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EU Development Commissioner and European External Action Office Head outline thinking on future EU Financial Perspectives

11-02-2011

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Below are ECDPM’s informal verbatim notes of this important debate. The speeches are not available anywhere else.

1 February 2011 European Parliament Special committee on the policy challenges and budgetary resources for a sustainable European Union after 2013.

David O’Sullivan, EAS Chief Operating Officer

Piebalgs will give EC view on heading 4 and Financial Perspectives later today to committee

EAS providing inputs to that process

Before summer – EC proposals will be put forward

This programming issue is a big one we’re thinking about.

Piebalgs will say more

How do we face challenges of 21st century with Europe in a shifting lf power from the Atlantic to the Pacific? How to ensure continued European relevance. Scale will count in the 21st century so individual Member States will find it difficult to influence world events, as 27 working collectively we can do better. But involves elements of losing national sovereignty which some will find difficult to do so how do we get that balance, what instruments do we need, how to design better instruments to achieve that purpose. These are challenges as we look at next period.

Have to have evaluation and assessments of shifting priorities. For EU Budget Heading 4 (external relations), can’t predict future, don’t know what next crisis will be and if you’ve programmed your money over 5 years or life cycle of FP, in year 2 won’t have resources if crisis arise. So how to combine what EP would wish for serious intent on programming with necessary flex to face new crisis if can’t add to total sum. That is a challenge for formulating heading 4 in next period.

Civilian crisis management important

Have not gone into it yet in organigramme

Because need additional study

In next few weeks hope to come forward with proposals on how to structure and organize this.

In 10% efficiency gains, will redeploy where new tasks, challenges – whether human rights or development policy (where a horizontal view may need to be developed), etc.

These are administrative and political challenges

Piebalgs

New financial framework must be seen in its new institutional context

Lisbon treaty defines a new framework for EU external relations and sets out objectives. Our new institutional setup with the creation of the EAS is providing EU capability to deliver a truly European approach to external relations. This gives the EU a chance to establish a closer link between the political priorities governing our relations with partner countries and the scope of the assistance we provide.

Further, external spending post-2013 should be aligned to the priorities of the Europe 2020 strategy. The EU’s presence in its network of international agreements with partners all over the world provides enormous potential for stronger efficiency, effectiveness, economies of scale and visibility. The EU has the necessary critical weight to respond to the global challenges such as poverty reduction and climate change. It also has the capacity and credibility that is irreplaceable when it comes to human rights, election observation, governance and crisis resolution. It is well placed to deliver needs-based humanitarian assistance on a global scale whilst respecting the principles of neutrality and impartiality. The EU should use the external instruments in an efficient manner enabling it to project its priorities, values and interests in the world in line with its global economic and political importance. We must cooperate closely with the Member States, strategic partners, and international organisations.

While the bulk of financial resources under heading 4 continue to be targeted at development assistance and neighbourhood countries, our interests go beyond poverty alleviation and regional integration and we need to engage with strategic partners in shaping the future in solving global challenges. The EU needs to equip itself with a long-term political strategy for external action including security elements to guarantee continuity in EU action. Our strategic orientation post-2013 should therefore support the delivery of 6 key aims.

An agenda of eradicating poverty that is integrated with focus on inclusive growth and sustainable development in developing countries.

A special relationship with neighbouring countries with the aim of establishing an area of stability and prosperity and preparing candidate countries for membership.

The new treaty provisions on humanitarian aid, civil protection and migration should be matched with the right legal and financial tools. An agenda based on the EU and mutual interest with industrialized countries and emerging countries with focus on strategic partners.

Modern and effective instruments for dealing with crisis prevention and resolution.

And EU leadership in addressing the major challenges such as climate change, sustainable development and protection of global public goods worldwide.

The treaty has given the EU the mandate to step up its role as a global player. This higher level of ambition needs to be reflected in the level of funding for external action. However, you should I hope understand that the EC is currently reflecting all aspects of the new financial framework and therefore unfortunately for me its too early to give any figures at this stage. The key principles that we believe should underpin our future financial instruments on external action were pinpointed in the last October budget review communication. In a nutshell, they correspond to 3 basic aims. Getting results, seeking financial and political leverage, and striking the right balance.

If we are to focus on results and delivery we must make measuring the impact of our actions a priority. The higher the impact of our actions, the greater the visibility and effectiveness will be.

We also stand to gain in the effectiveness and efficiency stakes by placing greater stress on financial leveraging of resources and on political leverage. We must seek to strike the right balance between predictability and flexibility. And we should address the issue of conditionality to ensure that the aid is matched by improved governance. We should also see whether there is more room for the simplification and streamlining in the structure of our external instruments. This principle should colour our approach to shaping the external action heading.

