House of Commons - Documents considered by the Committee on 14 December 2011

Documents considered by the Committee on 14 December 2011 - European Scrutiny Committee Contents

5 EU Development Assistance: 4th High Level Forum on Aid Effectiveness

(33126)

13927/11

COM(11) 541

Commission Communication: Proposal for the EU common position for the 4th High Level Forum on Aid Effectiveness, Busan

Legal base —

Document originated 7 September 2011

Deposited in Parliament 12 September 2011

Department International Development

Basis of consideration Minister's letter of 25 November 2011

Previous Committee Report HC 428 xxxviii (2010-12), chapter 5 (19 October 2011); also see (32718) 9334/1/11: HC 428-xi (2010-12), chapter 8 (18 May 2011); (32157) 15915/10: HC 428-xi (2010-11), chapter 17 (15 December 2010); also (30978) 13732/09: HC 19-xxviii (2008-09), chapter 2 (21 October 2009); and (29616) 8408/08: HC 16-xxi (2007-08), chapter 1 (14 May 2008) and (30544) 8695/09: HC 19-xv (2008-09), chapter 10 (29 April 2009)

Discussion in Council 14 November 2011 "Development" Foreign Affairs Council

Committee's assessment Politically important

Committee's decision Not cleared; further information requested

Background

5.1 The eight goals UN Millennium Development Goals (MDGs) that, in 2000, the UN set itself to achieve, most by 2015, are: 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.

5.2 In February 2005, at the Paris High Level Forum on Aid Effectiveness, more than 100 signatories — from donor and developing-country governments, multilateral donor agencies, regional development banks and international agencies — endorsed the Paris Declaration on Aid Effectiveness. It contains 56 partnership commitments aimed at improving the effectiveness of aid; lays out 12 indicators to provide a measurable and evidence-based way to track progress; and sets targets for 11 of the indicators to be met by 2010. The Declaration is focused on five mutually reinforcing principles:

— Ownership: Developing countries must lead their own development policies and strategies, and manage their own development work on the ground;

— Alignment: Donors must line up their aid firmly behind the priorities outlined in developing countries' national development strategies;

— Harmonisation: Donors must coordinate their development work better amongst themselves to avoid duplication and high transaction costs for poor countries;

— Managing for results: All parties in the aid relationship must place more focus on the end result of aid, the tangible difference it makes in poor people's lives; and

— Mutual accountability: Donors and developing countries must account more transparently to each other for their use of aid funds, and to their citizens and parliaments for the impact of their aid.[14]

5.3 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 upcoming Third High Level Forum on Aid Effectiveness and the Doha meetings 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.

5.4 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.[15] That debate took place on 9 June 2008.[16]

5.5 In September 2008, 1,700 participants including more than 100 ministers and heads of agencies from developing and donor countries, emerging economies, UN and multilateral institutions, global funds, foundations, and 80 civil society organizations attended the Third High Level Forum on Aid Effectiveness hosted by the Government of Ghana (HLF3). HLF3 reviewed progress on the implementation of the Paris Declaration and conducted an analytic overview of major "workstreams" intended to take stock, share experience, and disseminate good practices.

5.6 The Accra Agenda for Action (AAA), adopted in Accra on September 4, reflected international commitment to support the reforms needed to accelerate an effective use of development assistance and help ensure the achievement of the MDGs by 2015, focussing the aid effectiveness agenda on the main technical, institutional, and political challenges to full implementation of the Paris principles.

5.7 In the spring of 2009, the theme of the pre-May "development" Council "April Package" was supporting developing countries in coping with the economic crisis. The Commission Communication set out how it 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.[17]

5.8 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. He said that the Commission had rightly identified the sheer scale of the challenge in meeting the MDGs, 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."[18]

5.9 The then Minister also said that while the Commission had improved its aid predictability through the MDG Contracts,[19] the UK wanted the Commission to encourage Member States to join the International Aid Transparency Initiative, as a way of meeting their commitments to aid transparency (as lack of aid predictability increased costs by 15-20%).[20]^,[21]

5.10 In October 2009,[22] the previous Committee considered a further paper, An Operational Framework for the EU to Promote Aid Effectiveness, which looked ahead to the Fourth High Level Forum on Aid Effectiveness (HLF IV), in Busan, South Korea, in November 2011. The paper said:

"[T]he 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."

5.11 The previous Committee noted that "effectiveness" is generally understood as the capacity to achieve the results desired; and that, on this basis, it was plain that, notwithstanding all that had gone before — especially the Paris Declaration and the Accra Agenda for Action[23] — 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". With those considerations in mind, the previous Committee recommended that the document be debated in the European Committee.[24] That debate took place on 9 November 2009, at the end of which the Committee resolved:

5.12 Then, last November, the Committee considered the Commission Communication that completed this process. That Communication set out key developments on aid transparency and accountability at the national and international level and proposed a fourth chapter to the Operational Framework for Aid Effectiveness.

