EU Aid: What is it for?

13 September 2011 18:30 - 20:00 GMT+01 (BST)
Public event
Streamed live online

Debaters:

Baroness Glenys Kinnock - Opposition spokesperson for the Department of International Development in the House of Lords

Simon Maxwell CBE - Senior Research Associate, ODI

Chris Heaton-Harris MP - Member of Parliament for Daventry

Stephen Booth - Research Director, Open Europe

Chair:

Liz Ford
- Deputy Editor, Guardian Global Development website

Description

The European Union (EU) is the world’s largest donor, represented in over 120 developing countries.  It is also the world’s largest humanitarian aid donor, supporting some 18 million people every year in over 60 countries.  Today, the European Commission channels around 18% of all EU aid.

 

This year, in October, the European Commission will publish proposals for a new, modernised EU development policy to render it more focused, relevant, efficient, effective and results-oriented.  But what does this mean in practice?  What is the comparative advantage of EU aid?  Should the European Commission play a greater part in shaping policy and delivering programmes; or conversely, be a coordinator and network manager, facilitating a multitude of donors?  What should EU aid focus on?

 

Join us for a debate on the future role of EU aid, followed by a drinks reception.

Hoare Memorial Hall

1. The Overseas Development Institute (ODI) and Open Europe hosted a panel debate, ‘EU aid: What’s it for?’ Around 120 government officials, academics, consultants, journalists representatives of NGOs attended.  Liz Ford, Deputy Editor of the Guardian’s Global Development website, chaired a panel comprised of: on one side, Baroness Glenys Kinnock, opposition spokesperson for the Department for International Development (DFID) in the House of Lords and Simon Maxwell, Senior Research Associate at ODI; on the other side, Chris Heaton-Harris MP, Member of Parliament for Daventry and Stephen Booth, Open Europe’s Research Director.

 

2. Stephen Booth spoke first and introduced the main findings of the Open Europe report, ‘EU external aid: who is it for?’.  He argued that the European Commission’s (EC) aid policy is ineffective because it is trying to do ‘too many things at once’, sometimes duplicating the work of national governments.  The sheer number of objectives makes it hard to understand what the EC is trying to achieve.  Stephen also stressed the lack of ‘full democratic accountability’ for how EU aid money is spent, and pointed out that only 46% of EU aid reached lower income countries in 2009, with 85% of aid financed from the EU budget currently going to middle income countries ‘which are relatively wealthy in global terms’.  He mentioned the results of DFID’s Multilateral Aid Review (MAR), pointing out that the voluntarily-funded European Development Fund (EDF) scored high, whilst spending through the EU budget, within which aid contributions are effectively mandatory and are traded off against other EU funding priorities, scored low.  As a result, he concluded that national contributions to EU aid spending should be made voluntary, as this would increase accountability to national governments, and by extension European taxpayers.  He argued that the EU should focus on creating a forum for coordination of donors rather than act as a 28th donor.

3. Glenys Kinnock took the floor next, arguing that ‘multilateral action is essential’ to combat poverty.  She insisted that no other agent in the multilateral sphere has the range of resources available to the EU, as well as the voice on trade, the role in foreign and security policy, and the role in tackling climate change.  She argued that the UK has more opportunities to influence development policies at an international level through the EU. To maintain and enhance its influence, the UK must be a full member of the EU and fully involved in all EU aid spending: ‘there’s no such thing as ‘outfluence’’.  She described how the EU consensus reflects both the geographic and thematic priorities of the Member States.  She argued that there have been huge improvements in transparency and accountability, with rigorous scrutiny taking place at all levels.  She referred to DFID’s EU aid review, which showed that the EC performed particularly well on partnership behaviour. She also noted that the EC is strongly committed to the Paris agenda, has a good record of aligning with country priorities and systems to reinforce the country led approach, shows good leadership on donor co-ordination, does not tie its budget support policy conditionalities, and has the capability to engage in joint co-financing arrangements with other donors.  Finally, she talked about the changing landscape of poverty and pointed out that that ‘75% of the world’s poorest now live in middle income countries’.

4. Chris Heaton-Harris agreed with both previous speakers and welcomed Open Europe’s report.  He said that he is a ‘critical friend’ of the EU.  He talked about his years as a member of the European Parliament’s Committees on Budgets and Budgetary Control where he had to deal with cases of waste and fraud involving EU aid money. He also argued, ‘You can never have enough of humanitarian aid’, but ‘Taxpayers deserve to know that they’re going to get value for money’ from EU aid.  He talked about the EU’s high administration costs – 5.4% for the EU budget and 8.6% for the EDF.

5. Simon Maxwell began by stating that ODI is non-partisan, non-political and pragmatic about the issue.  He welcomed the debate but insisted on a debate based on accurate facts, accurate perceptions and accurate analysis.  He welcomed the commitment made to poverty reduction as a global public good, a humanitarian necessity and a moral endeavour; and what Open Europe had said about the importance of aid. He emphasised the part that aid had played in achieving growth and human development in developing countries.  There were, he suggested, some errors and misunderstandings in the Open Europe Report. First, the question needed to be understood not as about ‘the UK versus the EU’, but about choices in multilateral space involving the World Bank and the UN as well as the EU.  Second, he felt that Open Europe was confused about whether aid should target poor people or poor countries:  75% of poor people now lived in middle income countries and it was necessary to make the case for aid to those countries.  Third, he pointed out that aid is heavily constrained by the rules of the OECD Development Assistance Committee (DAC), which require a focus on development and limit diversion to e.g. military purposes.  Fourth, he talked about how the UK has an interest in improving the quality of EU aid and how if the UK withdrew, the average quality might decrease.  Fifth, he gave examples about the things the EU can do that the UK can’t do, such as large-scale infrastructure.  Finally, he called on evidence as to whether the EU was a competent donor, citing various studies of donor rankings, pointing out that in all of them, the EC ranks in the top half.  ‘The EC is not the worst donor ... it is better than the average of European donors and we should celebrate that.’  On making EU aid voluntary, Simon said that our contribution to European development cooperation is, in actual fact, voluntary.  The UK is not forced to contribute, but makes those decisions at the highest level in the context of a voluntary European budget and a voluntary EDF.  He drew comparisons with funding arrangements for the World Bank IDA.  In conclusion, Simon argued that aid recipients are already overburdened with the quantity and demands of donors, a problem which a multilateral approach helps to rationalise. He called for ‘a focus on the real comparative advantage of EU development cooperation, what we can do multilaterally with our friends in Europe that we can’t do bilaterally, how we can combine the support that we give to Europe with the support that we give to the World Bank, the UN and the other international organisations, and then working together to make it better.’

6. Questions and statements from the audience included: accusations of aid lining pockets of corrupt officials; the focus of EU aid which should be on job creation; and the EU’s role in the neighbourhood in particular with the Arab Spring. The point was also made that multilateral aid, including aid through the EC, helped to reduce the proliferation of aid projects and the coordination costs imposed on aid recipients. Finally, it was emphasised by some that making contributions to the EC aid programme voluntary might make it easier for some countries (not the UK) to avoid meeting their overall aid commitments.