Documents considered by the Committee on 15 December 2010 - European Scrutiny Committee Contents


17 EU Aid Effectiveness

(32157)

15915/10

COM(109) 643

Commission Communication: Mutual Accountability and Transparency—A Fourth Chapter for the EU Operational Framework on Aid Effectiveness

Legal base
Document originated5 November 2010
Deposited in Parliament11 November 2010
DepartmentInternational Development
Basis of considerationEM of 24 November 2010
Previous Committee ReportNone; but see (30978) 13732/09: HC 19-xviii (2008-09), chapter 2 (21 October 2009); also see (29616) 8408/08: HC 16-xxi (2007-08), chapter 1 and (30544) 8695/09: HC19-xv (2008-09), chapter 10 (29 April 2009)
To be discussed in Council9 December 2010 Development Council
Committee's assessmentPolitically important
Committee's decisionCleared

Background

17.1 The eight UN Millennium Development Goals (MDGs) that, in 2000, the UN set itself to achieve, most by 2015, are to eradicate extreme poverty and hunger; achieve universal primary education; promote gender equality; reduce child mortality; improve maternal health; combat HIV/Aids, malaria and other diseases; ensure environmental sustainability; develop a partnership for development — each with associated targets and benchmarks to measure progress.

17.2 On 14 May 2008, the previous Committee considered Commission Communication 8408/08, "Speeding up progress towards the UN Millennium Development Goals", and supporting Staff Working Papers, which provided a mid-term assessment of progress towards the MDGs and put forward priority areas for action and proposals in each area. The Commission's aim was "to make a contribution to the formulation of a European common position, with an eye to the Accra and Doha meetings[126] and the high-level UN event in September 2008 in particular, and so confirm the EU's key role on the international scene and its commitment to the MDGs." The Commission said efforts needed to be redoubled to ensure the goals were met by 2015 and identified four priority areas for EU action: Aid Volumes, Aid Effectiveness, EU policy coherence and Aid for Trade.

17.3 Given the importance of the subject and the widespread interest in the House therein, the previous Committee recommended that the Communication be debated in European Committee B prior to the June European Council at which it was to be adopted.[127] That debate took place on 9 June 2008.[128]

17.4 A year later, the theme of a similar, pre-May "development" Council "April Package" was supporting developing countries in coping with the economic crisis. The Communication set out how the Commission would address the impact of the crisis on developing countries, whilst also encouraging Member States to join in particular initiatives. Broadly, it stressed: Honouring existing commitments and leveraging new resources; providing counter-cyclical funding; improving aid effectiveness; cushioning the social impact whilst supporting the real economy, governance and stability. The Commission identified four priority areas for action by the EU: Aid for Trade; Aid Volumes; Millennium Development Goals; and Aid Effectiveness. All of this was set out in detail in our predecessors' relevant Report.[129]

17.5 The then Minister at the Department for International Development (Mr Gareth Thomas) regarded the overall picture the four specific areas as mixed. A much greater effort was required to meet the 2010 and 2015 ODA targets, which were particularly important, but more challenging, in the current economic crisis. On "Aid for Trade", he was pleased to note the commitment to increase grant funding for the EU-Africa Infrastructure Trust Fund, and was considering increasing DFID's contribution; but other Member States had yet to commit. The Financing for Development Report gave a clear picture of EU implementation of its commitments; however, he shared the Commission's concern that the collective EU commitment to reach 0.56% ODA/GNI might be missed, despite the fall in expected GNI which had reduced the level of ODA required to meet this commitment. The then Government remained committed to provide 0.56% of GNI as ODA in 2010, and to reach 0.7% by 2013, had also set out its plans to meet ODA commitments to Africa, and already met the target to provide 0.15% ODA/GNI to the least developed countries; the then Minister would continue to press other donors to meet their commitments, which he described as a key issue for the EU and the G8 and for the UN High-Level Conference on the Financial Crisis and the Copenhagen Climate Change Conference that year. He said that the Commission had rightly identified the sheer scale of the challenge in meeting the MDGs, particularly in the current economic climate, and correctly pointed to the EU's leadership role on this and the importance of fulfilling its commitments, including "the helpfully highlighted, EU MDG Agenda for Action."[130] UK officials would continue to be actively engaged in expert groups on improving the EU's analysis and response to fragility and vulnerability in developing countries and policy coherence, and to ensure that the most off-track MDGs (those focused on education and health) were addressed.

17.6 The then Minister said that the Financial Crisis reinforced the importance and urgency of meeting the Paris[131] and Accra targets on aid effectiveness; while the Commission had improved its aid predictability through the MDG Contracts,[132] the UK would lobby for greater prominence for this in the Council Conclusions (as lack of aid predictability increased costs by 15-20%), and for the Commission to encourage Member States to join the International Aid Transparency Initiative, as a way of meeting their commitments to aid transparency.

