EU-LDC Themes - Development Co-operation - Policy
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Development Co-operation: the European Union
Development co-operation is one of the main elements
of the EU’s external policy. Its total external aid has increased
considerably over the last decade and recorded a value of Euro 8.6
billion in 1998.
The regional distribution of aid has also changed.
The EU now gives priority to the stability and development of
neighbouring countries and to aid for countries in crisis in the
regions nearest to the EU. This is reflected in the rising share of
aid to the Mediterranean region, Central and Eastern Europe (CEE)
and the Newly Independent States (NIS).
While these regions together accounted for only 18.5
percent of total EC aid in 1990, this share had increased to 32.6
percent by 1998.
The African, Caribbean and Pacific (ACP) Group is
the main receiver of EC aid, although its share in total EC aid has
decreased over the last years, from 52.1 percent in 1990 to 43.6
percent in 1998.
Go to the OECD website for an overview of the amount
and distribution of official development assistance of the European
Community in the period 1998-99, Aid
at a Glance
This section provides information on the main
elements of the EC’s development co-operation:
Within the European Community the Directorate
General for development (DG development) is a main actor of the EC’s
development co-operation policy for all developing countries and
Overseas Countries and Territories (OCT). It plays a key role in the
formulation of development policy and in the co-ordination of policy
between the EC and the member states. The objective of EC
development co-operation policy is to foster sustainable development
that eradicates poverty in developing countries and that integrates
these countries into the world economy. Democracy, rule of law, good
governance and respect for human rights are important elements in
this context.
Development co-operation will be focussed on
poverty eradication while taking into account that the EC will be
active in areas:
- in which it has a comparative advantage over other donors;for
which EU citizens have expressed their concern;
- in which it the EU’s interests are best served at a
Community level, either because of the principle of subsidiarity
(e.g. conflict prevention, migration etc.) or because it is more
effective (e.g. in the case of food aid).
The complete texts of the mission
statement of EC development co-operation can be found at the Directorate
General for Development (DG Development) website
In May 1995 the European Council requested an
evaluation of the European Community’s development programmes and
instruments, the conclusions of which were adopted in May 1999.
The evaluation results included the following
conclusions:
- The aid system is too complex and fragmented in terms of
objectives, instruments, institutional mechanisms and
procedures;
- Policies are guided by the instruments instead of by policy
objectives and clearly defined policies;
- Monitoring, evaluation and institutional learning should be
improved;
- There are relatively few people to manage the volume of aid,
both in the EU and in developing countries;
- The quality of interventions often suffers from the speed of
disbursements;
- Financial controls need to be simplified, with a focus on
performance indicators;
- Internal and external control systems should be complementary
and mutually reinforcing;
As a result of this evaluation and as part of a
reform of the EC’s external assistance, the Commission has written
a communication about the EC’s development policy that defines a
new strategy for development co-operation.The main elements of this
new approach are:
- an increased focus on poverty reduction and sustainable
development while taking account of the multidimensional nature
of poverty. Promotion of human rights, democracy, the rule of
law and good governance are important elements in this process;
- better co-ordination with the EU member states and the IFI’s
and other multilateral organisations;
- strengthening the link between trade and development and
increasing the linkage between relief, rehabilitation and
development;
- concentration of development activities in a number of
priority areas and sectors, especially in which areas the EC has
a comparative advantage over its member states or other
multilateral organisations. Least developed countries and
low-income countries will be given priority;
- importance of ownership and participation in the developing
countries in the development process, both of governments and of
civil society;
- changes in the implementation process, procedures and
institutions to improve the effectiveness and efficiency of aid.
The Commission proposes the following six
priority areas of development co-operation:
- The link between trade and development. As a major trade
partner and aid donor of developing countries, the EC needs to
ensure that development policies and trade and development
policies are complementary and mutually reinforcing. Capacity
building and co-operation in trade-related areas, investment
promotion, technology transfers, private sector development and
increased market access are important elements in this context.
This will help developing countries to integrate into the world
economy and to minimise the adverse effects from globalisation.
- Regional integration and co-operation. Many countries have
chosen regional integration as a mechanism to integrate into the
world economy. It provides an effective way to deal with
cross-border problems, like environmental problems. Finally, it
can be an effective conflict prevention and resolution
mechanism. The EU can support regional co-operation because of
its experience and the means it has at its disposal.
