On the 10th of November I convened a seminar at St. Antony’s College, Oxford, UK with the above title.
Fernando Frutuoso de Melo, Director General for International Cooperation and Development, European Commission presented the following speech.
Dear Professors, Ladies and Gentleman,
I would like first of all to thank the University of Oxford and St. Antony’s for giving me the privilege to be here this evening and to talk to you about the EU’s Development policy. I feel very honoured but also thrilled by the perspective of facing your comments and questions…you understand I have not been before such distinguished jury for a long time…
In order to address the questions posed by the title of this speech, I will need to refer to three deferent issues that are crucial to answering these questions:
A. EU DEVELOPMENT POLICY – OVERVIEW
B. Development aid – trends and developments
C. Why EU development cooperation is still even more relevant and necessary
A. EU DEVELOPMENT POLICY – OVERVIEW
• The basis of our development policy is set out in the Treaties. It identifies development policy as a pillar within the framework of the principles and objectives of the EU´s external action and provides for our primary goal which is the reduction, and in the long term, eradication of poverty, in the context of sustainable development. We can certainly point to a great deal of progress towards that goal. However, it is a sad and unacceptable fact that extreme poverty is still a reality for 1.2 billion people on this planet.
• The Treaties further stipulate that close and complementary cooperation with Member States in development cooperation is required and that the Union shall take account of the objectives of development cooperation in all its policies, which are likely to affect developing countries. The latter is referred to as EU Policy Coherence for Development (PCD). These are both critical principles guiding our development cooperation to which I will come back later.
• The European Consensus on Development, the political declaration which dates from 2005 and which was jointly agreed by the European Parliament, the Commission, the Council, and the EU Member States is another pillar which shapes our framework. It identifies the shared values, goals, principles and commitments which the EU Member States and the European Union will implement in their development policies.
• Furthermore, in a pledge to eradicate poverty, the EU joined world leaders in 2000 in the global partnership to reach the Millennium Development Goals to be achieved by 2015. The EU has been and continues to contribute significantly to this process. Substantial progress towards these goals has been made, such as the attainment of the objective to halve the proportion of hungry people, but there still remains a lot to be done to reach all goals.
• Specific agreements and strategies with different regions in the world, like the Cotonou Agreement with the African, Caribbean and Pacific states, to mention one, also provide an important framework for our work.
• We are facing a fast changing international context. This is reflected by global challenges like climate change and increasing demographic tensions, several developing countries reaching increased standards of living while other lay behind, the appearance of new strong actors in the development world such as the private foundations and emerging donors, the growth of the world population which is to reach 9.3 billion people by 2050, the global economic and financial crises as well as those related to food prices, the Arab spring, new security and conflict challenges at country and regional level as in Syria, Iraq, Ukraine and a number of African countries and the existence of strong economic growth in some regions of the world but without a proportional impact towards global poverty reduction.
• Taking into account the fast changing international context, the EU communication ´An Agenda for change` of 2011 provides for orientations with a view to increasing the impact and getting more and better results from our development cooperation.
• The EU remains the largest trading partner, and is, the EU and MS together, the biggest donor of development and humanitarian aid in the world.
• The differentiated situation in developing world today let the new EU Commission led by JC Juncker to enlarge the concept of Development portfolio to include also International Cooperation, meaning other EU policies relevant for cooperation with third partners beyond traditional Development assistance.
• It is within this framework that the development cooperation policy is conducted. Based on this framework, I would like to recall the main principles and priorities of the EU’s development policy as it stands today, to reach our final goal of poverty eradication in the context of sustainable development.
Development of differentiated partnerships
• During the last decade developing countries have undergone substantial change. With the increase in global GDP, 27 countries have moved into a higher income group. As a result, the developing world is more “differentiated” than it used to be. A main orientation of our development policy is to focus aid on those who need it most and where it can have the greatest impact. Resources are therefore concentrated on the poorest countries. This has been ensured through the recent graduation of 16 upper and large middle income countries out of bilateral aid under the Development Cooperation Instrument and differentiated initial country allocations under DCI and EDF in favour of low income and least developed countries, which now capture 70% of the funds.
• With more advanced countries we are engaging in new forms of partnership and cooperation that offer development opportunities based on mutual interests (such as economic cooperation, research, transfer of knowhow etc.) and allowing for joint initiatives to address global challenges. The Partnership Instrument plays an important role in this.