5.13 The Communication proposed 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.

5.14 In his Explanatory Memorandum of 24 November 2010, the Minister of State at the Department for International Development (Mr Alan Duncan) welcomed the proposals, noting that the alignment of transparency and mutual accountability into a single chapter reinforced the importance and interdependence of each principle, and provided a stronger basis for the operational framework. He also made a number of detailed comments on various technical aspects, all of which seemed to be well-made while not raising serious issues.

5.15 In clearing the Communication, we reported it to the House because of its antecedents and the intrinsic importance of the overall Operational Framework and the issues that it addressed; and for the same reasons also drew it to the attention of the International Development Committee.[26]

The April Commission Communication

5.16 This year's "April or Spring Package" Communication and its annexes[27] — the cornerstone of discussion at the May "Development" Foreign Affairs Council — took this process a step further. It focused on the EU and Member States' performance in fulfilling common ODA commitments in particular, but also on: mobilising domestic resources for development; increasing trade capacity and investment; innovative sources and mechanisms of financing; aid effectiveness; debt; climate finance; and global development governance.

5.17 The Communication recapped proposals on how to reach common EU targets, considered how to bridge the estimated €50 billion gap between current ODA levels and the target for 2015, and provided a basis for the Council report to the European Council for the annual ODA peer review discussion on how to meet the EU ODA targets by 2015. It is summarised in more detail in our Report of 18 May 2011, with the Commission recommendations in the Annex of that chapter of our Report.[28]

5.18 The Parliamentary Under-Secretary at the Department for International Development (Mr Stephen O'Brien) described this year's "Spring Package" as a highly welcome contribution to improving EU transparency and accountability. He noted that the Government had supported the Commission's work throughout the process, with the documents clearly showing Member States' performance against their own targets (especially regarding ODA), identifying gaps and holding Member States to account. The Minister hoped that this would increase internal peer pressure and ultimately contribute to the achievement of EU targets.

Our assessment

5.19 We felt that the Commission's analysis and the Minister's comments spoke for themselves. Given the importance of the "aid agenda", we drew them to the attention of the House, but were otherwise content to leave it to Members to follow these matters up via the many means at their disposal.

5.20 As on previous such occasions, we are also drew this "Spring package" to the attention of the International Development Committee.[29]

The Commission Communication

5.21 The 4th High Level Forum (HLF 4) on Aid Effectiveness will be held in Busan, Republic of South Korea, from 29 November to 1 December 2011. The objective is to assess progress against agreed international aid effectiveness commitments — namely the Paris Declaration in 2005 and Accra Agenda for Action in 2008 — review the aid effectiveness agenda, and link it with the wider agenda on development financing. The focus is on improving development results in the context of new global development challenges and partnerships, including how to respond to the new emerging economies engagement on the Global Development stage.

5.22 The Commission says that:

— the previous High Level Forums added principles, concrete commitments and a monitoring framework to strengthen the reform;

— the objective of the 4th High Level Forum is to assess progress against agreed commitments, review the aid effectiveness agenda and link it with the wider agenda on development financing;

— the focus is on supporting strengthened development results in the context of new global development challenges and partnerships, including the engagement of emerging economies;

— HLF4 should not duplicate the international agenda on Financing for Development but focus on the added value of aid effectiveness in reducing poverty and achieving the Millennium Development Goals by 2015.

5.23 The Commission then set out a proposal for an EU Common Position for Busan, including possible future aid effectiveness commitments. Key themes include:

— ownership;

— transparency and predictability;

— reduced fragmentation and proliferation;

— alignment;

— accountability for results; and

— countries in fragile situations.

5.24 On Ownership, the Commission says donors should provide their capacity development support according to local priorities, context and capacity and use sectors as the primary entry point for joint approaches; and that partner countries should, with the support of donors:

— commit to strengthen democratic ownership;

— institutionalise inclusive and results-oriented multi-stakeholder dialogues;

— safeguard the active participation of groups often excluded from decision-making, particularly women;

— reaffirm their commitment to capacity development as one key element for ownership;

— agree to seek approaches that balance results orientation and long-term capacity development;

— commit to continued leadership in country system reforms;

— work together towards harmonised and results-based conditionality.

5.25 On Transparency and Predictability, the Commission says donors should:

— commit to develop internal systems which allow for multi-year budgeting of development cooperation;

— adapt a global reporting standard based on IATI and the Development Assistance Committee (DAC) Creditor Reporting System; develop and implement mechanisms which align aid data standards with partner countries' budget classifications;

— disclose all country-specific information of the DAC forward spending; and

— exercise, including more detailed information at sector level.

