# EUR-Lex - 52013SC0307 - EN

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# 52013SC0307

**COMMISSION STAFF WORKING DOCUMENT Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Annual Report 2013 on the European Union's Development and external assistance policies and their implementation in 2012 /* SWD/2013/0307 final */**

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Table of Contents

1..... Chapter
1 - Delivering on commitments. 3

1.1.    EU response to world
developments in 2012. 5

1.2.    Leading the way in
development policy. 9

1.2.1.     A more
strategic approach: implementing the "Agenda for Change" 9

1.2.2.     Responding
to global challenges and supporting long-term reforms. 10

1.2.3.     Making a
difference: new instruments and aid modalities. 12

1.3.    Keeping long-term promises. 13

1.3.1.     Progress
in achieving the MDGs and preparation of the post-MDG framework  13

1.3.2.     Focusing
on poverty. 18

1.3.3.     Strengthening
human rights and good governance. 20

1.3.4.     Mainstreaming
of cross-cutting issues. 21

1.3.5.     Cooperation
with non-state actors and local authorities. 22

1.3.6.     Financing
for development 24

1.3.7.     The role
of the private sector 26

1.4.    Better and more effective aid. 27

1.4.1.     Aid
effectiveness and joint programming. 27

1.4.2.     Cooperation
with the donor community. 29

1.4.3.     Cooperation
with international organisations. 30

1.4.4.     Coherence
between development and other policies. 32

1.5.    Outlook 2013. 34

2..... Chapter
2 - Implementation: geographic overview... 35

2.1.    European Neighbourhood and
the Middle East 35

2.1.1.     European
Neighbourhood & Russia. 35

2.1.2.     Middle
East 55

2.2.    Sub-Saharan Africa & all
ACP programmes. 58

2.2.1.     South
Africa. 72

2.2.2.     Intra-ACP
programmes (including water and energy) 75

2.3.    Latin America & the
Caribbean. 77

2.3.1.     Latin
America. 77

2.3.2.     Caribbean. 90

2.4.    Asia, Central Asia & the
Pacific. 97

2.4.1.     Asia. 97

2.4.2.     Central
Asia. 107

2.4.3.     Pacific. 114

2.5.    OCTs. 125

3..... Chapter
3 Implementation: thematic overview... 128

3.1.    The thematic programmes. 128

3.1.1.     Investing
in people. 128

3.1.2.     Non-state
actors and local authorities in development 131

3.1.3.     Migration
and asylum.. 132

3.1.4.     Environment
and sustainable management of natural resources including energy  133

3.1.5.     Food
security. 136

3.2.    Democracy and human rights. 140

3.3.    Stability. 140

3.3.1.     Crisis
response and preparedness. 140

3.3.2.     Global
and regional trans-border challenges. 140

3.4.    Nuclear safety. 140

3.5.    Humanitarian assistance. 140

3.6.    Macro-Financial Assistance. 140

4..... Chapter
4 Managing aid for results. 140

4.1.    Monitoring project
performance. 140

4.1.1.     Project
results: results-oriented monitoring. 140

4.1.2.     Evaluation:
review of the 2012 work programme. 140

4.1.3.     Lessons
learned. 140

4.2.    Aid delivery modalities. 140

4.2.1.     Developments
in aid delivery modalities and channels. 140

4.2.2.     Budget
support 140

4.2.3.     Blending
of grants and loans/innovative financing. 140

4.3.    Progress in aid management 140

4.3.1.     Progress
on qualitative issues in aid management 140

4.3.2.     Simplification
of procedures. 140

4.4.    Communication &
transparency. 140

4.4.1.     Communication
and visibility. 140

4.4.2.     Transparency. 140

5..... Chapter
5 Financial annex.. 140

5.1.    Introduction to financial
tables. 140

5.2.    Financial tables. 140

1. 
Chapter 1 - Delivering on commitments

Introduction

The European Union as a whole remains the largest
donor of official development assistance (ODA) worldwide. In 2012 it provided
collectively EUR 55.2 billion of ODA, which amounts to over 50 % of official
global ODA (as reported by the OECD Development Assistance Committee - DAC).[1] 2012 was the first year of implementing the "Agenda
for Change"[2]
after its endorsement by the Foreign Affairs Council in May. Responding to the
changing context of development cooperation it sets out a more strategic and
effective approach to poverty reduction with a view to further increasing the
impact of EU development policy.

The Agenda for Change inspired further discussions
and proposals in 2012. The European Development Days
(EDD) – an annual event for the debate of global issues and development
cooperation – were held in Brussels in October 2012. They focused on inclusive
and sustainable growth for human development in line with the Agenda for Change.

