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
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| Legal base | —
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| Document originated | 5 November 2010
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| Deposited in Parliament | 11 November 2010
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| Department | International Development
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| Basis of consideration | EM of 24 November 2010
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| Previous Committee Report | None; 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)
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| To be discussed in Council | 9 December 2010 Development Council
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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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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