17.7 Given the Minister's comprehensive and helpful analysis and assessment of this important set of papers, the previous Committee both reported them to the House because of the widespread interest in the issues involved and forwarded them to the International Development Select Committee, so that they might be aware of them and of the Minister's analysis and evaluation.[133]

The earlier Commission Staff/Presidency Joint Paper

17.8 Against that background, this document, An Operational Framework for the EU to Promote Aid Effectiveness, had been prepared jointly by the Commission and the Swedish Presidency. It looked ahead to the Fourth High Level Forum on Aid Effectiveness (HLF IV), which was to be be held in Seoul in 2011. There, it said:

    "the European Commission and Member States will be held accountable for the commitments made in the 2005 Paris Declaration and the Accra Agenda for Action (AAA) of 2008. The EU was a driving force behind much of the content of these agreements, and therefore has a special obligation to ensure that we deliver on our commitments. While, individually, the Member States and the Commission are making progress on their commitments, achieving the targets in the short time remaining before Seoul presents a formidable challenge. The purpose of this operational framework is to catalyse EU action to achieve the massive change necessary to meet this challenge."

17.9 The discussion paper responded directly to the Council's May 2009 Conclusions which called for an operational framework to be presented before the end of 2009. The four EU aid effectiveness priorities agreed in Conclusions of May 2008 and 2009 were: division of labour; use of country systems; predictability of aid; and mutual accountability for results, including less conditionality.

17.10 The proposed Operational Framework identified concrete actions to improve EU performance against its aid effectiveness commitments, including under the Paris Declaration, before the 2010 deadline. Three areas — division of labour between donors, enhanced use of national systems by donors to deliver aid, and technical cooperation for improving capability — were covered as follows:

Division of labour: EU approaches to the division of labour between donors in-country are well established in the EU Code of Conduct on Complementarity and Division of Labour, adopted in 2007. The Operational Framework calls on the Commission and member states to re-confirm their political commitment and speed up implementation. It proposes meetings between EU country and headquarters staff to make faster progress in selected countries. It also calls for a joint approach amongst EU members and the Commission on division of labour between countries.

Use of country systems has been a priority since 2005 when the EU committed to channel 50% of government-to-government assistance through national mechanisms and systems. However, the report notes that overall progress in using country systems is weak. The paper proposes practical steps on how to increase the use of partner country systems by the Commission and Member States whilst tackling issues including partner capacity and accountability to member states' own tax payers, e.g.:

·  Support the role of parliaments, civil society, the media, audit institutions, and public procurement monitoring agencies, in holding governments accountable for public expenditure;

·  Support partner country capacity development for improving the quality of country systems;

·  Initiate or continue dialogue with our Member States parliaments and national audit offices on the use of country systems.

17.11 The then Parliamentary Secretary at the Department for International Development (Mr Michael Foster) said that the UK was "strongly committed to deliver on its aid effectiveness commitments, ensuring that development is driven by partner countries and helps build capable, accountable, and responsive states". He strongly supported the EU's focus on aid effectiveness. The urgent need for EU members and the Commission to step up efforts on implementing aid effectiveness commitments was recognised in the Commission's 2009 report on EU performance against its aid volume and aid effectiveness commitments.[134] The analysis in that report indicated that in 2008 the EU as a whole was off-track on at least four of the ten 2010 Paris targets. Increased effort was also important as the EU, influenced by the UK and other donors, played a lead role in securing an ambitious international agreement on aid effectiveness at the Accra High Level Forum in 2008. The UK welcomed the Operational Framework as a way of achieving meaningful and concrete actions before the 2010 deadline for the Paris targets.

17.12 Noting that the Operational Framework did not yet cover all four EU aid effectiveness priorities agreed in previous Council Conclusions, the then Minister said that it was proposed that actions on other aid effectiveness commitments would be agreed and added to the Framework in future. He was working with other EU member states to ensure mutual accountability — between donors and partner countries, one of the four EU priorities — was referenced as an urgent area for the EU to agree operational actions as soon as possible. International progress on mutual accountability remained extremely slow; this area was fundamental to improved aid effectiveness and development results.

The previous Committee's assessment

17.13 Noting that "effectiveness" is generally understood as the capacity to achieve the results desired, the previous Committee said that, on that basis, it was plain that, notwithstanding all that had gone before (the previous Communications, the Paris Declaration, the Accra Agenda for Action), the EU had much room for improvement. Given that the EU — the Commission and its Member States — provides nearly 60% of development assistance to the world's neediest countries, it was all the more important that the Commission and the Member States responded to the "formidable challenge" to which the document referred at the outset, and achieved "the massive change necessary to meet this challenge".