- Support for macroeconomic policies. Macroeconomic policy is
important for income distribution and the sustainability and
accessibility of social services. Sectoral policies in health
and education should therefore be integrated in the
macroeconomic framework. The EC will both improve the
macroeconomic framework and support the social sectors.
- Transport. Efficient transport systems are essential to access
basic social services. At the same time, the sector needs to
fulfil social, economic and environmental requirements. The EC
has been a major donor in the transport sector and has therefore
acquired experience and expertise in the sector.
- Food security and sustainable rural development. Food security
and sustainable rural development are important elements to
reduce poverty. They reduce the need for food aid and help to
prevent environmental damage in the struggle for food. Food
security is often one of the first issues to be addressed in the
transition from relief aid to development. The EC promotes a
regional approach in this area.
- Institutional capacity building. Well-functioning, democratic
institutions with a capacity for long-term planning are a
condition for sustainable development. The development of
negotiating capacity in developing countries is also important
in international forums like the WTO. Action by the EC will be
more neutral than by its member states, since the latter have
their own history and are bound by a specific legal system.
In all six areas cross-cutting principles will be applied: good
governance, respect for human rights and the rule of law, gender
equality, the environment, institutional and capacity building and
the impact on poverty. In addition, the EC must promote research and
the use of new technologies in developing countries.
Regarding the implementation of development
policy, the EC will put more emphasis on results in the allocation
of resources will continue the decentralisation of tasks.
Partnership, participation and ownership and international/regional
best practices are important in the implementation process.
For more information on the co-ordination of development co-operation between the EC and its member states, see the report of the European Commission:" and then put in the other document
An important element of the EU development
co-operation policy is the use of Country Strategy Papers (CSPs).
The CSPs provide a framework for EU assistance programmes based on
EU objectives, the Partner Country government policy agenda, an
analysis of the partner country’s situation, and the activities of
other major partners. The CSPs point to where EC assistance should
be directed and how it integrates with what other donors are doing.
The document below is a Commission Staff Working Paper on the
Framework for CSPs.
For more information on the co-ordination of
development co-operation between the EC and its member states, see
the report of the European Commission:
.
The ACP Group receives a major part of total EC
aid. Economic relations between the EU and the ACP Group have been
governed by the Lomé convention for 25 years. In June 2000 a new
agreement was closed between the two parties: the Cotonou Agreement.
This Agreement entails both trade and development co-operation
aspects. In this section the focus will be on the development
aspects of the EU-ACP relation. For a description of the ACP group
and for more information on the trade aspects of the Cotonou
Agreement, see the regional focus section.
The first Lomé Agreement dates from 1975 and
provided the ACP countries with preferential treatment and
assistance. In the first and second Lomé Agreement, development
co-operation mainly consisted of programme aid for infrastructure
(including schools and hospitals) and sustainable agriculture.
Because doubts were raised on the effectiveness of this aid,
improving the effectiveness and credibility of aid became important
in the third Lomé Agreement and afterwards. The EU progressively
abandoned the project approach and concentrated instead on aid on a
sectoral basis. Combating drought and desertification and developing
self-sufficiency and food security became priority issues in the ACP
development co-operation relationship, together with funding for
infrastructure. In the fourth Lomé Agreement, emphasis was put on
respect for human rights, democracy, good governance, protection of
the environment, gender equality, decentralised co-operation,
promotion of the private sector, diversification of ACP economies
and regional co-operation. The fourth Lomé Agreement was reviewed
in 1995. Again, emphasis was put on respect for human rights, making
it now a condition for receiving aid. Regarding debt relief, all
uncommitted special loans were converted into grants. In the context
of decentralisation of development co-operation, the role of civil
society was taken into account.
The need to comply with WTO rules and the
revealed importance of the institutional and policy context for the
effectiveness and viability of aid led to negotiations for renewal
of the Lomé Agreement. In February 2000 the negotiations for a new
EU-ACP relationship were concluded and in June 2000 the Cotonou
Agreement was signed. The Agreement is based on five pillars:
- Reinforcement of the political dimension of the EU-ACP
relationship. There will be regular political dialogue between
the partners on issues of mutual concern to ensure consistency
and to increase the impact of development co-operation.
Important new elements include peace building,
conflict-prevention strategies and migration. New consultation
procedures are planned to be introduced in cases of violations
of human rights, democratic principles and the rule of law.
