EU support to regional integration: Between cuts and 'unfailing’ commitment
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Despite being hit by the current economic and financial crisis, Europe remains a strong advocate and keen supporter of deep regional integration, at home and abroad. In Africa, the arguments for fostering integration are manifold; from building larger markets that can attract Foreign Direct Investments, achieving economies of scale, enhancing competitiveness, to fundamental security considerations. Today there are a host of ambitious integration arrangements among African states, many of them overlapping in space and scope. However the track record is quite disappointing for a variety of reasons. What could the EU do to improve this trend? For decades, the EU has used a combination of instruments to support regional integration in other regions of the world. The instruments in the toolbox ranged from political dialogue, to trade agreements and considerable envelopes of development support at regional level. In Africa, the Caribbean and the Pacific this was translated into the negotiation of Economic Partnership Agreements (EPAs) between the EU and various sub-regions. The EU argued that negotiating and concluding these comprehensive free trade agreements with sub-regions would foster their integration processes, build regional markets to attract more investment. Many opponents have argued the EPAs will do exactly the opposite and further complicate regional integration, such as in West Africa for example where the EU has concluded interim EPAs with individual countries who stood to loose market access, namely Ivory Coast and Ghana. This was also up for discussion at the Potsdam Spring Dialogue that I attended for ECDPM last month, although the debate focussed more on the appropriateness of the European structuralist model of deeper integration for Africa versus a lighter version of regional integration that would be more adapted to realities on the continent. Beyond the trade instruments, the European Commission has been a frontrunner in supporting the regional economic communities by providing sizeable regional indicative programmes funded through the European Development Fund. For many years, these programmes financed both the activities of the economic communities as well as the functioning of their institutions. However, in the recent Trade & Development Communication (a guiding policy document on the future of its trade policy) the EU announces its plans to take a more strategic approach to supporting regional integration. The European Commission intends to do this by addressing regional integration in political dialogue with developing countries and regions and by putting a greater focus on “those regions that show political will and have the capacity to deliver”. It remains rather silent on how it intends to do so. In line with this logic, the European Commission has decided to considerably cut its development support to various African regions in the context of the mid-term review of the European Development Fund, while simultaneously reaffirming its ‘unfailing’ commitment to supporting crucial regional integration projects. For example, the funds for East and Southern African region were halved, the ones for West Africa cut by a third. The main argument used by the European Commission to justify these cuts is the lack of capacity of the African regional economic communities to spend the funds in an effective way. The next months will show how exactly the EU’s new approach to supporting regional integration will take shape. Various scenarios are floating around, but little has leaked from the EC corridors so far. One of the concepts could be to increase support to national envelopes to implement ‘cross-border’ and regional projects. Another idea could be to provide regional support to other regional institutions which are more effective in managing such funds. Some argue that the RECs were never the adequate institutions to be charged with the responsibility of managing EU development funds and are now being unduly blamed for not delivering. At the Potsdam Conference I mentioned before a call was launched to find innovative ways of ‘outsourcing’ to other development partners in the region, who have the capacity on the ground to work on regional programmes, based on concrete needs and bankable projects. Surely, if the EC is changing its approach to supporting regional integration, the question begs of whether EU member states will step in to provide the funds that were cut or whether the African regional economic communities will find alternative ways of financing themselves and their programmes. ECDPM is planning more analytical work on innovative ways of financing for regional integration in the near future. -- Kathleen van Hove is Programme Manager Trade & Regional Integration at ECDPM. This blog post features the authors personal views and does not represent the view of ECDPM.