I will focus here on 4 policy areas which we believe should continue to account for the bulk of external action resources. For my own area I would like to indicate the review of the MDGs and the 0.7% of GNI target by 2015 we must take account of the needs for substantial increase in the overall volume of development assistance at European level with the EU level playing its part. A differentiated approach according to the development level of countries and to ensure political economic considerations would allow us to focus on EU and mutual interests with strategic and emerging countries such as China, India, and Brazil, and from the other side on poverty eradication with the poor or fragile countries. These principles of differentiated approach will help to be imbedded appropriately in the future legislative proposals and in the architecture of future instruments. A reflection on this is ongoing.

The EC has repeatedly proposed the budgetisation of the EDF for reasons of political accountability and democratic scrutiny. For the period beyond 2013 these arguments in favour of EDF budgetisation remain valid. I consider it is important that the EP plays a strong role in cooperation with ACP countries. That said, in the budgetisation debate we must no doubt be able to address and overcome the difficulties posed by the current financial situation which may lead to pressures concerning the overall level of funds for development at the EU level.

In addition to geographically based cooperation, thematic development programmes support actions at global and regional level and support the strategic influence and visibility of the EU. They can provide coherent support to sectoral policies and address priorities not adequately covered in geographical instruments. We see added value in maintaining the current thematic programmes but there is a potential for refocusing the scope by essentially concentrating them on horizontal, global and transnational actions in areas of sustainable energy, climate change, food security, migration to mention a few. We could also consider whether a thematic programme to address the problems related to the fragility of states would be merited. The number of possible actions under thematic programmes could be reduced and we should priorities bigger, strategic, high impact, high visibility actions.

Thirdly, coordinated use of development instruments between the EU and Member States should be improved. By stepping up cooperation on joint programming and division of labour we can make great strides towards bolstering aid effectiveness and visibility of the EU external action.

Fourthly, on growth and leverage, in our green paper on EU development policy the orientation is moving towards scaling up growth oriented investment both public and private. EU development assistance can be catalyst for this. To be able to leverage and multiply resources we need a reinforced partnership with financial institutions including the EIB but also other partners in support of such investments. The use of innovative financial instruments including grant/loan blending and the European platform where cooperation and development to be set up will support this aim.

The political commitment towards candidate and potential candidate countries and neighbouring countries is based on the treaty and has been confirmed by the European Council. Financial assistance to these countries is a direct consequence of this political commitment but it is also an investment in the future of the EU and the stability in the EU’s direct neighbourhood and thus in the own interest of the EU. The structure for implementing enlargement policy is well defined starting with the stabilisation and association process. The current mix of tools has demonstrated its effectiveness to guide the beneficiary countries along their progression towards the EU through political dialogue and aquis-related negotiations. As to the instruments in this area, the instrument for pre-accession should continue to prepare the candidate and potential candidate countries for accession. The European Neighbourhood Partnership Instrument should continue to support economic and political integration and the creation of an area of prosperity and good neighbourliness around the EU borders. The financial resources of the EU need to match its political objectives. Consideration should be given to the possibility of progressive differentiation between countries as in the case for developing countries development cooperation.

Due to rise of natural and man made disasters often compounded by population pressures and increased climate instability, the importance of needs based humanitarian assistance for the most vulnerable populations on the planet is likely to increase. The EU is already the largest provider of humanitarian assistance and therefore a player with global recognition and respect. Humanitarian assistance activities would benefit from greater flexibility. Further work needs to be undertaken to see how to develop the flexibility instrument and the emergency aid reserve. It is worth considering whether the latter should not be equipped with a multi-annual dimension. This would assure the availability of sufficient resources to respond to unforeseeable major disasters in years of particular accumulation of events.

The EU also needs to be better equipped to improve its intervention in crisis and transition situations. The treaty obligation to promote conflict prevention, peace building and international security as an overarching objective of our external action sets out the challenge in this area. One way of developing our instruments further in this area could be to redesign the instrument for stability allowing for flexible operations for short term interventions with a strong link to peace and state building. This would complement humanitarian relief assistance and facilitate linking relief with rehabilitation and reconstruction and CFSP and CDSP security related operations. This would pave the way for more long-term development interventions in particular related to state-building. It could be further considered whether the long-term development component of the instrument for stability could be incorporated into the future development instrument possibly through a programme for fragile states.

Need greater flexibility. This is an area of particular importance to the external relations field given its complex and sometimes fast changing working environment. As already reflected in the EC budgetary review communication, we should aim for greater budget flexibility without undermining the predictability of funds allocated under longer-term strategies. Larger reserves, transfers across headings or transfers of unused margins would be helpful. As would the possibility for uncommitted funds in a given year to be carried over to subsequent years and the freedom to front load or backload spending with the multiannual envelope.