- A participatory approach, i.e. involvement of civil society,
the private sector and other non-state players. These non-state
players will be provided with information and supported for
capacity building. They will also be more involved in the
implementation of programmes and projects and consulted on
reforms and policies. Finally, links between EU and ACP actors
will be encouraged.
- A new framework for economic and trade co-operation. One of
the principles of the Cotonou Agreement is that economic and
trade co-operation shall build on regional integration
initiatives of ACP countries. Regional integration is seen as a
key instrument for the integration of ACP countries in the world
economy.
The EU and ACP countries have agreed to
establish new trade agreements that will liberalise trade between
the two regions and that will include co-operation in trade
related areas, like competition policy, consumer policy,
protection of intellectual property rights, environment, labour
standards, standardisation and certification and sanitary and
photo sanitary measures. Co-operation in international forums and
in trade in services has also been agreed upon. The current
preferential trade agreements will be replaced with Economic
Partnership Agreements, based on reciprocity. This reciprocity is
necessary to comply with WTO requirements.
For more information on the trade aspects of
the Cotonou Agreement, see under the theme Regional
Focus.
- A focus on poverty reduction. The agreement defines a
framework with a global strategy and that takes account of the
complexity and multidimensional nature of poverty. The
development strategy will incorporate economic, social,
cultural, environmental and institutional elements that will be
locally owned. Different priorities will be set for each
individual country and the integration of civil society and the
private sector into the development process will be actively
promoted.
Support will focus on three areas: economic
development, social and human development and regional
co-operation and integration. In the area of economic development,
the focus will be on private sector development and investment
promotion, sectoral policies and macroeconomic and structural
policy and reform. In the field of social and human development,
emphasis is placed on social sector policies, cultural development
and youth issues. Finally, the EU-ACP co-operation will provide
effective assistance to achieve the objectives and priorities of
ACP countries in the context of regional co-operation and
integration. Within the three areas of support, the issues of
gender equality, environmental sustainability and institutional
development/ capacity building will be taken into account.
- A reform of financial co-operation. Development finance
co-operation will be implemented on the basis of and be
consistent with the development objectives, strategies and
priorities of ACP states, both at a regional and national level.
Local ownership, partnership, predictability and flexibility are
important elements of development finance co-operation. In
addition, special attention will be given to the least developed
ACP countries and the vulnerability of landlocked and island ACP
countries will be taken into account.
The partner country will own and be accountable
for its own policies. Aid will therefore increasingly take the
form of budgetary support or sector programmes. The non-state
sector and actors will be involved in the formulation of support
strategies and in the implementation phase.
To improve efficiency, the instruments under the
European Development Fund (EDF) have been regrouped and rationalised.
There are now two types of instruments:
- The grant facility: subsidies for long-term development
support. Under this instrument, each ACP country receives a lump
sum, with which it can finance different types of operations,
like debt relief, sector programmes, macroeconomic support,
decentralised co-operation, mitigation of adverse effects of a
shortfall in export earnings and humanitarian aid. This allows
for a high degree of flexibility in the allocation of resource
in ACP countries.
- The investment facility: aims to promote the private sector in
ACP countries. This will be a revolving fund in the sense that
returns that accrue from its operations will flow back to the
Facility. This Facility is therefore in principle
self-sustainable. Businesses will have direct access to the
Facility, or indirect through intermediaries. The main focus
will be on fields of operations and interventions that cannot be
financed from local financial institutions or private capital.
Financial co-operation under the grant facility
will be subject to developments in needs and performance. Each ACP
country will have its own Country Support Strategy (CSS) that covers
the implementation of all operations financed under the grant
facility. The direction of EC aid will be based on an analysis in
the CSS of the political, social and economic situation, the
development strategy and activities of other donors in a country.
The CSS and the amount of resources can be adapted through regular
review to changes in needs and performance. The criteria for the
evaluation of needs and performance have negotiated between the EC
and ACP states. Criteria to assess the needs include per capita
income, population size, economic and social development indicators,
dependence of export earnings and level of indebtedness. Criteria to
assess the performance of a country include the progress in
implementing institutional reforms, effective implementation of
current operations, poverty reduction, macroeconomic and sectoral
policy performance, sustainable development measures and the
performance of a country in the use of resources.
For more information on the Cotonou
Agreement, see the website of the European Commission. For
the
full text of the Agreement, see the website of the European
Commission (DG Development)
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