17.14 With those considerations in mind, the previous Committee recommended that the document be debated in the European Committee.

17.15 That debate took place on 9 November 2009, at the end of which the previous Committee resolved:

    "That the Committee takes note of European Union Document No. 13732/09, Commission/Presidency Paper on an operational framework for the EU to promote aid effectiveness; and calls on the Commission and Member States actively to implement its recommendations."[135]

The Commission Communication

17.16 This Communication sets out key developments on aid transparency and accountability at the national and international level and proposes a fourth chapter to the Operational Framework for Aid Effectiveness. It thus completes the process begun by the earlier paper discussed above.

17.17 The EU and other donors made commitments on aid effectiveness including transparency and mutual accountability in the 2005 Paris Declaration and the 2008 Accra Agenda for Action:

—  Mutual Accountability is a process whereby two (or more) partners agree to be held responsible for the commitments that they have voluntarily agreed to. It is one of the EU's four aid effectiveness priorities, and also one of the areas of the Paris Principles on Aid Effectiveness where least progress has been made to date;

—  Transparency is the process of releasing more information on aid flows in order to increase public scrutiny, and is a prerequisite for assessing performance against commitments made.

17.18 The Communication proposes a common EU approach on:

—  making aid more transparent through quarterly reporting following the OECD DAC Creditor Reporting System (CRS) Standard Format.

—  publishing at least three-year and up to five-year forward aid allocations, sector by sector, for all countries of the Fast Track Initiative on Division of Labour and at an aggregate level for all partner countries based on the DAC Survey on Donors Forward Spending Plans.

—  improving the EU Annual Report on Financing for Development.

—  using the TR-AID tool in order to publish and share information.

—  initiating discussions on mutual accountability in countries under the Division of Labour Fast Track Initiative.

—  establishing joint Performance Assistance Frameworks by July 2011 to regularly review donor performance on country level aid effectiveness commitments.

—  supporting the role of civil society organisations to hold governments and donors to account.

—  working with EU Member States towards a common vision on the future of aid architecture following the 4th High Level Forum on Aid Effectiveness in Busan, by July 2011.

The Government's view

17.19 In his Explanatory Memorandum of 24 November 2010, the Minister of State at the Department for International Development (Mr Alan Duncan) describes aid transparency and accountability as top UK priorities. He continues as follows:

    "The Aid Transparency Guarantee, launched by the Secretary of State in June, commits us to full transparency of our aid information, enhancing accessibility and feedback and pushing our international partners to become more transparent. The UK is also a signatory and a leader of the International Aid Transparency Initiative (IATI). IATI was launched at the Accra High Level Forum in 2008 and enables donors to publish information about their aid in a user-friendly, internationally comparable way. 18 donors are signatories, covering approximately two-thirds of EU aid."

17.20 He describes the proposed new chapter to the Operational Framework as an important milestone in integrating international commitments on transparency and accountability into European operational guidance, noting that the alignment of transparency and mutual accountability into a single chapter reinforces the importance and interdependence of each principle, and provides a stronger basis for the operational framework.

17.21 The Minister also strongly supports the essence of the proposals on aid transparency put forward by the Commission:

    "However, we would also like to see a much stronger reference in the Communication to existing processes to improve aid transparency. We have concerns that the proposed content of the chapter does not explicitly address the need to build on and go beyond the minimum CRS standard to deliver aid information that meets all user requirements. It is important that commitments build on existing international initiatives that attempt to extend common standards for publishing aid information such as the IATI."

17.22 There are, the Minister says, also certain elements of the proposed aid transparency commitments which we are unable to implement due to discrepancies between the UK's reporting procedures and the Communication's proposed requirements:

    "Quarterly publication of aid volume and allocation using the CRS standard (Section 7.1, para 1): Whilst the UK plans to publish DFID data on a quarterly basis by January, we are not yet able to publish non-DFID data. We are working with other providers of UK ODA to improve transparency of overall UK aid.

    "Publication of three to five year forward allocations at the sectoral and aggregate level (Section 7.1, para 2): We cannot commit to this as we can only publish this information for years that fall within the current Spending Review period.

    "Mandatory reporting to the new EU TR-AID system from December 2011 (Section 7.1, para 4): The UK will be publishing information in the IATI format and do not want to duplicate publication. We have asked the Commission for assurance that the reporting requirements for TR-Aid will be met by our publication of information to the IATI standard."

