Select Committee on European Communities Second Report



7.  FINANCIAL AND TECHNICAL MEASURES TO ACCOMPANY THE REFORM OF ECONOMIC AND SOCIAL STRUCTURES IN THE FRAMEWORK OF THE EURO-MEDITERRANEAN PARTNERSHIP (MEDA II) (5104/00)

Letter from Lord Tordoff, Chairman of the Committee, to the Rt Hon Clare Short MP, Secretary of State for International Development, Department for International Development

  At its meeting on 21 March, Sub-Committee A cleared this document from scrutiny. However, it asked me to raise the following points with you.

    (1)  We appreciate from paragraph 10 of your Explanatory Memorandum that DFID bears most of the United Kingdom's share of the costs of the MEDA programme; what proportion of DFID's total budget does the contribution to MEDA represent?

    (2)  We also note your comment that the present MEDA programme is "badly focused and poorly managed"; are there other multilateral aid programmes funded by the EU to which you would apply the same criticism, and, if so, how much of your budget do they absorb?

    (3)  How do the claims made on DFID funds to finance these EU programmes affect the possibilities of attaining your overall strategic objectives, such as poverty reduction?

27 March 2000

Letter from The Rt Hon Clare Short MP, Secretary of State, Department for International Development, to Lord Tordoff, Chairman of the Committee

  Thank you for your letter of 27 March informing me that at its meeting on 21 March, Sub-Committee A cleared this document from scrutiny.

  The following is in reply to the further questions raised by the Sub-Committee.

  The UK share of EC external spending currently absorbs about 30 per cent of DFID's budget; £679 million FY 99/00, the MEDA element being about 2 per cent.

  It is partly because DFID's obligatory share of EC spending is so large that I am anxious to improve how the EC spends this money. With such a large amount of my Department's budget allocated to the EC it does have important implications for attaining our poverty reduction objectives. We need to improve EC programmes so that they have a much bigger impact on poverty. This would be a major prize since the EC is the largest provider of grant funding in the world.

  The MEDA programme is the weakest of the EC's development programmes, with too much money allocated to projects that are poorly implemented, which underspend and are not targeted on the key poverty targets. Negotiations underway in Brussels for a new MEDA Regulation for the period 2000-2006, will determine how MEDA is operated for at least the next seven years. We are taking a very firm line in those negotiations, for fundamental improvements. Other programmes—European Development Fund spending in the African, Caribbean and Pacific countries; programmes in Asia, South Africa, Latin America, Eastern Europe, the Balkans and the former Soviet Union—are better, but there is much room for improvements.

  My general criticisms of EC external spending are that it is insufficiently directed against poverty; there is too much weight on spending and not enough on achieving and measuring output; Commission procedures are inflexible and inefficient; and there is a lack of coherent development policy focus.

  However, EC development spending also has strengths—large financial resources (it is the second biggest multilateral donor, after the World Bank); some capacity to lever in development funds from EU member states, and instruments such as the much improved successor to the Lome Convention which make important links between development, trade and political cooperation.

  Recently the EC has also begun to move towards addressing some of the weaknesses in its handling of external programmes. It is helpful, for example, that in the new Commission the number of Commissioners responsible for external spending has been reduced from five to two, and that both of these, Poul Nielson and Chris Patten, are former development Ministers. Both have stated their commitment to poverty elimination. This month the Commission will be considering two reform proposals, which have potential to improve EC development: for a development policy statement, which for the first time should provide an integrated and strategic up-to-date development policy; and for the reform of the Commission's mechanism for implementing development proposals. We are feeding in constructive ideas on both these proposals.

  These intended changes are welcome. However, the key test will be how effectively the EC delivers them. I and other member state development Ministers will continue to press hard for significant, radical improvement. As the Sub-Committee's question implies, attaining the strategic poverty reduction objectives will be much harder if there is not a radical reorganisation and refocusing of EC aid. It is therefore a high priority for my Department to tackle these issues with vigour and determination.

13 April 2000

Letter from Lord Tordoff, Chairman of the Committee, on the European Union, to the Rt Hon Clare Short MP, Secretary of State for International Development, Department for International Development

  Thank you for your letter of 13 April, replying to mine of 27 March. At its meeting on 9 May, Sub-Committee A considered your responses to its questions. It welcomed your determination to tackle the re-organisation and re-focusing of EC aid "with vigour and determination", and it looks forward to seeing the results of your efforts.

10 May 2000


 
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