The mid-term reviews of the NDICI and MFF: Navigating geopolitical consequences of the war in Ukraine

The EU is currently reviewing its financial instrument for neighbourhood, development and international cooperation (NDICI-Global Europe) and its long-term budget, the so-called Multiannual Financial Framework. While only halfway through their implementation, the stakes and challenges associated with both reviews are high, as these processes will be pivotal in identifying new priorities and budgetary needs for the years to come. 

Three intertwined processes running in parallel 

It seems like the Multiannual Financial Framework (MFF) and the NDICI-Global Europe instrument were adopted in a different era – in December 2020 and June 2021, respectively. The geopolitical and economic context has radically changed since then due to a succession of mutually reinforcing global crises – from climate change and the COVID-19 pandemic to the impact of the Russian war in Ukraine – and the global instability these have triggered.

Over the next few months, three important processes will be running in parallel to assess the NDICI-Global Europe and the MFF – the interplay of which will have a strong bearing on the EU's international and development cooperation efforts in the years to come:

• The mid-term review of NDICI-Global Europe occurs halfway through implementation and is essential in (re)assessing the instrument's progress, objectives, and achievements for the remainder of the programming period;
• The mid-term evaluation of NDICI-Global Europe complements and feeds into the mid-term review by providing a deeper evidence-based analysis of the instrument’s efficiency, relevance, coherence and potential areas of improvement for future external instruments after 2027;
• The mid-term review of the MFF is a broader exercise that offers an opportunity to adapt the EU's overall budgetary priorities in response to emerging challenges and changing circumstances. The revision process involves negotiations among the EU and member states to adjust internal and external funding priorities and reallocate resources accordingly for the remainder of the financial cycle.

All three processes should, in principle, be completed by the end of the year with subsequent financial and political decisions to follow in 2024.

Assessing progress, identifying new priorities and allocating remaining resources

The first objective of the NDICI-Global Europe mid-term review is to assess whether the EU programming documents adopted at the end of 2021 – the so-called Multiannual Indicative Programmes, or MIPs – are still relevant. The review will look at the progress made on jointly agreed priorities with partner countries as well as their capacity to absorb and spend financial resources and overall performance in delivering outputs.

The EU will also want to showcase progress made for its flagship Global Gateway strategy, and a strong emphasis will hence be put on identifying opportunities to accelerate the roll-out of Global Gateway-labelled projects. The review should also take stock of progress on the various targets and EU commitments contained in the regulation on a wide range of areas, such as spending targets on official development assistance, climate and biodiversity, human development and migration, as well as gender targets.

It will be particularly important to ensure that measures are taken in areas where progress is lagging behind, notably on climate, and to decide what course correction is needed and whether this ought to be done at the country, regional or global level.

The review could lead to amendments to country/regional or thematic MIPs, especially to realign objectives or address new needs and priorities emerging from recent global crises, such as the food, debt and climate crises that have hit partner countries globally.

For the European Parliament and some NGOs, this could also be an opportunity to bring back attention to areas which haven’t attracted a lot of investments, such as human development, and health in particular. Furthermore, a stronger focus on gender equality and human rights should be sought by ensuring the mid-term review builds on other relevant processes, such as the update of country-level implementation plans of the EU’s gender action plan, as well as the mid-term review of the EU’s action plan on human rights and democracy.

The second objective of the mid-term review is to define the financial allocations for the remainder of the period 2025-2027. The country MIPs adopted in 2021 only established indicative envelopes until 2024, giving some degree of flexibility to the EU but also considerably less predictability for partner countries. Yet, the financial adjustments and reallocations might not be so consequential given the commitments and limited margin of (financial) manoeuvre of the EU.

The looming geopolitical consequences of the war in Ukraine

Geopolitical considerations and consequences of the Russian war in Ukraine – ranging from diplomatic tensions, energy security, migration and regional stability – will shape the outcome of the review. In that context, the EU is also likely to pay more attention to how partner countries align with its strategic priorities and seek to reward their support to the EU’s position in multilateral fora on matters such as climate cooperation or sanctions against Russia. The stronger weight given to geopolitics in the mid-term review confirms the increasing politicisation of EU international development cooperation amid a fierce battle of narratives to retain influence in Africa.

Responding to global instability

Unforeseen events requiring flexibility and adaptability have become the new normal and are putting increasing pressure and expectations on the EU to live up and respond at scale to polycrises in an increasingly volatile world. The mid-term review will be an opportunity to assess the value and effectiveness of the EU’s flexibility mechanisms. The so-called cushion for emerging challenges and priorities under the NDICI-Global Europe instrument has proven its worth, particularly in the context of COVID-19 and the war in Ukraine. Still,  it is already almost fully depleted, and 80% of its unallocated funds have already been earmarked until 2027.

Against this background, how will the EU respond to crises in the near future? A replenishment of the cushion is on the table. But questions are also being raised on whether there is a need for better-defined criteria and governance mechanisms to tap into the cushion. Has it always been mobilised rightfully for ‘new’ initiatives or ‘unforeseen’ events, or could some initiatives have been programmed instead?

A dedicated instrument for Ukraine

The European Commission‘s proposal for the MFF revision, published in June,  acknowledged that the recent global crises and the war in Ukraine had “pushed the resources of the EU budget to the point of exhaustion, hindering the EU budget's capacity to address even the most urgent challenges”, and insisted on the need to significantly increase resources to avoid large cutbacks in other EU spending priorities. The Commission, therefore, asked member states to increase their budget contributions to set aside €50 billion for Ukraine, €15 billion to address migration challenges and strengthen partnerships with non-EU countries, and €10 billion to strengthen the EU's competitiveness on critical technologies.

Until now, EU assistance to Ukraine was largely funded through NDICI-Global Europe and has used up all margins that were still in the EU’s long-term budget, including the cushion in NDICI-Global Europe. This has raised legitimate concerns that EU support to Ukraine would ultimately come at the expense of other countries and regions in the world. The European  Commission’s recent proposal for a new and dedicated Ukraine facility seeks to circumvent this risk by combining all future support to Ukraine in a separate single instrument under heading 6 of the MFF.

The need for increased funding to match EU ambitions and honour commitments

All these proposed areas have a clear geopolitical resonance, and the Commission makes a strong case for strengthening the EU’s budget for external action in the overall MFF review process – a welcomed effort. But while EU member states are likely to green-light the financial support for Ukraine, resistance is to be expected on the other MFF proposals to the level requested. Tough negotiations, hence, lie ahead with likely delays in the overall process.

The EU’s ability to continue delivering on its promises and to respond to emerging crises risks being jeopardised if they are not matched with adequate funding. The mid-term review processes in the coming months will be crucial to determine the EU's ability to remain a key global actor able to foster stability, prosperity, and democracy in its neighbourhood and beyond.

The views are those of the author and not necessarily those of ECDPM.