Select Committee on International Development Appendices to the Minutes of Evidence


APPENDIX 6

Memorandum submitted by Mr Jean Bossuyt and Ms Terhi Lehtinen, European Centre for Development Policy Management (ECDPM)

THE CHALLENGES OF THE REFORM OF THE EC EXTERNAL AID

Introduction

  1.  The European Centre for Development Policy Management (ECDPM), an independent foundation specialising in EU cooperation with ACP countries, has been strongly involved in the discussions on the effectiveness of the European aid system. In particular, ECDPM recently finalised a study of the EC external aid reform, providing a "snapshot" of the on-going reform process. Based on desk review and consultations with EC officials, it presents an independent assessment of the reform proposals from a broad developmental perspective and identifies key challenges in further improving the performance of EC aid.

  2.  This short memorandum offers some fresh thoughts on the challenges of the EC external reform in the perspective of aid effectiveness and efficiency. The memorandum will focus on the issues raised in the Commission's Statement on the EC Development Policy (COM(2000)212) and the Commission's Communication on the Reform of the Management of External Assistance of 16 May 2000. The analysis of current crisis as set out in these documents seems to cover major problem areas, although the suggestions to address the situation still remain rather general and indicative.

  3.  A few general comments can be made on the overall direction of the reform process:

    —  first, there seems to be a consensus on the urgency of reforming the way the EC plays its dual role of global player and donor. Both the credibility and the legitimacy of European external assistance are seen to be at stake;

    —  second, the overall policy direction of the reform package seems quite logical and coherent. In many ways, the current reform process marks a break with past attempts in that it adopts a comprehensive approach, linking political objectives with far-reaching management reforms. Taken together, these measures have the potential to improve EC aid performance and impact; and

    —  third, while the reform agenda looks rather solid on paper, implementation will be the real test. Managing the transition from the current crisis situation to the "new-style Commission" will be a complex and fragile process. Against this background, it might be useful to adopt a "rolling implementation" approach to the reform process, thus ensuring a proper monitoring of the process (what works, what doesn't work), a continuous dialogue (especially with Member States and the European Parliament) and remedial action in due time.

  4.  There are some critical dimensions in the reform process that merit greater attention, namely the need (i) to safeguard a "development perspective" in the new structures, (ii) to reconcile the search for a new "management logic" with effective policy framework, with participation of different actors and with quality of aid, (iii) to ensure an effective role for evaluation and (iv) to make effective progress in improving the human resource base.

  5.  In particular, the following broad topics should be closely monitored in the reform process:

    —  mainstreaming or marginalizing the development perspective. The European Development Policy must embrace all aspects of the European Union's ties with the developing countries. The political, economic and trade dimensions are complementary to aid. Reconciling them in a way that takes into account both the needs of each partner country and the Union's objective interests, is not easy. This will constitute a specific challenge for the operationalisation of the EC policy framework, including the poverty focus. Furthermore, quite little attention seems to be given to the role and place of partner countries in the reform process. Also, the consistency between the planned reforms and the commitments in cooperation agreements will be a challenge. For example, the tendency to focus on "big projects" may contradict political objectives to reorientate aid to poverty reduction or to work more with decentralised actors, whose needs are often for smaller projects. The main question will be on how development cooperation could be properly integrated in a more politically orientated external assistance and in trade policies and how to ensure that the reforms take into account the partner countries" views;

    —  challenges of implementation. A key objective of the reform is to dramatically improve the "efficiency" of EC aid (to speed up implementation). This laudable objective puts pressure on the Commission to increase disbursements. In the current political climate and taking into account the scarcity of human resources, this may lead to a situation where disbursing money becomes the key institutional incentive rather than the pursuit of quality aid. One of the envisaged solutions to the disbursement pressure is the increase of budgetary aid, which, in turn, raises questions of accountability. The devolution of authority to delegations is seen as the main aspect of implementation. Therefore, it is important to ensure that the devolution of authority to EC Delegations starts only after tackling the issue of staffing. Therefore, the monitoring of the human resources base is crucial to the success of the reform; and

    —  complementarity among new actors. A constructive dialogue among Member States, the European Parliament and the Commission is a pre-requisite for strengthening the EC's political profile, building complementarity, simplifying controls and ensuring greater involvement of new actors in the field. The Commission proposes to strengthen complementarity as a management tool by taking a proactive leading role in limited priority areas in order to restore confidence in its capacity to deliver aid effectively. By contrast, in areas that fall outside this concentration, the Community would contribute financially to the programmes of Member States and other donors. The programming experience will be critical for the integration of different actors to the cooperation framework. The issues related to an effective coordination and task division and definition of added value of EC aid appear to be vital for the future effectiveness of EC aid. Monitoring and evaluation methods should feed effectively back into the programming process.

