Examination of Witness (Questions 209-219)
MR MACIEJ
POPOWSKI
1 APRIL 2009
Q209 Chairman: Good morning, Mr Popowski,
and welcome again. This is the second occasion when you have been
before us for different reasons. You have heard the discussion
and some of the issues will be common. Perhaps I can start by
looking at the Commission's situation specifically. What steps
can the Commission take to ensure that both the Commission and
Member States' commitments are fulfilled? Do you share Mr Deutscher's
view that the MDGs' aims remain paramount and can still be progressed
at the same rate given the downturn?
Mr Popowski: I am glad to be back.
Let my start by saying that I share Mr Deutscher's analysis of
the situation; indeed, there is some reason for optimism in the
figures published by the OECD. We are going to follow and present
European figures specifically for the EU as a whole next week
on 8 April. Whereas the situation in 2008 seemed to have improved,
there are still question-marks on the future 2009-10 figures?
As you know, the EU has taken individual and collective commitments
to reach certain levels of aid, 0.56% by 2010 and 0.7% by 2015,
and in order to get there we need to strengthen our efforts. We
are not there yet even though 2008 was a good basis. Of course
we all know that the effects of the financial crisis, and the
additional pressure on the aid budgets which is the main subject
of our meeting, will increase in 2009 and 2010. For example, if
we were to meet our collective commitments in 2010 we would have
had to scale up by €20 billion already. The EU is still the
largest donor combined, the 27 Member States and the Commission.
We also increased our spending last year arriving at 0.4% of GNI,
and we also increased the volume, but that effort needs to be
maintained and strengthened. We constantly remind our Member States
of the commitment and obligations and those were, of course, reconfirmed
at the Doha Conference and was also reconfirmed by our leaders
at the European Council meeting last June. We are going to remind
our Member States again as early as next week since the Commission
is going to adopt a policy paper—a communication as we call
it—on the measures we would like to adopt to help the developing
countries in coping with the consequences of the crisis. It will
be published on 8 April together with some supporting documents
outlining the current situation in areas like aid effectiveness,
financing for development, aid for trade and the state of play
of the MDGs, so more efforts need to be done. We are going to
send a very powerful message to our Member States: the commitments
must be met and the current financial and economic crisis cannot
be an excuse not to meet our commitments.
Q210 Chairman: How do you deal with
Ireland and Italy who have both made cuts? Are you protesting
about those cuts or checking whether they are saying it is a one-off
and they will catch up? What is the current state? I do not want
to pick on them but they are two countries who specifically and
explicitly cut their budgets.
Mr Popowski: That is true. We
are aware of the situation and are in touch with them, of course.
We have analysed this situation together with our partners and,
as I said, there is no valid excuse not to maintain the commitments.
Of course, there is still some time. It requires a lot of effort
and that is why we have been encouraging our Member States to
adopt multi-annual spending plans, and roughly half of them have
done so. Thirteen Member States have adopted these multi-annual
plans and that increases the predictability of aid. They can also
play a little bit with time. Some of the Member States, including
the United Kingdom, still intend to back-load quite a lot of spending
at the end of this period, let us say 2010 to 2015. We, as the
European Commission, do not have any legal instruments to force
our Member States to spend more. The national budgets are an exclusive
national competence so we can only send reminders and engage in
a dialogue, which we are currently doing. We cannot force them,
of course, but we will not shy away of even, if need be, naming
and shaming.
Q211 Chairman: Not only that, but
Italy is going to be leading the G8 and it would be very unfortunate,
in addition, having to be in the impossible position of encouraging
people to increase aid if they have cut theirs.
Mr Popowski: That is true. We
are going to use the opportunity of the G8 Summit in Italy in
July to raise the issue of the level of spending but also the
question of burden sharing among donors. Being the largest donor
worldwide we will definitely continue to encourage the others
to be ambitious as well. There are also some encouraging signs
from the US that the new US Government would like to double the
level of development assistance to arrive at $50 billion. We hope
Japan will do so as well as the others so we can have a combined
mass attack.
Q212 Chairman: You announced on 13
March a €2.7 billion commitment to African, Caribbean and
Pacific (ACP) countries. Is this new money or is this part of
the already planned allocation?
Mr Popowski: It is part of the
allocation under the 10th European Development Fund which, as
you know, came into force last year. That is the so-called intra-ACP
tranche which we can use for different purposes mainly concentrating
on areas having original effect. For example, some of these funds
we are going to use to finance the next addition of the African
Peace Facility which is a very novel instrument created to support
African-led peace-keeping efforts but also capacity building in
the area of peace and security. It is only part of it and there
are also other areas we are going to finance with that.
Q213 John Battle: Could I ask about
DFID's response as well which is focused on infrastructure and
social protection? I wonder what your view is of that policy response
and what else would you like to see from bilateral donors.
Mr Popowski: It is going definitely
in the right direction. In the policy paper I mentioned the Commission
is going to propose targeted and well co-ordinated action in a
number of areas and one of the areas is definitely infrastructure,
and that was already mentioned by Eckhard Deutscher. If we invest
in infrastructure we are automatically creating ways and means
of cushioning the impact of the crisis on the real economy because
we would spur job creation and promote growth so that is what
we intend to do as well. We intend to boost spending at the Commission
to invest more in the EU-Africa Infrastructure Trust Fund, for
example, so we are going to double our outlay.