Focus EU support where it can have the greatest impact
• Secondly, EU resources are being channelled into critical areas where they have the greatest impact, the first one being inclusive and sustainable growth. Everyone would agree that the eradication of poverty requires economic growth, however, good growth rates are as such not sufficient, as it is equally important that growth benefits all in society, focusing more on the poor, and that it is sustainable in all its dimensions. One of several key sectors that contribute to inclusive and sustainable growth is the private sector.
• There is also a sharpened focus on human rights, democracy and good governance, stipulated by the Lisbon Treaty, taking into account the Arab Spring and necessary to provide for a strong development framework.
• Furthermore, a number of specific commitments have been made to focus our activities, like the support for social inclusion and human development through 20% of EU aid as mentioned in the Agenda for Change, secondly the commitment to support basic social services with at least 20% of funding under the DCI regulation, and thirdly the commitment to spend at least 20% of the overall EU budget on climate change related action, which are all within reach.
• To further increase the impact and leverage of EU assistance, and to help keep EU assistance manageable for all stakeholders involved, bilateral cooperation is concentrated in a maximum of three sectors. This principle has been applied with the new programming in the vast majority of countries, with a limited number of exceptions mainly for fragile states.
Extended coordination of EU & MS action – Joint programming
• The EU has always been a driving force behind the aid and development effectiveness agenda, integrating in our development cooperation the agreed principles in the different High Level Fora. It is in this context that extended coordinated action between the EU and MS is truly advancing, through the focus on ´Joint Programming` which is finally increasing. Not only does it lead to more effective aid provision but it is also about increased EU influence and impact through more coherent interventions and a strengthened political dialogue. Under the current programming exercise, joint programming has truly advanced, and will cover no fewer than 40 countries.
Extended coherence of EU policies for Development / security and development nexus / migration and development nexus
• As indicated before, the extended coherence of EU policies impacting on developing countries has to be sought and is a main pillar of our development policy. Combating poverty and achieving sustainable development in developing countries is not just about aid and development policy alone. EU policies for trade and agriculture, for example, have both an internal and external dimension that can have a strong impact on developing countries which we need to take into account.
• Policy coherence for development requires close cooperation amongst Commission services as well as joint efforts by the Commission and Member States. In this regard we are strengthening our working methods.
• A similar effort towards more coherence between EU policies and instruments, including those of the MS, is being sought particularly in the context of countries in crisis or conflict situations. There cannot be sustainable development without peace and security, and without development and poverty eradication no sustainable peace will occur. Therefore the need to have a joined up approach to security and poverty. A number of concrete measures have been proposed in this regard in the recent Joint Communication on a comprehensive approach to external conflict and crises.
• Specific attention is also being given to coherence in the fields of migration and development. In May 2013, the Commission adopted a new Communication on ‘Maximising the Development Impact of Migration’.
Future policy making
– I would like to take now a look at the main ongoing and upcoming initiatives in relation to policy making, which are particularly relevant in this discussion. Looking forward, just over a year from now, in September 2015, the United Nations General Assembly will be asked to agree on a new paradigm for sustainable development. The EU has expressed a clear vision and has an influential voice in the ongoing debates. Recently, on 2 June 2014, the European Commission issued a new Communication, which further elaborates on the EU’s thinking for the post-2015 agenda, including key principles, priority areas, potential target topics and the need for a new global partnership.
– I would like to underline the EU´s strong involvement in this so called ´post 2015` international process, the objective of which is to bring the MDGs together with the conclusions of the Rio Conference on Sustainable Development in one single framework. A key aspect of the process will be to define a new global partnership that will identify the appropriate means of implementation for the new framework. The EU will be putting forward its vision in the next few months with a view to the international conference that will take place in Addis Ababa in July 2015.
– Furthermore, during this new legislature, the important long-standing Cotonou Agreement, which includes the ambitious development agenda between the African, Pacific and Caribbean states (ACP), the EU and its Member States, will come to an end, in 2020. We are currently looking into what could potentially be the follow up of this key agreement with the ACPs.
Let me now use the example of EU aid in Trade since I know that Emily Jones is an expert on this. I would start from three simple facts.
1. export revenues earned by developing countries far outweigh the development aid they receive.
2. economic growth has always been accompanied by an increase in trade and there are strong indications that trade is an indispensable component of growth.
