By IPS Correspondents
BRUSSELS, Jul 14 2007 (IPS)

Anti-poverty campaigners are concerned that a new European Union proposal for improving development aid may not result in sufficient extra money for health and education in poor countries.

Officials in the European Commission, the EU’s executive branch, are mulling the idea of introducing a ‘contract’ with aid recipients to help them meet the United Nations Millennium Development Goals (MDG) of deep cuts to extreme poverty by 2015.

While the concept of an ‘MDG contract’ has been applauded by campaigners, many of them are uneasy about how the Commission is considering using it to finance measures with a less tangible link to the actual goals.

The eight MDGs are primarily focused on health and education; they include targets for tackling AIDS, malaria, tuberculosis, and infant mortality and for achieving universal access to primary schooling. Yet a paper being assessed by the Commission indicates that the MDG contract could be tailored to entice firms to invest in or to bolster the transport and energy infrastructure of poor countries.

Sasja Bökkerink, policy adviser to the Dutch organisation Oxfam Novib, said that it is essential the paper should be revised so that it has a sharper concentration on such pressing issues as addressing the shortage of doctors, nurses and teachers in poor countries. Oxfam has calculated that more than four million extra doctors and two million teachers must be hired to address extreme hardship.

Bökkerink pointed out that there is disproportionate emphasis on transport and infrastructure in a series of related aid plans known as country strategy papers (CSPs) that EU officials recently drafted for Africa, the Caribbean and the Pacific. The MDG contract, she argued, should ensure that the officials’ attention is turned more towards paying school and health workers.

“Of course, we agree that investment climate, infrastructure and energy are important,” she told IPS. “But it’s quite clear that within the European Commission, there’s a focus on issues other than health and education. If you look at the CSPs, there is a huge focus on transport and infrastructure. Health and education are almost absent.”

The MDG contract is expected to be formally unveiled by the Commission in the autumn.

According to the Commission’s paper, it would represent “an improved and innovative approach” to general budget support, in which development aid is channelled directly to the treasuries of recipient countries, rather than allocated for specific projects only.

The paper says that this is in line with commitments by the Commission and EU governments to “develop new, more predictable and less volatile aid mechanisms.”

Under present arrangements, EU-financed budget support typically lasts for three years. But the paper recommends this should be extended to six years under an MDG contract “based on a signed and binding long-term financial agreement.”

The paper states that the contract could be used to finance “long-term recurrent cost commitments, such as teachers’ and nurses’ wages.” Yet it also makes clear that its results should not be “exclusively in health and education,” with an annex to the paper opening the possibility that infrastructural and investment issues could be taken into account.

To be eligible for the contract, recipient governments would have to have already shown progress towards achieving the MDGs, as well as undertaken reforms to their management of public finances. The paper says that at least 10 poor countries would be likely to qualify for the contract, according to a preliminary analysis, but it does not name the countries concerned.

Frazer Goodwin from the European Public Health Alliance criticised the Commission for only offering the contract to countries that are already deemed to be good performers in eradicating poverty. Needs can often be more acute, he said, in ‘failed states’ such as those struggling to cope with the legacy of war.

“We’d welcome an initiative that tries to achieve better financing for health in the long-term predictable fashion essential to deliver the MDGs,” he said. “But we don’t think this initiative is sufficient in itself. If you look at the ability of recipient countries to deliver their side of the bargain, those countries in the most difficult situations are always going to be unable to fulfil their criteria.”

Although rules covering the EU’s budget require the Commission to allocate 20 percent of all development aid to basic health and schooling, the proportion of assistance actually going to these sectors has shrunk. In 1996, 7 percent of aid administered by the Commission went to health but this fell to 5 percent in 2005.

“The Commission has its hands tied a bit,” said Goodwin. “It has its budget capped for development assistance. This means it has to do more to ensure what it does spend is largely targeted towards social services, especially health.”

An EU official said that the idea of the MDG contract had arisen after the Commission had learned from some ministries of finances that they do not use budget support to hire doctors and teachers because aid had been short term. “The idea of the MDG contract is to give countries greater certainty, thus making them more confident that they can count on these resources,” added the official, who was speaking on condition of anonymity.

The official admitted that money paid to the treasury would by definition be general and that it would be difficult to track how much EU aid ends up in schools or hospitals. “This aid would be mixed with that of other donors,” the official added. “We don’t care if it is our money that finances a school. What really matters is the actual results that policies achieve.”

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