying. Most Commission aid is untied, and from
1 April 2001, all UK development assistance has been fully untied.
We continue to encourage the Commission and other donors to fully
untie their aid.
"We do not agree with all the Commission's
proposals to improve EU coherence on the Boards of International
Financial Institutions. The first two proposals are already happening
— there are frequent EU coordination meetings at the World
Bank and the International Monetary Fund. The third proposal,
which calls for sharing documents between the Commission and Member
States, is unhelpful. The Government is not able to transmit Board
documents to the Commission
or any other party, as these are confidential and cannot be shared
with non-Board members (the Commission is not a Board member).
We will push to make this clear in Council Conclusions.
"We broadly agree with the assessment on
the recommendations of the International Task Force on Global
Public Goods (GPGs) and agree on the priority GPGs identified
by the Task Force, especially those related to health and the
environment. GPGs are vital for sustainable poverty elimination
and so we do not agree with the recommendation to delink GPGs
from development. Joint financing to increase the supply
of GPGs can be an effective substitute for national action to
achieve the Millennium Development Goals (MDGs). We recognise
the mixed views of Member States on financing issues but feel
that the EU is well placed to play an important role. The EU can
help to increase the supply of GPGs by designing new ways of providing
funds, and can build stronger alliances with developing countries.
Given the importance of GPGs we would encourage the EU to work
towards establishing an Action Plan, concentrating first on areas
where there is agreement and then progressively tackling other
areas where there is less agreement.
9.12 Finally, the Minister says that:
- although the Government is
in regular contact with UK NGOs about the delivery of the EU commitments
on increasing ODA and other issues in the Report, no consultation
has been held about this Report;
- while the 2005 EU commitments
on increasing ODA have direct financial implications for Member
States including the UK, the Report itself has no direct financial
implications; and
- it will be discussed at the 14-15 May GAERC.
Conclusion
9.13 The Commission highlights two key considerations.
The first is quantity: as we noted in our own consideration of
the EU-Africa Strategy, in addition to posing a range of other
unprecedented challenges, implementation would above all require
EU Member States to "put their money where their mouth is".
The Commission's analysis shows clearly who is pulling their weight
and who is not.
9.14 The second is quality, i.e., where and how
to spend the money. We considered both the Communication on Aid
for Trade and on the proposed EU Code of Conduct on Division of
Labour in Development Policy on 25 April, recommending the latter
for debate in the European Standing Committee. We consider this
document relevant to that debate.
9.15 We now clear the document but ask the Minister
to report on the nature and outcome of the discussion of it in
the Council.
18 (23287) 6564/02: see HC 152-xxix (2001-02), paragraph
17 (15 May 2002). Back
19
Global or International public goods are public goods whose provision
or associated benefits spill over national boundaries, such as
eliminating or preventing the spread of disease across borders. Back
20
In order to provide, by 2006, at least 0.39% of the EU GNI collectively
as ODA, Member States with ODA of 0.7% ODA/ GNI committed to maintain
the high levels; all other Member States committed to achieve
at least 0.33% ODA/GNI. Back
21
The second intermediate collective target for 2010 is based on
individual baseline targets, i.e. Member States that have not
yet reached an ODA of 0.51% of their GNI undertake to reach that
level; Member States undertake to achieve the 0.7% ODA/GNI target
by 2015 and those which have achieved that goal commit themselves
to remain above that target; Member States that joined the EU
after 2002 strive to achieve or maintain, by 2010, a minimum of
0.17% ODA/GNI and of 0.33% by 2015. This commitment is combined
with the promise to provide collectively at least 50% of the agreed
ODA increase to Africa. Back
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