5.26 On Partner country commitments on transparency as integral parts of democratic ownership and accountability commitments, the EU should send a strong political message on EU leadership on transparency by launching an "EU Transparency Guarantee" based on the existing transparency commitments adopted in the EU Operational Framework on Aid Effectiveness.

5.27 Regarding reducing Fragmentation and Proliferation, the Commission says that the Paris and Accra commitments have not fully addressed the political nature of division of labour, while partner countries have not been able or prepared to lead in determining the optimal roles of donors. Therefore, in Busan, donors should commit to:

— proceed further with concentration and division of labour while recognising that political decision making is essential for success;

— move from individual country strategies towards joint assistance strategies among those donors that have the political will to work together; and

— avoid further proliferating vertical funds and instead use and strengthen the existing channels.

5.28 Donors and partner countries should promote a global high-level debate on cross-country division of labour based on the DAC's analytical work on fragmentation and forward-looking plans, also addressing under-funded countries.

5.29 On Alignment, donors should reaffirm their current commitment to:

— align with the partner countries' national development plans; and

— use and strengthen, together with partner countries, country systems for all aid modalities for more effective institutions and policies.

5.30 On Accountability for results, at Busan the ability to measure and report result should be at centre stage. Partner countries and donors should deepen their accountability for development results by committing to:

— increased investment in developing the statistical capacity of partner countries, including through the initiative Paris21;[30] and

— strengthening partner countries' monitoring and evaluation capacities to track development results;

— transparent reporting on development results using partner countries' assessment frameworks; and

— the universal use of mutual accountability frameworks tailored to country contexts to monitor progress on commitments and results and strengthen results-based decision-making for aid investments.

5.31 Concerning Countries in fragile situations, the Busan outcome should:

— recognise and support the work of the International Dialogue on Peacebuilding and Statebuilding, and the growing leadership of the g7+ countries by endorsing the Monrovia Roadmap on Peacebuilding and Statebuilding as a framework for defining and measuring results in fragile States;

— endorse the DAC guidance on state building, transition financing and risk management in fragile situations; and

— call upon donors to adapt their procedures for decision-making, funding and implementation to the specific challenges of situations of fragility.

5.32 The Communication also covered the role of emerging economies, civil society and the private sector, and considers future aid effectiveness governance and monitoring.

5.33 In his Explanatory Memorandum of 27 September 2011, the Minister (Mr Stephen O'Brien) professed himself broadly content with the proposals in this Communication, and said that "while reaffirming Paris principles the overall aim for Busan should be to enable a high level of ambition to support development results.[31]

5.34 The Minister described the top UK priorities for Busan as:

— getting better results for the world's poorest and the UK taxpayer;

— increasing aid transparency;

— improving effectiveness in fragile and conflict-affected States; and

— engaging emerging powers.

5.35 Noting that each of these is covered in the proposed EU position, the Minister said he the Government would be seeking to ensure ambitious commitments in these areas at Busan; that he supported the proposals in the Communication to strengthen methods of tracking, measuring and reporting development results; and was "working to achieve a strong emphasis on results as the overarching theme for Busan in the common EU position."

5.36 The Minister also noted that the recent evaluation of the Paris Declaration "highlighted the importance of transparency for aid effectiveness". He described the UK as a leader in this area internationally and welcomed the proposal in the Communication for Busan commitments on transparency based on the International Aid Transparency Initiative (IATI). He was "working for a strong EU position on transparency for Busan, urging others to commit to publishing data compatible with IATI standards."

5.37 On the matter of fragile and conflict-affected states, the Minister said:

Fragile and conflict-affected states

5.38 The Minister then said that he:

fragmentation

aid that comes in too many small slices from too many donors, creating high transaction costs and making it difficult for partner countries to effectively manage their own development. We agree on the importance of better coordinated aid and the move toward joint assistance strategies where appropriate, but believe that any harmonisation and division of labour initiatives must be country-led, shown to add value, and based on existing in-country coordination mechanisms. Furthermore, any such processes should be voluntary, reduce bureaucracy and open to all donors. We are working to ensure that any commitments in this area made in Busan reflect this approach."

5.39 By contrast, the Minister agreed with the proposal in the Communication that the way the international community monitored and evaluated the effectiveness of aid should be simplified after Busan; and also supported the proposal that future implementation should be focused at the partner-country level.

Our assessment

5.40 The emphasis on results in both the Commission and the Minister's views was notable and commendable. But it also suggested just how much still had to be done before the link between the large sums of money being spent and the outcomes is fully demonstrable, and able to provide the UK and European taxpayer with reassurance that the money they provided was achieving what they and everyone else wanted in as effective a way as possible.

5.41 The immediate questions arising from this Commission were: to what extent would the prospective Council Conclusions reflect the Commission's and the Minister's approach; and what the outcome of HLF4 would actually be.