The recommendations of the
Agenda for Change have also been incorporated into the proposals for the 2014-20
external financial instruments, as well as in the new programming instructions
to EU Delegations. Several communications adopted during 2012 focused on specific
aspects of the Agenda for Change. Throughout 2012 the
EU pursued its policy of improving Policy Coherence for Development (PCD).

Supporting the objectives of "Sustainable Energy for All" (SE4ALL) gained important momentum
in 2012. EU Development Commissioner Andris Piebalgs served as a member of the SE4ALL
High Level Group launched by UN Secretary-General Ban Ki-moon. At the SE4ALL
summit organised in April by the European Commission (henceforth the
Commission) and the Danish Presidency of the Council of the European Union, Commission
President José Manuel Barroso proposed the ambitious goal of helping developing
countries to provide access to sustainable energy services to 500 million
people by 2030. The Commission is mobilising significant resources to rapidly scale
up its support for sustainable energy.

In the area of external relations, 2012
saw the deepening of relations with Europe's neighbours (with the goal of
promoting democracy, stability and prosperity) and the continued building of
strong strategic partnerships with existing and emerging global players. It was
also the second full year of the operation of the European External Action
Service (henceforth EEAS) which now oversees 141 EU Delegations worldwide.

Throughout the year, the EU continued to respond
with determination to fast-changing situations in its Neighbourhood, with the
aim of supporting and encouraging sustainable democratic transitions. The joint
communication “Delivering on a new European
Neighbourhood Policy”[3],
adopted in May, gave an assessment of the
implementation of the new approach in the Neighbourhood. Accompanied by a set
of joint staff working documents[4],
it showed the EU’s speed in laying the policy’s new foundations and that most
partner countries have responded positively, indicating their readiness to
pursue political and economic reform with increased determination and to engage
more deeply with the EU. The joint communication
"EU Support for Sustainable Change in Transition Societies"[5] adopted in October examines what the EU can offer in order to help countries in
transition achieve successful and sustainable transformation.

The EU also swiftly cut back relations
with countries violating human rights and imposed wide-ranging restrictive
measures against repressive regimes. As a result, support
was directed towards civil society and affected populations - most notably in Syria.

As part of its
long-term commitment to the transition in Afghanistan the EU continued its work
with international partners. It actively accompanied the process of reform and
transition in Myanmar/Burma. The EU equally played a key role in reacting to
the crisis in Mali and addressing security and development issues in the Sahel
region.

Throughout 2012,
the EU stepped up its engagement on regional and global challenges by promoting
a more comprehensive and coherent approach through bringing together diplomatic
initiatives, political dialogue, humanitarian aid, development assistance and
security instruments (such as CSDP operations in the Horn of Africa and the Sahel).
Since the adoption of the Horn of Africa Strategic
Framework in November 2011, the political and security situation in the Horn of
Africa (HoA) and the economic
environment have developed favourably.

In 2012, the EU
actively promoted development and stability in Asia and the Pacific by increasing
the number of high-level bilateral visits and participating in regional fora (Asia-Europe
Meeting (ASEM), Association of South-East Asian Nations (ASEAN), Pacific
Islands Forum (PIF)). In particular, the EU signed new Partnership and
Cooperation Agreements with Vietnam and the Philippines and acceded to the
Treaty of Amity and Cooperation in Southeast Asia allowing wider cooperation
across the policy board.

In 2012, the EU continued to vigorously support electoral processes
around the world by sending Electoral Observation Missions and providing
electoral assistance and support. It
began preparations for the comprehensive "EU Strategic Framework and Action
Plan on Human Rights and Democracy” across all EU external policies. This was
in line with the Commission and EU High Representative for Foreign Affairs and
Security Policy/Vice President (HR/VP)'s joint communication “Human Rights and Democracy
at the Heart of EU External Action: Towards a More Effective Approach”[6].

The strengthening of the UN remains a key element of EU external
action. In 2012 the EU continued to give priority to international peace and
security, sustainable development and human rights, as well as an effective
reform of the organisation itself. Follow-up of the Rio+20 outcomes and the
preparation of the 2013 special event to follow up on progress on the Millennium
Development Goals (MDGs) and the post-2015 framework were of particular note.
Furthermore, the EU has continued to promote human rights, democracy and the
rule of law. Following the 2011 adoption by the UN General Assembly, the EU has
consolidated its ability to effectively represent the Union at the UN as
envisioned by the Lisbon Treaty.