EC Development Policy Statement

  6.  The EC Development Policy Statement is a comprehensive document, designed for all developing countries, and reflecting most underlying issues of the reform process and priority-setting for the EC aid management.

  7.  However, it remains to be seen how this new policy framework will be used in practice. Critics could easily argue that the Policy Statement still sees a role for Community aid in too many areas and that the proposed criteria to define the EC's "comparative advantage" will not suffice to set "negative priorities". The issue of coherence in the external relations sector, but also with regard to other community policies, such as agriculture, is the key priority for an effective implementation of the development policy framework.

  8.  The nature of cooperation[3] with ALA, MED, ACP, TACIS and PHARE countries is different, constituting a major challenge to any attempt to "harmonise" policies through an overall strategic framework, setting the "poverty focus" as an overall objective. Much more could be done, with due respect to the principle of differentiation, to translate the poverty objective more consistently in country strategies, sectoral policies and monitoring and evaluation systems. The new system of programming should create opportunities to bring poverty concerns and development perspective into the elaboration for country strategies also for non-ACP countries.

Commission Communication on the management of the reform

  9.  The reform is an on-going process. The communication contributes to the setting up of more detailed guidelines for the implementation of specific managemnent reforms. The questions of externalization ("office") and devolution to EC delegations require constant monitoring and dialogue to ensure the allocation of necessary technical and human resources for an effective implementation. Multi-annual programming will be the key area of future aid management.

  10.  However, several issues remain open to further discussions and negotiations. The inter-institutional dialogue with Member States and the European Parliament, in particular on the issues of comitology and the budget measures, is crucial in ensuring the support and monitoring of suggested reform measures.

Conclusions

  11.  Some critics say that reform proposals may not go far enough in setting radically new structures and detailed procedures, seen as essential for the improved aid effectiveness. However, many of the key principles of the reform process are included in the new EU-ACP partnership agreement, and therefore, there will be legal obligations to implement some of the far-reaching proposals, for example in the programming process. Detailed discussions on the methodology of the reform process will certainly continue in the coming months.

  12.  Against this background, the inter-institutional dialogue both with the European Parliament and the Member States continue to play a crucial role in the success of suggested reform measures. This dialogue should involve different actors, including the Select Committee, in order to promote a more constructive approach and to avoid some major past errors.

  13.  The reform process has to be seen in a long-term perspective. The main challenge of the reform will be to link a strategic vision (what is the specific added-value of EC aid in a rapidly changing international context?) with concrete management reforms (what changes can help the EC to effectively use its different policy instruments while delivering quality aid?).

  14.  In this context, ECDPM would like to suggest that the Select Committee should closely monitor the following priority areas in the reform process, considered as having a major impact on the EC aid effectiveness:

    —  The coherence of suggested reforms in the external relations sector in relation to the overall reform of the commission ("Kinnock reform"). It seems that current reform has focussed more on the management dimension of the EC crisis, although the underlying challenge is how to save the political credibility of Europe's external image.

    —  Special focus on the "sequencing" of the devolution of responsibilities to the delegations and the externalisation, ensuring that necessary capacities and human resources are available for an effective implementation.

    —  Specification of practical modalities for the reform of control, monitoring and evaluation mechanisms.

  Mr Jean Bossuyt and Ms Terhi Lehtinen

  European Centre for Development Policy Management (ECDPM)

  June 2000



3   For example, EC external assistance to MED-countries is considered part of "economic cooperation" to achieve a free trade zone by 2010. Similarly, cooperation with ALA countries combines deveopment (in Central America) and trade. (FTA negotiations with Mercosur) elements. It is argued that many middle-income countries (for example within the Mecrosur) do not consider themselves in the category of "poor countries" where a poverty focus as a key objective would be justified. These "political" sensitivities are often coupled with the simplified idea that a poverty focus would exclusively mean aid to LDC's. Back


 
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