3. the EU is the main world market for products exported from developing and in particular least developed countries. This is not happening by chance or just because of historical links between some of EU Member States and developing countries.
The most important factor in export performance remains in my view the capacity of developing countries to make trade part of their development strategy, particularly when the objective is to diversify the economy towards higher added value manufactured goods.
• But trade is also one of the most important tools of our development policy and it has been so since the origin of the European Community in the ‘60’. This has a solid political basis in the Commission, Council and European Parliament work, of which I will only mention the most recent Communications: the Agenda for Change, the Trade, Growth and Development and the one on Private Sector in development.
• Those and other policy documents have been and continue to be translated into concrete actions. The European Union was the first and remains one of the few advanced economies to open entirely its market to the least developed countries with the scheme called “Everything But Arms” in 2000. This would have been impossible and ineffective if it was done on a MS level.
• The EU has negotiated regional trade agreements, in fact Economic Partnership Agreement, with many countries of the African, Caribbean and Pacific group. In 2014, three negotiations were completed with Eastern, Southern and West African regions. It is particularly encouraging that wherever possible these agreements are concluded with ACP regional groupings, thus supporting their regional integration process.
• The EPAs have a strong development dimension, which consists of three main elements:
a. the EU has supported our partners in the negotiations, providing funds for studies, consultants and in general technical assistance to help them define their negotiating positions and conduct the negotiations.
b. we ensure that the content itself of the agreements is development-friendly. For example, in EPA the EU opens immediately and completely its market, while developing countries may maintain both long transitional periods, up to 20 years and the maximum level of protected sectors that is compatible with WTO rules, normally about 20% of their trade with us but even more in justified cases. In some cases the agreements go well beyond simple free trade and include elements that in our view are very relevant for development, such as social and environmental issues, trade in services, investment, competition, public procurement and intellectual property rights. In other cases our partners were not yet ready for this and we have respected their choice .
c. once agreements are concluded, our cooperation supports their implementation in order to help our partners to harvest their development potential. Since the WTO started monitoring Aid For Trade, in 2005, the EU, including Member States, has consistently be the main contributor, reaching € 12 billion in 2012; I would also note that our contribution, except once, has always increased so far year after year, in fact it has doubled between 2005 and 2012, and we are committed to continue this positive trend.
• For example, when the EPA with West Africa was concluded earlier this year, the EU fixed a collective objective of € 6.5 billion support for it from EU, Member States and EIB resources for the next five years, to assist with reforms, regional infrastructure and productive capacity. We think this is realistic: we fixed the same objective in 2000 for the period 2000-2005 and in fact the actual result was even higher, at € 8.2 billion.
• To conclude on trade, I am convinced that a trade policy aimed at development objectives will remain essential in the years to come and the role of the EU development aid is crucial in this respect.
B. Development aid – trends and developments
I have already indicated a series of actions that EU development policy is crucial and very relevant.
Let me now approach the issue from the point of view of the transformation of development aid and what the EU has to offer in this new context.
According tot eh German Development Institute (D.I.E) future aid transformation can be summarised as follows :
– The proliferation of actors – bilateral, multi-lateral, south-south coop, sub-national actors, private sector, NGOs, philanthropic actors…
– Diversification of finance: Aid only 2% of international funding to developing countries. Also FDI, domestic resources, remittances, PPP…
– Regulation: International agreements – more and more influencing development cooperation objectives but are being discussed and signed outside the traditional development cooperation for a.
– Knowledge: scattered, multidisciplinary and increasingly from outside aid arena ->
In view of the above transformations of the development cooperation arena – the role of the EU is even more important because:
– In the proliferation of actors – the EU aid serves as a coordinator of the development cooperation efforts within the MS – particularly now with the Lisbon Treaty in force – thus contributing to donor coordination efforts globally
– Diversification of finance – in the context of policy coherence for development the EU is uniquely placed in order to address some of the implications of this – for example on the issue of remittances and the cost of money transfers back to countries of origin.
– Regulation – the EU is uniquely placed to contribute to debates in international fora on the coherence of international agreements with development cooperation objectives
– Knowledge: the proliferation of donors – philanthropic actors, south- south cooperation etc – which basically are only working in limited fields of development cooperation and don’t have as an objective to look at the ‘big picture’ of the implications of their actions or the implications of new developments on developing countries. The EU development cooperation – which is present in all developing countries globally and which has been carrying development projects for decades now and haw the expertise and the staff to be a key player in the acquisition and transfer of knowledge to the other donors.