Progress was also made towards attaining the poverty reduction
targets of the MDGs. For example those related to reducing extreme poverty, the
provision of universal primary education, gender equality in primary education,
and access to water have been - or are likely to be - reached by 2015. However,
the world is still off-track at the global level as progress has been variable
across regions, countries and population groups. Several targets linked to maternal
and child mortality and access to sanitation are off-track.

1.1. 
EU response to world developments in 2012

Changes in the Arab world once again underlined the urgency of resuming
negotiations between Israel and the Palestinians. During 2012, the EU
continued to encourage both parties to return to the negotiating table in line
with the Quartet statement of September 2011. Regrettably, despite the support
of Jordan at the beginning of the year, these negotiations were not resumed. Reaffirming
its commitment to a two-state solution, the EU expressed its increasing concern
about developments on the ground that were threatening to make such an outcome
impossible.

In response to the dramatic deterioration
of the situation in Syria, the EU decided in 2011 to suspend bilateral
financial assistance to the government of Syria and to impose a strong package of
sanctions. At the same time the EU stepped-up its assistance to the Syrian
population affected by the crisis and the overall EU contribution for
humanitarian assistance reached almost EUR 300 million. The EU continued to
call on the members of the UN Security Council to uphold their responsibilities
in view of reaching a political solution to the conflict. The December Foreign
Affairs Council (FAC) accepted the National Coalition of the Syrian
Revolutionary and Opposition Forces as legitimate representatives of the Syrian
People.

In the case of Libya, the EU sought
to engage the provisional authorities in a dialogue covering key issues of
concern. It continued to accompany the process of democratic transition,
notably through the deployment of an EU Election Observation Mission (EU EOM)
for the July General National Congress elections and through assistance to
civil society, the security sector and governance.

The EU has increased its support to those
other partners engaged in political and economic reforms, offering the prospect
of deeper economic integration to Morocco, Tunisia, Jordan and Egypt, while
also proposing to negotiate mobility partnerships. The Commission also stepped
up support to civil society organisations throughout the region.

The EU continued to support sustainable
reforms in Eastern European countries and to advance the political
association and economic integration agenda with its partners. The main goal of
the Eastern Partnership (EaP) remains to create conditions favourable to
accelerating political association and deepening economic integration between
the EU and Ukraine, Belarus, the Republic of Moldova, Armenia, Georgia and
Azerbaijan. In May, the HR/VP and the Commission issued a roadmap listing key objectives,
reforms which partners have committed to, EU support and expected results. This
policy was endorsed by the EaP foreign ministers at their meeting in July 2012.

Good governance, respect for human rights
and economic reforms have remained priorities in EU policy towards Africa.
In support of relevant regional organisations, the EU was engaged in finding
solutions to political problems in countries subject to Article 96 of the
Cotonou Agreement (Zimbabwe, Madagascar, Guinea-Bissau, Guinea-Conakry). The EU
has supported the constitutional transfer of powers in Malawi and Ethiopia and
provided assistance to electoral processes in several countries including
Senegal, Sierra Leone and Ghana.

Since 2010, in close coordination with the
Governments of Mali, Niger and Mauritania, the EU prepared and implemented the
EU Strategy for Security and Development in the Sahel with the objective
of simultaneously promoting security, good governance and development at local,
national and regional levels. In 2012, the implementation of the strategy helped to address the longer-term security and development
impacts of the crisis in Libya.

In Mali, a
coup d'état by the army in March 2012 precipitated a terrorist takeover and the
violent imposition of an extreme version of Shari'ah Law in northern Mali, and
political paralysis in the south. The EU played a key role bringing about
international mobilisation, working to unblock the political situation, lead measures
to rebuild the army and thus contributing significantly to the efforts of the African
and French forces which intervened at Mali's request - and with UNSC approval -
in early 2013. The EU remains
determined to make a substantial contribution to the reconstruction, stabilisation
and peace-building process in the north of the country in particular. The
deployment of an EU CSDP training
mission for the Malian Defence Forces was decided to help restore the chain of
command, generate a credible threat of force and to inculcate a respect for
international humanitarian law. The EU also committed to contribute financial support to an African-led International Support Mission in
Mali.

In Niger, a new CSDP mission (EUCAP
SAHEL) was launched in July 2012 to train internal security forces and
reinforce coordination with Mali and Mauritania to tackle criminal activities, such
as drug trafficking and terrorism. Several related counter-terrorist
and security actions were accelerated and substantial additional funds provided
to strengthen security management in the region.

