Monthly Highlights from ECDPM's Weekly Compass Update, Volume 1, Issue 5 (July 2012)

EU weak on early warning systems for conflict prevention. Weekly Compass, No 114, 22 June 2012 
Although the EU adopted a conflict prevention agenda and has shown a lot of interest in early warning systems, it is struggling with putting this into practice effectively, finds a new report by the NGO Saferworld. Data from two case studies in Africa and Asia show that “there is no shared understanding across the EU of what its early warning system is and what its purpose should be” and that “the EU does not conduct systematic analyses to inform its programming process or political dialogue”. A set of timely recommendations proposed by Saferworld could help the EU to improve its practice so it can tackle the root causes of conflict more proactively once the newly established European External Action Service will be fully up to speed.

Poor countries likely to be hit hard by Euro crisis. Weekly Compass, No 114, 22 June 2012 
A breakup of the Euro zone could cost developing countries around 25 billion EUR in lost trade and foreign investment, according to a new estimate by Oxfam. This amount is equivalent to almost a quarter of the global aid budget and its loss would pose an additional challenge to poor countries. To mitigate the negative effects, Oxfam called on the G20 that met this week to implement a five-point policy programme, which also includes the introduction of a global financial transaction tax. In another recent paper on the same topic ODI provided a set of policy recommendations to developing countries on how to cope with the impacts of the European debt crisis.

Will more money add value to the Joint Africa-EU Strategy? Weekly Compass, No 113, 15 June 2012 
Negotiations on the next EU budget have put the Joint Africa-EU Strategy (JAES) under intense scrutiny. Despite the existing commitment to the strategy on both sides, there is wide consensus that it struggled with delivering on many of its ambitions. One of the reasons for this is the lack of an ad hoc financial instrument. This has prompted the European Commission to propose a 1 billion EUR envelope - the so-called Pan-African Programme (PAP) - to support the implementation of the strategy. While this proposal reasserts the EU’s faith in the JAES, it prompted a debate on its future. In a Briefing Note, ECDPM’s Faten Aggad-Clerx and Nicola Tissi analyse whether this new financial envelope would help to revitalize the strategy and highlight some broader issues EU member states should consider in the negotiations of the PAP.

Private profit for public good. Weekly Compass, No 112, 8 June 2012
As global aid flows stagnate, several development agencies have suggested a dramatic scaling up of public finance devoted to supporting private sector investments. By 2015, the amount of donor support to the private sector is expected to exceed $100 billion – making up almost one third of external public finance to developing countries. A new report by Eurodad assesses grant and loan trends in the portfolios of some of the largest multilateral and bilateral development agencies. It looks at which types of companies are benefiting the most from public aid and how development institutions ensure they support responsible investments that contribute to equitable and sustainable development.

Aid for Trade and innovative financing. Weekly Compass, No 111, 25 May 2012
The aim of the multilateral Aid for Trade (AfT) initiative is to channel aid resources towards interventions enabling developing countries to “trade their way out of poverty”. Since its inception in 2005, the aid context has changed and the international development community is now looking beyond traditional aid, seeking to combine it with ‘innovative’ forms of finance, including greater levels of private funding. A new ECDPM Discussion Paper explores this shift and the relationship between Aid for Trade and such new forms of finance. It finds that AfT is an area that is well-suited to such an approach, and some useful models are emerging in infrastructure or agriculture finance, for instance. At the same time, innovative forms of funding have important policy implications which need to be explored further.

This article was published in GREAT Insights Volume 1, Issue 5 (July 2012).