DEVELOPMENT-EU/ACP: Study Criticises Past Criteria for Allocating EU Aid

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Brian Kenety

BRUSSELS, Apr 9 2000 (IPS) - The European Union (EU) has set out to “rationalise” its overall development policy, in part by shifting aid allocation to need and merit-based criteria in future agreements.

But a recent study argues that since 1975 the interests of EU member states have come first in determining aid to the African, Caribbean and Pacific (ACP) states under the Lomé Conventions, by far the EU’s largest trade and aid agreements.

In the 1990s, the EU executive Commission became the world’s fifth largest donor of development aid. Together with aid from its 15 member states, the EU provides more than 50 percent of all aid going to ACP countries.

However, Dr Susanna Wolf of the Centre for Development Research (ZEF) in Bonn and Dr Dominik Spoden of the London School of Economics say in a 59-page study published this March by the centre that aid levels to the least developed countries has continuously decreased.

This fact is in contradiction “to the (EU’s) statement that poverty reduction is the overall aim of EU aid, as stated in the Maastricht Treaty,” note the authors.

From 1975 to 2000, almost 30 billion euros were committed to the ACP states under Lomé I -IV Conventions. Despite that investment, 39 of the now 71 ACP states still belong to the group of least developed countries. The ACP group includes 75 percent of the world’s least developed countries (LDCs).

“Therefore, one could conclude that the EU has failed to reach its aim of poverty reduction as has been stated in various documents,” write Wolf and Spoden.

The study shows that from 1990 to 1997 countries such as Angola, Ethiopia, Kenya, the Dominican Republic and Tanzania received approximately 10 euros per capita, while Mauritania and some other island states received 77 euro per capita.

“It can easily be seen that EU aid is distributed very unequally to the different ACP countries,” they write. “However, it is not very clear according to what criteria aid is given.”

The authors note that previous analyses of bilateral aid flow show that variables such as the gross domestic product (GDP) of recipients, the human development index (HDI), civil liberties, and size and openness of a country can influence allocation.

But Wolf and Spoden write that although the EU has introduced some conditionality with respect to human rights, democracy and economic reforms, to date “the distribution is still related to long-term relationships with EU member states.

“The performance of a country in terms of civil liberties plays only a minor role in the EU’s aid allocation and factors like openness and the (HDI) play no significant role at all,” they conclude.

The authors argue that the EU should follow World Bank recommendations “that aid be allocated on the basis of poverty and economic management.”

The current European Development Fund (2000-2007), the mechanism through which the EU disburses aid to ACP states, was set at 13.5 billion euros. In real terms, the aid volume will be three percent less than the previous fund.

“The challenge for both the EU and the ACP states to use aid more effectively is even (greater) as the overall amount of EU and other aid is likely to decline at least in real terms, because of aid fatigue and new priorities in Eastern Europe,” they write.

“To meet this challenge, it is not only crucial to rethink the criteria for aid allocation, but also to adopt an integrated approach where the various programmes and projects of development policy are complementary and interlinked,” they say.

It is just as important that “cross-cutting issues such as gender, the environment, institutional development and capacity building are taken seriously,” says the report.

The authors note that the two parties agreed the new Partnership Agreement “will focus on reducing poverty in a way consistent with the ACP countries sustainable development and gradual integration into the world economy.”

Negotiations, that concluded in February, will lead to the signing of the successor to the Lome IV Convention, in Fiji in June. The new trade and aid Partnership Agreement will be known as the Suva Convention.

The EU Commission noted in a recent internal discussion paper that EU development policy “is already to a large degree fully consistent” with the poverty reduction strategies of the Organisation for Economic Co- operation and Development (OECD), the World Bank and the International Monetary Fund (IMF) “in particular with the new Agreement concluded with the ACP states.”

The guiding principles behind these strategies are ownership in the developing countries of their own development processes and increased attention to the social dimension of growth and development.

“Some adjustments are however to be considered, in particular with a view to facilitating complementarity with the Member States’ bilateral policies,” said the EU discussion paper.

The Commission has engaged civil society, EU Member States’ experts, Members of the European Parliament, and relevant multilateral development agencies, non-governmental organisations (NGOs), and the private sector in reaching what we become the Suva Convention.

Wolf and Spoden note that the new convention reflects the EU commitment to engage outside actors, and conclude that greater involvement of “the civil society in various facets of the partnership (political, social, economic and trade) should ensure that their capacities are strengthened.”

At the outcome of a series of evaluations of the development and humanitarian aid programmes managed by the Commission, the Council of EU Development Ministers meeting in May 1999 invited the Commission to draw up a general policy statement on the shape a review of the EU’s aid policies could take.

A number of these recommendations were taken up by the Development Council, which decided to translate them into a general policy statement on development aid. The first draft of the statement is due to be submitted by the Commission to the Development Council in May 2000.

“This is a welcome process. No such statement has existed up to now, and drafting one will allow development cooperation to be set in a strategic framework,” said the Liaison Committee of Development NGOs to the European Union (CLONGS).

CLONGS has chosen the subject for its annual conference this month, and with the Commission will host a conference entitled “The Future of EU Development cooperation” at its Brussels headquarters on April 13.