The European Parliament Special committee on the policy challenges and budgetary resources for a sustainable European Union after 2013 aims to adopt it’s final report at the end of February. Amendments can then be tabled. The final report’s adoption by the full European Parliament plenary session is planned for 8 June.

To listen to a recording of the debate, see: http://www.europarl.europa.eu/wps-europarl-internet/frd/vod/player?eventCode=20110201-0900-COMMITTEE-SURE&language=en&byLeftMenu=researchcommittee&category=COMMITTEE&format=wmv#anchor1

For background documents from the EP meeting, see: http://www.europarl.europa.eu/meetdocs/2009_2014/organes/sure/sure_20110201_0900.htm

See also:

Duration of the post-2013 Multiannual Financial Framework. Introduction by Salvador Garriga Polledo, Rapporteur European Parliament Special committee on the policy challenges and budgetary resources for a sustainable European Union after 2013.

http://www.europarl.europa.eu/meetdocs/2009_2014/documents/sure/dv/sure_20101206_3rpmff_/sure_20101206_3rpmff_en.pdf

and

Post-2013 Multiannual Financial Framework: Structure and flexibility

http://www.europarl.europa.eu/meetdocs/2009_2014/organes/sure/sure_20101122_1900.htm

and

Reflection Paper by the Rapporteur on implications of the EU2020 strategy on the post-2013 Multiannual Financial Framework

http://www.europarl.europa.eu/meetdocs/2009_2014/organes/sure/sure_20101028_0900.htm

The 25 January European Parliament Development Committee also discussed its draft opinion to the EP special committee on policy challenges and budgetary resources for a sustainable European Union after 2013. (Watch a recording of the meeting at: http://www.europarl.europa.eu/wps-europarl-internet/frd/vod/search-committees?language=en

http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+COMPARL+DEVE-OJ-20110125-1+02+DOC+XML+V0//EN&language=EN)  Rapporteur Thijs Berman calls for more resources and for them to be focused on fighting poverty. He sees the EC added value in coordinating Member States development cooperation projects and in carrying out large projects such as for infrastructure. Human rights and democracy is also an area of EC added value, he says.

In response to the debate, the EC representative acknowledged that geographical boundaries should be overcome if these weaken political strategies and that this means the EU needs to address Africa more coherently. While the EC is fully supportive of the African continental integration agenda, it is also of the view that the well-established neighbourhood policy justifies implementing different policies in future with separate, but more interlinked instruments, in the case of the neighbourhood policy and development cooperation policy instruments.

The EC representative also stated that while the EC strongly supports that all spending under development related budget lines must target the recipients economic and social development, the would like to see some cautiousness with respect to the “DAC-ability” needs of development-related budget lines given the desired differentiation regarding the changing nature of the partners in the Middle Income Countries and emerging economies it is becoming increasingly important to support the EU policies in their global dimension and this begs for a certain flexibility as regards the “DAC-ability” of the activities he said. He assured that at the same time, the EC favours further pursuit to dedicate 0.7% of GNI by 2015 to ODA and this with a stronger focus on the poorer and more vulnerable countries.

Regarding the Parliament’s proposed amendment for a separate heading for climate change issues, the EC representative said the EC are fully in favour of the future spending of climate action funds to be additional and it must be said that reflection at the EC level is ongoing still on the issue of climate change, but the overarching idea, within at least the External Relations family, is that the cross cutting issues relating to partner countries should primarily be mainstreamed into the geographically based external action and that on the other hand it is true that the climate change is a key global issue and it deserves therefore a separate reflection which might lead to considering the existence of a separate instrument or a thematic programme as part of the development instruments. However, in the EC’s view this would find its place within the external action heading to ensure the coherence within EU actions towards partner countries.

The Parliament’s Special Committee Rapporteur, Salvador Garriga said that it is important to have a quantitative analysis to determine the European added value for development policy to know if development policy should be funded by 27 Member States or if a common fund is more beneficial.

One single community budget effort could improve the situation (it has in the case for research for example), but is that the case for development policy also he asked. This was a relevant question given the restrictions the EU face in negotiations on the Financial Perspectives he said. Priorities for expenditure are needed. Need to know added value of common policy. The Parliament will be negotiating an instrument to negotiate with Member States on the amounts to contribute to that he said.

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onono

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2011-02-16 10:56:22

The Eu should continue to develop a more and more innovative financing mechanism such as the international financing facility that issues bond in the international market to finance infrastructure in Africa with the guarantee from the Eu to cushion the effects of aid volatility and unsustainable debts and balance of payment problems.

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2011-02-11 11:51:58

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