The role of EU development cooperation with respect not only to receiving countries but also on sending countries and the EU internal challenges
• A report prepared by the Overseas Development Institute – ODI – and the National Institute of Economic and Social Research for ONE has attempted to quantify the effects of EU aid.
• This study simulated EU aid channels through the EDF and the Development Cooperation Instrument (DCI) which over the 7 year period of the next financial framework (2014-2020) amount to 30B euro and 21 B euro respectively.
• In the combined scenario, output at the global level is expected to be 0.2 per cent higher by 2020 as a result of EU aid. This is equivalent to a rise in the level of global output of nearly €400 billion, with large global gains in employment.
• At the EU-wide level, they calculated the level of output to be 0.1 per cent higher by 2020. Thus the gains from the rise in trade and decline in trade costs are expected to outweigh the losses due to the deterioration of current account balances and rise in government borrowing needed to finance the aid. EU aid is an investment in itself.
• By 2020, the value of world trade would be expected to rise by €120 billion as a result of the aid flows, and also by 2020 global gains in employment are expected to fall within the range of 600,000-3,000,000.
Finally I would like to refer the unique significance of 2015 for EU development cooperation and the views of EU citizens
The European Parliament and the Council have recently adopted legislation following the Commission’s proposal to designate the year 2015 officially as ´European year for development` with the moto ‘our world , our dignity, our future. It is in this context I very much welcome the opportunity to engage with you academics and citizens today. In the last 30 years the EU has dedicated each year to the promotion of an EU policy but it is the first time ever that a year is dedicated to an external policy area.
2015 will be a crucial year for international cooperation and development.
• It is the target date for achieving the Millennium Development Goals (MDGs),
• and the year in which the Third Financing for Development Conference (Addis Ababa, 13-16 July),
• the UN Summit to adopt the Post-2015 Development Agenda (New York, 21-23 September)
• and the United Nations Framework Convention on Climate Change 21st session of the Conference of the Parties (Paris, December 2015) will take place.
• These are expected to bring about important decisions, which will frame the future or our international cooperation and chart our path towards an inclusive and sustainable future.
But what about the European citizens ?
• Over the course of the last 30 years, EU citizens have consistently shown strong support for development aid and cooperation: positive opinions range from 82% in 1984; 89% in 1987; 75,8% in 1999; 82,5% un 2003; 91% in 2005; 88% in 2009 to 83% in 2013. While support has slightly declined in recent years, it should be noted that it remains widespread, despite the economic crisis. Indeed, the most recent Eurobarometer (Special Eurobarometer 405, November 2013) shows that that 61% of respondents think that aid to developing countries should be increased, 50% of which think aid should be increased in line with what has already been promised, and 11% beyond that it should increase even beyond that.
• That being said, Eurobarometers also consistently show that EU citizens usually have little awareness of development issues (in 2013, only 6% had heard of the MDGs, while only 10% correctly estimated the number of people living in extreme poverty). Moreover, the enduring financial and economic crisis and the recent growth of Eurosceptic and populist parties across the EU could continue to negatively impact Member State commitment to development, and erode EU’s citizens support (ETTG, 2014). In this context, “European citizens must be shown, now more than ever, that EU development cooperation delivers clear results and impact on the ground and achieves clear effectiveness and better accountability for public spending” (Council, 2012).
• But EU citizens also need to be shown that international cooperation and development deliver benefits for them too. A majority already believes so: 69% of EU citizens believe that tackling poverty in developing countries has a positive influence on EU citizens as well (Special Eurobarometer 405, November 2013). In fact, the poll shows that there is a strong link between support for development cooperation and the perception that it also has a positive influence on EU citizens. This goes to show that this positive influence ought to be better showcased.
I have today presented:
• an overview of EU development policy
• an overview of development aid trends and developments and the unique and necessary role that EU development policy plays
• the importance of values in our development policy, namely respect for Human Rights, Democracy, Rule of Law, Gender balance and Equal opportunities, Social inclusion
• the driving forces of sustainable development and interdependences, including climate and demography.
• referred to the role of EU development cooperation with respect not only to receiving countries but also on sending countries and the EU internal challenges
• and gave you data that show that EU citizens also believe that EU development aid is important
I hope I have convinced you that EU development policy is still very much relevant and needed.