Aid budgets – Victims of the EU crisis

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Europe accounts for more than half of the development aid worldwide. But owing to its economic crisis, aid budget cuts have been decided. Southern poor will also pay the price of this crisis.

On the last 8 February, EU leaders agreed on a 960 billion euros budget for the 2014-2020 period, about  73 billion below the figure proposed by the European Commission. Inevitably, the move will have consequences on the aid budgets, in sharp contrast with the trends observed in emerging aid2countries such South Korea and Turkey, which with 1 billion euros each of development aid in 2011, have contributed more than Austria, Luxembourg and as much as Finland. But the rise of these new donors cannot compensate the decline of European aid. Indeed, in 2011, with a total of 55 billion euros, the EU and its member states accounted with 66 billion euros for 55 % of the global aid flows to developing countries.
 The trend looks irreversible. Last November already, the President of the European Council, Herman Van Rompuy proposed a 11.26% cut to 26,9 bn in the 11th European Development Fund (EDF). The EDF  which is managed by the Commission, separately from the EU budget, covers the development aid to the 80 African, Caribbean and Pacific countries which signed in 2000, the Cotonou agreement with the European Union.
In spite of the EU Council’s cut in the European Commision’s proposal, the 11th EDF will be 19% higher on an annual basis than the 10th EDF for the 2008-2013 period. However, ACP diplomats in Brussels claim that in reality, there will be a decline in aid per capita in real terms. In the view of the ACP Secretary General,  Mohammed Ibn Chambas of Ghana, the timing of these cuts is particularly unfortunate. He recognises the “fiscal challenges’ faced by EU member states. But at the same time, he argues that “vulnerable communities in ACP countries are the worst hit by the global economic crisis’ and that showing solidarity with the poor is preferable to  attempting to balance budgets. Cutting the EDF budget could mean missing the United Nations’ Millennium Development Goal of halving the number of people living in absolute poverty by 2015”.

To cut more

European aid from the member states is falling much faster than the funds managed by the European Commission. In 2011, eleven of the 15 original member states cut their aid. The worst affected by the crisis did it in spectacular proportions. That was the case of Greece which cut aid funding by 38%, Cyprus (-37.5% and Spain (-32%). But substantial cuts were also made by Austria (-13% ) and aid5Belgium (-11%). France cut 406 ml. while the Netherlands reduced their aid budget on that year by 251 ml. The United Kingdom is one of the few countries that will achieve the 0.7% of Gross National Product in 2013 target to meet the Millennium Development Goal challenges. Yet, in real terms, the amount will decline because of the recession in the UK that shrinked this country’s GNP. Germany and Sweden have slightly increased their aid but not in sufficient proportions to compensate for the cuts of other EU member states.
But that is only a beginning. The worse is to come. In 2012, the Belgian government announced another 400 ml. cut of the development aid budget, while the Netherlands anticipate a reduction of 1 billion euros between 2013 and 2017. Greece, Spain and Portugal are also expected to cut more, since the crisis is far from finished in these countries. In front of this situation, European donors are putting much emphasis on the improvement of “aid effectiveness”, trying to persuade both the European public opinion and the recipient countries in the South that it is possible to “achieve more with less”. One of the pillars of this policy is to ensure a better coordination between EU states and institutions and like-minded. International organisations or countries to avoid replication and go as far as embarking on a “joint programming” with the beneficiary country. Ghana and Ethiopia were choosen last year as the test-cases for this new policy.
Clearly, the EU is realising that it has no longer the muscle to do it alone in developing countries. One of the symptoms is that it has approached large emerging countries to advocate for a triangular cooperation between Europe, the emerging countries and the poorer countries of the South. The issue was discussed in 2011a at the Busan Forum, in South Korea, between the Organisation for Economic aid4Cooperation and Development (OECD) countries, India and China. Observers of non governmental organisations report that it was a dialogue of the deaf, for several reasons. On the one hand, large Asian countries point out that their partners in South-East Asia or in Africa, do not want European interference, in their bilateral deals with them, such as conditions in terms of governance, human rights or the respect of the rule of law. On the other hand, the large emerging countries find that European criteria concepts are too complex and sophisticated and would bind them.

Criticism from the NGOs

The cuts decided by the European Council have prompted sharp criticism from the NGOs. The director of Oxfam International office in Brussels, Natalia Alonso says that “EU aid is not only a good investment in our common future, it is also an act of solidarity that provides aid that saves lives and helps millions of people around the world to escape from poverty”.  In the opinion of the director general of Save the Children in Germany, Kathrin Wieland, time is not appropriated for such cuts, owing to the number of global challenges, such as the Arab spring, droughts in Africa, earthquakes and severe storms and also the current conflicts in Mali and Syria.
European lawmakers are also unhappy about the cuts. As the decision to reduce aid budgets and the European budget for the 2014-2020 period, was already looming, the Development Committee of the European Parliament, approved a report in December that expressed “ deep  concern at the proposal presented to the Member States on 22 November 2012 by the President of the Council, Herman Van Rompuy, which provides for an 11 % reduction in the 11th EDF budget proposed in July 2012 by the Commission”. The European MPs also draw the attention of the EU leaders and of the public opinion “to the glaring  contradiction between the repeated undertakings given by the Council to meet development aid targets by 2015 and the substantial cuts to international development appropriations in national and Union budget”. And the MPs conclude that “ in making these budget cuts, the Union and its Member States, will be held primarily responsible if the objective of reducing global poverty levels by half is not met by 2015”.

François Misser


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