17.23 The Minister then goes on to welcome the proposals on mutual accountability. But he notes that the suggested content is currently focused on creating EU donor Performance Assessment Frameworks (PAFs) at the country level "within partner countries priorities and targets", and says that he has three concerns with the proposed EU PAFs that he would like to see addressed:

    "Strengthening existing systems: The PAFs could risk duplicating existing government-led processes. In order for mutual accountability frameworks to be sustainable, it is critical that they are country-led and situated within partner countries' systems such as planning and budget processes. Where country-owned mutual accountability frameworks already exist they should be strengthened.

    "Ensuring that the proposed framework goes beyond the EU: The PAF risks limiting its reach to EU donors only. Wherever possible, an emphasis should be given to extending initiatives to cover all donors present at country-level.

    "Implications of a joint EU framework: We want clarity on whether the proposal suggests that the EU would represent all Member States in country in PAFs and other joint frameworks. The UK wants to ensure that it has the freedom to represent itself in mutual accountability processes, and to be able to enter into mutual accountability agreements without having to obtain the agreement of all Member States in country."

17.24 The Minister concludes by noting that if agreement is reached by Member States, Council Conclusions on this Communication may be agreed at the EU Development Council on 9 December; and that, failing this, Conclusions are likely to be agreed early next year.

Conclusion

17.25 We are reporting this to the House because of its antecedents and the intrinsic importance of the overall Operational Framework and the issues that it addresses.

17.26 For the same reasons we are also drawing it to the attention of the International Development Committee.

17.27 We now clear the document.


126   TheThirdHigh-LevelForumonAidEffectiveness,Accra,2-4September2008;Follow-upInternationalConferenceonFinancingforDevelopment,29November-2December2008. Back

127   See headnote: (29616) 8403/08: HC 16-xxi (2007-08), chapter 1 (14 May 2008). Back

128   Seehttp://www.publications.parliament.uk/pa/cm200708/cmgeneral/euro/080609/80609s01.htmfortherecordofthedebate. Back

129   See headnote: (30544) 8695/09: HC19-xv (2008-09), chapter 10 (29 April 2009).  Back

130   The EU Agenda for Action was adopted by the 20 June 2008 European Council. It sets a number of milestones which willcontributetotheachievementoftheMDGsandprovidesexamplesofEUactionsandsupportaspartofthe commitments already taken by the EU. For example, the health section estimates that the additional finance to reach the health MDGs at € 13,4 billion by 2010 based on the WHO Commission on Macroeconomics and Health's estimations; on the basis that the EU continues to provide 60% of ODA, this would mean the EU would increase its support to health by €8 billion by 2010, almost €6 billion of which would be for Africa. It is to be implemented in application of the European Consensus on Development, the EU Code of Conduct on Complementarity and Division of Labour, the Paris Declaration on Aid effectiveness and the EU commitments on Policy coherence for development. The EU will further ensure that the implementation of the Agenda for Action is fully in line with partner countries' poverty reduction, development and reform strategies. The involvement of the private sector, both in the EU and in the partner countries, is seen as a key element for poverty reduction and for the achievement of the MDGs. For the full text, see http://register.consilium.europa.eu/pdf/en/08/st11/st11096.en08.pdf. Back

131   The Paris Declaration, endorsed on 2 March 2005, is an international agreement to which over one hundred Ministers, Heads of Agencies and other Senior Officials adhered and committed their countries and organisations to continue to increase efforts in harmonisation, alignment and managing aid for results with a set of monitorable actions and indicators. Back

132   TheMDGContractisdescribedbytheCommissionas"alongerterm,morepredictableformofgeneralbudgetsupportthattheEChaslaunchedinanumberofcountriesatthestartofEDF10[which]…..ispartoftheCommission'sresponsetointernationalcommitmentstoprovidemorepredictableassistancetodevelopingcountries":seehttp://webcache.googleusercontent.com/search?q=cache:eTGXDLeBi6sJ:ec.europa.eu/development/how/aid/mdg-contract_en.cfm+%22longer+term,+more+predictable+form+of+general+budget+support+that+the+EC%22&cd=1&hl=en&ct=clnk&gl=ukforfurtherinformation. Back

133   See headnote: (30544) 8695/09: HC 19-xv (2008-09), chapter 10 (29 April 2009). Back

134   Commission Staff Working Paper accompanying the Communication Supporting developing countries in coping with the crisis: 'Aid Effectiveness after Accra: Where does the EU stand and What more do we need to do?' Full text available at http://ec.europa.eu/development/icenter/repository/COMM_NATIVE_SEC_2009_0443_4_Aid-Effectiveness-after-Accra.pdf. Back

135   See http://www.publications.parliament.uk/pa/cm200809/cmgeneral/euro/091109/91109s01.htm for the record of that debate. Back


 
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