Report Influence

  • The Dutch Government stated that the report closely mirrored many of its criticisms of EU aid policy and called on the European Commission to respond to the points raised in the report. The report’s findings were also discussed in an emergency debate in the Dutch Parliament.
  • In 2012, Justine Greening, the UK’s Development Secretary, called on the EU to make a major shift in policy to target resources at the poorest countries.
  • The study sparked debate around Europe with UK Development Minister Andrew Mitchell saying, “This report underlines the very reason why we are pressing for reforms of the way the EU spends aid.” Citing Open Europe’s report, Ben Knapen, the Dutch Europe Minister, called on the European Commission to clarify the use of EU aid.
Low income

Effective aid? Percentage of EU aid that reaches low-income countries

EU aid continues to be poorly targeted at tackling poverty. In 2009, less than half of the EU aid budget (46%), reached low-income countries. Aid programmes administered independently via the UK and the US were far more effective, with 72% and 56% reaching low-income countries respectively. Open Europe recommends that EU member states should, therefore, spend their aid budget directly rather than via the EU, unless there is a demonstrable EU 'value added’.Source: European Commission.

17 April 2011

 EU external aid policy

In 2010 the EU, in combination with its 27 member states, spent €53.8bn on Official Development Aid (ODA), making it the largest aid donor in the world. €9.7bn of this aid was disbursed directly by the EU institutions. The question is whether it makes sense for member states to provide so much of their aid via Brussels and whether it is spent effectively?

The Commission’s external aid budget includes both Official Development Aid and other external funding. In 2009, the entire EU external aid budget was €12,298m, €11,764m of which was counted as Official Development Aid by the Commission. Confusingly, aid to Turkey, for example, through the EU’s pre-accession funds is counted as ODA, in the same way as EU development spending in sub-Saharan Africa. The EU is also a large provider of humanitarian aid, through the Commission’s Humanitarian Aid & Civil Protection Directorate General, with €930m spent by the ECHO in 2009.

The UK currently contributes £1,424m to EU external aid spending, around 18% of the UK’s £7,767m total aid budget. The UK Government has said that its recent “plans to redraw the aid map will concentrate efforts on countries where UK aid will, pound for pound, achieve the best results in fighting poverty and building a safer world.” This redrawing of the map must also include EU aid.

EU aid’s lack of poverty focus

Money spent as EU aid continues to be poorly targeted at tackling poverty. Only 46% of EU aid reached lower income countries in 2009, compared with 74% of UK aid and 58% of EU member state governments’ aid.

Geographical proximity and ties with former colonies continue to determine the destination of much of the Commission’s foreign aid. From 2000-2009, developing European countries received $10.49 per capita, while Sub-Saharan Africa received only $3.94 per capita. Turkey was the top recipient of EU aid in 2009 and other European neighbours Kosovo and Serbia were also in the top ten recipients.

Low income

Tackling poverty: Percentage of UK aid that reaches low-income countries

In 2009, 72% of UK development aid reached low-income countries, compared to only 46% of EU aid that had the same effect. In order to maximise European development funds, Open Europe recommends that EU member states spend their aid budgets directly rather than via the EU.Source: UK Government.

Effectiveness and accountability

EU aid, which is managed by the European Commission, currently has administration costs of 5.4%, which are higher than the UK’s Department for International Development’s (DFID) costs of 4%, and the UK Government’s target of reducing these to 2% by 2014-15. Some EU aid streams, such as the programme for African, Caribbean and Pacific countries, have administration costs as high as 8.6% – above the ceiling the UK imposes when giving grants to NGOs.

€1.4bn or 10% of EU aid is needlessly passed on to other multilateral donors every year, such as the UN and World Bank. This money is simply being recycled between donors – up to three times in some cases – before it reaches a recipient country and is subject to unnecessary administration and transaction costs. In 2009, the Commission also agreed to ‘delegate’ €242.7m worth of aid spending back to the EU’s national governments, which begs the question why the money was ever given to the EU by member states in the first place.

EU aid is too often not aligned with other EU policies. For example, in 2008, the European Commission established a migration centre in Mali to provide support to migrants seeking temporary jobs in the EU. However, with only Spain having signed a migration agreement with Mali, the €10m centre has helped only six Malians find work in Europe, although the centre also served as an information and education hub.

 Overreliance on ‘budget support’

The EU’s current drive to transfer up to 50% of its aid directly to recipient governments’ treasuries, through ‘budget support’, rather than pre-agreed projects means that the EU risks donating money directly to discredited or illegitimate regimes.

While budget support does offer benefits, such as better alignment of aid with recipient countries’ national policies, the EU often lacks the proper controls and monitoring to ensure money is not wasted or lost to corruption. The huge focus on budget support risks an overreliance on an unproven development policy.

Some aid funding does not even leave the EU, or even Brussels. In 2009 alone, the EU granted a Brussels-based communications agency nearly €500,000 to produce various promotional brochures and campaigns. This included €90,000 to co-ordinate an “I fight poverty” music contest amongst young people in Europe, to increase “development awareness”. However, Open Europe also highlights examples of EU aid well spent, which could be built on in the future, where the link between aid and performance has been strong.

Conclusions and Open Europe recommendations

  1. Despite improvements the EU’s ‘value added’ remains unclear.
  2. Contributions to the EU aid budget should be voluntary which would drive better performance and accountability.
  3. The EU’s role should be more geared towards facilitating the co-ordination and division of labour.
  4. The EU needs to avoid overreliance on budget support for delivering its aid.
  5. Aid is not the only way to foster development – the EU needs to be more open to trade and remove internal subsidies, which are particularly damaging to farmers, among others, in the developing world.

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