Q214 John Battle: It is not so much
what the EU does with the compound of the money but it is the
combination of approach that DFID is putting together—an
emphasis on social protection as well as infrastructure. I wonder
what other EU Member States are doing. Are they pushing hard on
the infrastructure and down-playing the social protection or are
some countries pushing social protection a bit more now? Is DFID
in line or are other countries coming in behind DFID?
Mr Popowski: I think DFID is in
line in the sense I do not have a full picture of what all the
Member States are doing. That is also the reason for us putting
forward a policy paper in order to have a discussion and encourage
Member States to act together in a co-ordinated fashion. The social
protection element is crucial. There will be social, political,
possibly also security related consequences of the crisis in the
developing countries and we need to invest in the governments'
abilities to cushion the social impact. That is the right approach
and we are going to do the same on behalf of the Commission by
creating a new vulnerability instrument which we dub the FLEX
Plus. There is already a FLEX instrument, the purpose of which
is to offset possible revenue losses from exports. The new instrument
will be based on a different premise in the sense it will be based
on the forecast of possible losses. We want to grant support to
countries, to the governments, so they will be able to finance
certain social expenditure.
Q215 John Battle: I can understand
that the Commission is taking that initiative. To its credit the
Commission has been ahead of the Member States, and that is right
from the beginning of the policy. On this initiative, in terms
of having a blend of social protection and infrastructure, could
you tell me which other Member States, as well as the UK through
DFID, are actually promoting social protection?
Mr Popowski: First of all, it
is our role to spearhead some efforts and to federate our Member
States, so that is what we intend to do. We very much hope that
the Member States will follow suit. When we proposed to them to
concentrate on infrastructure, social protection, as well as on
agriculture and investing in the green economy we hoped to create
this mass effect. What other Member States are doing, for the
time being I do not have a full picture at this stage. I know
that Germany is also thinking along the same lines. They are very
mindful of the social dimension, the social consequences, of the
crisis, but I do not think I can give you a full picture.
Q216 John Battle: It may emerge from
discussing the paper.
Mr Popowski: We very much hope
so. We want the Member States to get together and act in a co-ordinated
way.
Q217 Andrew Stunell: I wanted to
pick up that point about co-ordination. We were talking in the
first session about harmonisation of the multilateral agencies
of which there sounds like far too many. Do we really have 27
different aid strategies within the EU?
Mr Popowski: I do not think we
have 27 different aid strategies. We have 27 players plus the
Commission, which is not the same thing, or 28. In terms of policies
and strategies, we are quite well co-ordinated in the sense that
Europe was very much the driving force behind the high level conferences
of Accra on aid effectiveness and Doha on financing for development.
We were pushing for a very ambitious outcome and that was a co-ordinated
effort by all the Member States: now we have to deliver. In terms
of co-ordinating and harmonising our approach, there are a number
of very clearly described commitments concerning harmonisation,
use of country systems, conditionality and the division of labour
where we need to deliver but, as a matter of fact, we have already
started. We are making progress albeit slowly. We know that we
need to make progress quickly because especially now in times
of crisis it is worth real money. According to our very, very
rough calculations, if we were to implement everything that is
covered by the Accra Agenda for Action, all the recommendations
to donors, we would be able to spend between €25 billion
and €35 billion more by 2015. That is, in a way, a rough
estimate of the real value of a well implemented aid effectiveness
agenda.
Q218 Mr Singh: We heard from Mr Deutscher
that we do not need new instruments. We do not need to proliferate
new instruments. I was very interested when you said about the
EU Vulnerability Fund, FLEX Plus and at the same time the World
Bank has its Vulnerability Finance Facility. Why do you not just
go in with the World Bank? Why are you creating a separate Vulnerability
Fund?
Mr Popowski: We are not creating
something totally new but are just adapting an existing instrument.
On the general remark, I fully agree that we do not need new instruments.
We should stop the proliferation but we have to see how effective
and how quick we can be. The instrument we are now working on
will be financed from the European Development Fund so its specific
target is the ACP countries. Also for formal contractual reasons
we cannot offer that money to another global institution because
we are managing that fund jointly with our partners in the ACP
countries. As I said, it is not entirely new. We are changing
the target to be more effective and to be able to act counter-cyclically,
because the current FLEX is basically a pro-cyclical instrument
and we are trying to offset the losses of export revenue which
can be quite dramatic. According to our estimates, the results
of the crisis in some countries vary. In export-dependent countries
like Mali, where the dependence on the export of primary commodities
is at a level of 95%, we want to anticipate this negative effect
and offer an instrument to cushion the impact.
Q219 Mr Singh: You would still encourage
EU States to support the World Bank Vulnerability Fund?
Mr Popowski: It is a proposal
which is on the table which needs to be examined in detail. We
have been in touch with Robert Zoellick on that as well. He spoke
both to President Barroso and Commissioner Michel. We are quite
open to discussion but we want to make sure it is effective, that
it is fast and we are not creating another layer of bureaucracy.
If it is the best way, fine, we are ready to look into that, but
we need to mobilise what we have in the EU at that stage.
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