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Beyond symbolic progress: UK contribution to EU development aid until 2020

22-01-2018

Emmanuel de Groof, Andrew Sherriff. ECDPM blog, 22 January 2018.

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The joint report on the negotiations between the European Union and the United Kingdom, published last month, closed the first phase of the Brexit negotiations. One of the thorniest issues was the financial settlement, known as the ‘Brexit bill’. The report gives more insight on what Brexit might mean for EU development funds until, at least, the year 2020. 

The Brexit bill also looked into the UK’s contribution to EU development aid. On 15 December the Council of the EU agreed that ‘sufficient progress’ was made in the first phase of the negotiations and, five days later, published the guidelines for phase 2 of the negotiations. These are significant steps, although they do not completely exclude the possibility that the negotiations will crash altogether (Brexit without deal) or that a withdrawal agreement may be rejected in another referendum (no Brexit).


Until 2020


If the joint report is implemented, and notwithstanding the caveats just expressed, we can expect two main outcomes:

One: The UK will remain party to the European Development Fund (EDF) until 2020 and will honour its commitments under this instrument (thus contradicting earlier points apparently made during the negotiations). The EDF is the off-budget €30.5 billion financial instrument contributing to “poverty eradication, sustainable development and the gradual integration of the Africa-Caribbean-Pacific countries into the world economy”, as the Cotonou Partnership Agreement puts it. The current EDF is the 11th in a row and covers the budgetary period until 2020. Yet, its effects and implementation may go beyond 2020 and, eventually, well beyond the end of March 2019, when the UK is scheduled to leave the EU.

Two: The UK will honour its contribution to the EU budget including the external financing instruments that are covered by the annual budgets for the years 2019 and 2020 under the current Multiannual Financial Framework (MFF). These instruments include the Development Cooperation Instrument (€20 billion) as well as the European Neighbourhood Instrument  (€15 billion)  (on-budget development policies). Also in this case, projects financed by them may be implemented well beyond the scheduled end of the Brexit process in March 2019.


Future collaboration on development policies during and after a transition


While the negotiations are  ongoing, the UK is a member of the EU still represented in the various configurations of the Council, notably the Foreign Affairs Council, where development issues are discussed, but also more prosaically the Committee on Development (CODEV) and EDF committees. This will, most probably, not be the case anymore after March 2019. The modalities of EU-UK collaboration on development issues should, therefore, be conceptualised and mapped out as of now. How, if at all, will the UK be involved in the governance of EU development projects and resources in which it is involved in financing once Brexit takes effect is currently not clear.

If foreseen by the withdrawal agreement, a transition period will run from April 2019 until December 2020. The 11th EDF, just as the current MFF, is scheduled until then. During the 21-month transition, the UK will, in principle, lose its decision-making power within the EU. The joint declaration, however, mentions that “the UK and the Union will agree on governance arrangements in the second phase, that take into account the continued participation of the UK in the 11th EDF”.

The Council directives also leave the door somewhat open for the UK’s participation during the transition, albeit without voting rights. The “exceptional attendance” of the UK is only possible upon invitation and when the EU deems it relevant. As the off-budget EDF is however dispensed from several on-budget control mechanisms – including parliamentary validation – it may allow the UK to be somehow involved in the governance of EDF development aid, perhaps beyond being a mere observer upon invitation, during the transition period.


After 2020


Several projects based on the EDF and the MFF, and agreed before 2020, could continue to be implemented after 2020. However, some uncertainty remains on the nature and functioning of EU-UK collaboration, perhaps co-financing, in the field of development after 2020.  The September 2017 UK paper outlining future collaboration with the EU covering the development sector was short on detail or commitments though did leave considerable room for creativity. Yet this ambiguity results not only from the fragility of the negotiations and the volatile political situation in the UK. The context is much broader than that.

The entire EU development architecture will soon be under revision. The  ACP-EU negotiations about a post-Cotonou order have just started.  Additionally, ongoing negotiations about the Multiannual Financial Framework – linked to the debate about a single financing instrument for development – will gain momentum after a Commission proposal scheduled for May 2018. Unless it is decided to merge development-related external financing instruments into one, the distinction between on-budget and off-budget instruments may become important for potential EU-UK collaboration in the field of development after 2020. Yet the EU’s enthusiasm in making special concessions to the UK (on an off-budget instrument, for instance) – that may or may not be taken up by the UK – is low.


Anticipating all scenarios


Against this background, the real challenge is to anticipate a variety of scenarios. In the coming months, ECDPM will contribute to outlining potential co-governance, coordination or information-sharing mechanisms on the (further) implementation of development collaboration during and after a transition. We are currently working on a ‘choice matrix’ that will allow to assess the potential EU-UK collaboration. This analysis will take into account developing countries, who are directly concerned by the outcomes of EU-UK negotiations (in a few cases, 70% of their gross national income (GNI)  derives from development aid). Until 2020, EU money for developing countries in principle will not decrease because of Brexit. After the transition, the future of the African, Caribbean and Pacific (ACP) group of states and other developing countries will also be impacted on how they wish to renegotiate their relations with the EU (in the post-Cotonou order) and with the UK (in the post-Brexit order), and what space and innovative solutions are feasible within this.


Progress not just symbolic


As the Council leaves the door somewhat open for the UK’s involvement during a transition, a hard Brexit for EU development in the short run could be somewhat avoided. It is still unclear how collaboration will unfold after the transition. Much depends on the second phase, during which “an overall understanding on the framework for the future relationship of the Union with the United Kingdom should [also] be reached”. This relationship will directly influence the international development landscape and related dossiers of direct relevance for the EU, the UK, such as trade, agriculture, migration and security. In the meantime, one can only take note of the agreement (reached in the joint report) that the UK will continue contributing financially including to development instruments as if it were in the Union until 2020. This is how, in a rather sibylline way, ‘sufficient progress’ was made during the negotiations. Yet, in light of the EU-UK’s agreement for the UK to continue contributing to development instruments, and the possibility of some form of collaboration during a transition, progress is not merely symbolic. The big question, however, about the depth and breadth of EU-UK collaboration in development sphere post-2020 remains very open.


The views expressed are those of the authors and not necessarily those of ECDPM.

Photo courtesy of Number 10 via Flickr.

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