Development & Aid, Europe, Headlines

DEVELOPMENT: EU Spends Most Aid on Itself

Stefania Bianchi

BRUSSELS, Mar 12 2004 (IPS) - A new report shows where most aid from the European Union is spent on itself.

The report from the European Commission, the executive arm of the European Union (EU), shows that in 2002, donors spent more resources on administrative overheads (3.1 billion dollars) than on basic health and education in poor countries – to which 2.7 billion dollars were allocated.

“We have been talking about coordination of aid policies and procedures at the EU level since 1974,” EU aid chief Poul Nielson said at the launch of the report Thursday. “It has been 30 years of good intentions. It is now high time to act on our intentions. We owe it to our partner countries to simplify development aid management and we owe it to our taxpayers to make the best of the funds that are available to us.”

The Commission report says most member states insist on applying their own national procedures when they manage their development aid in recipient countries, which means that the recipient countries are faced with a multitude of different reporting requirements.

“This is imposing an administrative burden on these countries which is at times crippling their already weak administrative capacity,” Nielson said. “We now need to move to action.”

The Commission is proposing a common legal framework for aid implementation procedures. Nielson says this could apply to implementation of bilateral aid as well as European Community aid. “It would be a radical way to do away with the parallel implementation of systems we currently work with.”

Other suggestions in the report include improving the coordination of multi- annual programming and analytical work, and outlining local EU action plans for coordination and harmonisation in partner countries where two or more EU donors have a cooperation programme.

Nielson said that the Commission would also table a proposal soon for the full untying of Community aid to deliver more “efficient aid”.

But the European Commission needs to set an example first, says ActionAid, a Britain-based non-governmental organisation (NGO).

“It is untenable for the Commission’s discourse to be strongly in favour of aid untying whilst at the same time issuing contracts requiring all goods for EC (European Community) funded projects to be purchased in EU countries without any regard for principle or practicality,” Louise Hilditch from ActionAid told IPS.

Institutions responsible for new legislation to untie aid should adopt the measures “as a matter of urgency,” she said.

The EC report shows an overall increase in aid. It says that the “EU as a whole remains firmly on target to significantly increase its official development assistance (ODA) by 2006.”

Based on current forecasts and road maps, the EU aid budget will increase from 38.6 billion dollars (31.5 billion euros) in 2004 to 47.2 billion dollars (38.5 billion euros) in 2006. That figure would represent 0.42 percent of the EU’s gross national income (GNI).

The EU has pledged it will “examine the means and time frame for each EU member state to reach the UN target of 0.7 percent ODA of GNI, with an intermediary target of 0.39 percent by 2006, by which year the member states should reach the target of at least 0.33 percent of GNI individually.” According to figures released Thursday (Mar. 11), the EU is set to exceed these targets.

“While we welcome the progress on aid levels, we consider that the EU should not lose sight of the 0.7 percent target which is of course, the original commitment,” Hilditch said.

“The Commission’s proposals are a good starting point for realising this progress and we believe that even if all the member states are not fully on board with the approach, that should not prevent those member states who are committed to maximising their effectiveness from proceeding,” she said.

Nielson said enlargement of the EU in May “would not jeopardise these targets. All accession countries have started to make the transition to becoming donors.” The accession states gave aid worth 0.03 percent of their GNI in 2002 on average. This commitment is expected to rise to 0.11 percent by 2006.