5.42 We accordingly asked to hear from the Minister about the first of these after the November "Development" Foreign Affairs Council, and the second after the Busan meeting, with his views on the extent to which the Council Conclusions beforehand, and the Busan outcome, reflect UK objectives.

5.43 In the meantime, we retained the document under scrutiny.

5.44 We are also drew it to the attention of the International Development Committee.[32]

The Minister's letter of 25 November 2011

5.45 The Parliamentary Under-Secretary at the Department for International Development (Mr Stephen O'Brien) attaches the Council Conclusions to his letter,[33] and draws the Committee's attention to a number of specific areas, as follows:

"We welcome the inclusion of the UK's priorities for Busan — results, transparency and fragility — in the key messages of the EU Common Position, and the recognition that achieving sustainable development results is the overall objective of the aid effectiveness agenda. We also welcome the prominence given by the EU to achieving a broader development partnership in Busan, notably with the emerging economies, in our common pursuit of development results. We are now working to ensure these key messages are taken forward and reflected in the outcome from Busan itself.

results

transparency

fragile and conflict-affected countries

"We concur with the EU position that we should look for opportunities to address the issue of fragmentation which creates high transaction costs and difficulties for developing country partners to manage their own development effectively. There is a clear value for money rationale in greater EU coordination at country level. However, our view is that the EU approach needs to be country-led, pragmatic, flexible and open to others who are willing to align around partner country led dialogue and coordination.

"The UK has made it clear to the EC and Member States from the outset that this process should not be led from Brussels — there is evidence that this increases transaction costs in partner countries, Brussels and donor headquarters. Moreover, any such initiatives should be respectful of EU Member States' sovereign decisions on where and at what level to provide aid. We also welcome the clear EU position on streamlining global aid governance and monitoring. We are working with others to ensure this is reflected in the final Busan outcome.

"In addition to preparations for Busan in the EU, the UK has also been working through other channels for a successful outcome at the High Level Forum. Notably, we have secured a place on the small group of high-level "Sherpas" selected to take forward final negotiations on the Busan Outcome Document. We are working very closely with members of that group, as well as other constituencies (donors and developing countries alike) to continue to push for effective outcomes from Busan reflecting the priorities set out above. We are seeking common ground with a range of development actors to bring about a partnership that is truly broader and more inclusive than ever before, committed to shared principles and common goals for better development results."

Conclusion

5.46 ^{We are grateful to the Minister for
this "interim report". We look forward to hearing},^{in due course},^{his assessment of the outcome of the
4th High Level Forum, and}especially of the extent to which it achieved what he is seeking, viz.,

— effective outcomes reflecting the priorities outlined, including reaching a partnership with a range of development actors "that is truly broader and more inclusive than ever before, committed to shared principles and common goals for better development results";

— ambitious commitments on getting better results for the world's poorest and the UK taxpayer, increasing aid transparency, improving effectiveness in fragile and conflict-affected States, and engaging emerging powers.

5.47 In the meantime, we shall continue to retain the document under scrutiny.

^5.48 We are also again drawing this chapter of our Report to the attention of the International Development Committee.

14 For full information on the Paris Declaration, see http://www.oecd.org/dataoecd/11/41/34428351.pdf. Back

15 See headnote: (29616) 8408/08 HC 16-xxi (2007-08), chapter 1 (14 May 2008). Back

16 ^{TherecordoftheEuropeanCommitteedebateisavailableathttp://www.publications.parliament.uk/pa/cm200708/cmgeneral/euro/080609/80609s01.htm(S}tg^CoDeb^{,EuropeanCommitteeB,9June2008cols3}-^22). Back

17 ^{Seeheadnote:(30544)8695/09:HC} ¹⁹-^xv(2008-^{09),chapter10(29April2009).} Back

18 The EU Agenda for Action was adopted by the 20 June 2008 European Council. It sets a number of milestones which will contribute to the achievement of the MDGs and provides examples of EU actions and support as part of the 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

19 The MDG Contract is described by the Commission as "a longer term, more predictable form of general budget support that the EC has launched in a number of countries at the start of EDF 10 [which] ….. is part of the Commission's response to international commitments to provide more predictable assistance to developing countries": see http://ec.europa.eu/europeaid/what/millenium-development-goals/contract_mdg_en.htm for further information. Back

20 IATI consists of a set of aid information standards; an online registry of published data; and a governance and advocacy process that builds the case for transparency across the aid sector. For full information, see: http://iatistandard.org/. Back

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

22 See (30978) 13732/09: HC 19-xxviii, (2008-09), chapter 2 (21 October 2009). Back

23 See http://ec.europa.eu/development/icenter/repository/COMM_NATIVE_SEC_2009_0443_4_Aid-Effectiveness-after-Accra.pdf for further information on the Commission's views on EU aid effectiveness issues, post the Accra 2008 Aid Effectiveness Summit. Back