Print version Email to a friend

Is EU aid worth our money?

Mon, 19 Sep 2011 11:19 GMT

Source: alertnet // Katie Nguyen

A flood victim climbs a truck asking for food which is being distributed in the Muzaffargarh district of Pakistan's Punjab province Sept 10, 2010. Six weeks after Pakistan was ravaged by floods, the European Union is still struggling to decide how to help beyond emergency aid, with a plan to offer lucrative trade concessions locked in dispute. REUTERS/Damir Sagolj

By Katie Nguyen

LONDON (AlertNet) - Value for money. More bang for your buck. Making every penny count.

In economically lean times, these phrases are on everyone's lips – especially in debates about aid.

Seven months after Britain unveiled a major shake-up of its aid budget, the European Commission is due to publish next month proposals to make its development policy more focused, efficient and effective.

The move comes ahead of a major international aid effectiveness conference to be held in Busan, South Korea, in November, which will review progress in improving the impact and value for money (that phrase again) of development aid.

In case you didn't know, the European Union is the world's largest donor – but only if you take the EU as a whole: member states’ bilateral aid, plus the European Commission, the EU's executive arm.

EU overseas development assistance (ODA) was worth 54 billion euros ($74 billion) last year, or 60 percent of total ODA.

After rather a lot of back and forth with the number-crunchers in Brussels, here’s a breakdown.

Last year, the EU committed 11.1 billion euros ($15.1 billion) to external aid via:

- the EU budget to which all member states contribute (8.45 billion euros), and

- the European Development Fund, a separate fund to which member states contribute under a pact called the Cotonou Agreement (2.65 billion euros).

EU external aid accounted for 6 percent of the EU’s total budget of 139.8 billion euros in 2010.

It seems like a lot of money for cash-strapped governments to be shelling out. And some taxpayers must be asking, as last week's Overseas Development Institute (ODI) discussion did – “EU aid: What is it for?”

Almost too many things to grasp, according to Stephen Booth, research director at the Open Europe think tank and co-author of a pamphlet that attempts to answer that question.

"The EU's aid budget as it currently stands is designed to do many different things at once," he told the audience.

"It's used for programmes in sub-Saharan Africa and Central Asia; it's used in the EU's neighbourhood, including in several middle-income countries in Eastern Europe, the Middle East and North Africa."

"It's used for pre-accession funding to help supposedly future members of the EU, such as Turkey, make the grade. And finally, some of it is also passed on to other multilateral institutions such as the U.N. and the World Bank," he added.

The sheer number of different objectives makes it hard for governments and taxpayers to understand what EU aid is trying to achieve, he said.

Booth said countries should think about transferring aid money directly to multilateral institutions rather than via the European Commission to cut down on administrative costs and duplication.

Moreover, he argued that all contributions to the EU aid budget should be voluntary to encourage effectiveness and allow governments to withhold funds if they’re not seeing good enough results.

Britain, he suggested, should spend its aid budget directly through its Department for International Development (DfID) with the possibility of opting into EU programmes.

NEW GEOGRAPHY OF POVERTY

This last idea was scorned by Baroness Glenys Kinnock, spokeswoman for the opposition Labour party in the House of Lords, Britain's upper chamber of parliament.

She said the EU gives Britain influence in parts of the world where DfID doesn’t work, citing Haiti, Ivory Coast and the so-called Arab Spring countries.

"The EU understands that individual country impact will continue to decline because of the influence of the BRICS - Brazil, Russia, India, China and South Africa," she said. "As this influence continues to grow, so it is important individual countries join together in order to be more effective."

And on the issue of where aid should be focused, Kinnock pointed to the new "geography of poverty".

Twenty years ago, 90 percent of the world's poor lived in lower-income countries, but now 75 percent live in middle-income countries like India and Mexico, she said.

While hailing "remarkable" improvements in transparency and accountability over the past decade, she proposed that the European Commission should put online country-by-country details of aid delivery, disbursement and impact.

Member of Parliament Chris Heaton-Harris, a Eurosceptic Conservative, reminded everyone of how wrong things can go.

He recalled the 170-million-pound aid package ($268 million) the EU pledged after Hurricane Mitch hit Central America, killing thousands of people, leaving tens of thousands more homeless, and destroying crops and livelihoods in 1998.

"Two years later not a penny of that aid had been delivered," he said. "In 2000, the House of Commons select committee on international development would accuse the European Commission of gesture politics."

"The problems were worse than that because internal investigations within the European Commission found what the select committee would later call 'Kafkaesque' bureaucracy and terrible mismanagement within the Commission itself."

IN DEFENCE OF AID

This example didn't impress the final speaker, Simon Maxwell, a senior ODI research associate, who noted that it wasn't exactly fresh.

He described some of the development successes of the last generation, thanks to the efforts of the countries themselves but also the aid they received.

Infant mortality has halved and life expectancy has risen in many countries by 20 years, he said. There are millions of people now on HIV/AIDS treatment in Africa, and tens of millions of children in school.

He added that aid is heavily constrained by rules set out by the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD).

"You can't spend aid - whether it's in Bosnia or in Burundi or Bolivia - on anything you like. There are rules on what counts as aid," Maxwell said. "The European Commission adheres to these rules: You can't spend on the military; you can only spend on the police in certain circumstances; aid has to be poverty-reducing."

The debate suggested the truth lies somewhere between fans of aid and those who think it’s a waste of precious funds.

(Editing by Megan Rowling)