The EU Strategic Framework for the Horn
of Africa (HoA), adopted in November 2011, was implemented in 2012 through
sub-strategies and action plans, including: the EU Comprehensive Approach to
South Sudan; the development of counter-terrorism action plans to oppose the
threats of terrorism and piracy, a discussion paper on the EU's approach in
post-transition Somalia and the "Supporting the Horn of Africa's
Resilience" (SHARE) initiative to improve the ability
of people to withstand food
insecurity and malnutrition. Additionally, a wide range of development
cooperation projects and four CSDP missions and operations[7], currently ongoing in the HoA are
contributing towards achieving the objectives of the Strategic Framework. The EU
Special Representative (EUSR) for the HoA, working closely with the EUSR for
Sudan and South Sudan, was appointed in December 2011 to contribute to the
implementation of the Framework. In line with his mandate, the EUSR's focus
during this first year was primarily on Somalia and, with the end of the
political transition, is beginning to shift to the regional dimensions of the
Somali conflict. Finally, with the exception of the European Union Aviation Security Mission
(EUAVSEC), an EU
Operations Centre was activated in March 2012 to support and coordinate EU CSDP
action under the guidance of the Political and Security Committee (PSC).

The coups d'état in Mali in March and
Guinea Bissau in April increased the threat of organised crime which had reached
new levels of internal organisation and links to international terrorism. The
increasing incidences of crimes such as piracy, the trafficking of drugs,
people and arms etc. highlighted the need for an overall EU approach to crime
in the wider Gulf of Guinea region (including the Sahel and Northern Nigeria).
The need for a cohesive strategy was recognised and planning was started.

The first visit of President Kiir of South
Sudan to Brussels in March 2012 was an important step towards developing a
close and long-term partnership with South Sudan, the world's newest state, ranging
from development cooperation to peace and security. In addition to pioneering joint
programming with South Sudan, the EU launched the EUAVSEC mission in October
2012 to strengthen security at Juba International Airport. It is the EU's first
engagement in the country under the EU's Common Security and Defence Policy. In
cooperation with the African Union (AU), the UN and international partners, the
Special Representative for Sudan and South Sudan continues to be at the fore of
the EU’s efforts to support the resolution of outstanding issues between both
states.

After the Presidential and Parliamentary elections
of 28 November 2011 in the Democratic Republic of the Congo (DRC) the EU
EOM made a series of recommendations to improve the next stages of the current
electoral cycle (in provincial and local elections). Following the resumption
of the conflict in eastern DRC, the EU promptly mobilised its efforts and
diplomatic instruments, sparing no effort to contain the conflict and limit its
humanitarian consequences. Alongside Presidents Kabila and Kagamé, President
Van Rompuy participated in a UN high level meeting on the situation which
provided an opportunity to condemn the rebellions in DRC and to encourage
political solutions based on dialogue.

With its impressive economic performance,
increasingly solid and widespread commitment to democratic values and human
rights, and rising influence in multilateral organisations, the Latin
American and Caribbean region continued to increase in importance for the
EU during 2012.

In June 2012 both the Association Agreement
between the EU and Central America and the Free Trade Agreement with
Colombia and Peru were signed. Another essential step forward was the FAC's
approval of the EU-Caribbean Joint Strategy in November, a significant document
concerning relations with the Caribbean sub-region.

The EU and the Association of Southeast Asian Nations (ASEAN) intensified relations adopting of a Plan of Action
for the period 2013-17 at the 19th Foreign Ministers’ Meeting in April in
Brunei. The HR/VP also attended the 19th ASEAN Regional Forum ministerial
meeting in July in Phnom Penh where she signed the EU's accession to the Treaty
of Amity and Cooperation in South East Asia with the ten ASEAN Foreign
Ministers. Further advancing the dialogue on issues of mutual security, the
EU-ASEAN Senior Officials Consultation on Terrorism and Trans-national Crime
took place in Bangkok in September. The 9th ASEM Summit
on 5 and 6 November in Laos was another opportunity for Europe and Asia to continue
their region-to-region dialogue.

On 28 April, the HR/VP inaugurated a new
Office in Myanmar/Burma. As early as February on the occasion of
European Commissioner for development Andris Piebalgs’ visit, the EU had decided
on an exceptional package of development assistance for 2012-13 amounting to EUR
150 million, to support better access to education and healthcare and improve livelihoods
of the Burmese population and to provide capacity building to some key
ministries. The EU also supports the ethnic peace process through its assistance
to people uprooted and affected by conflicts in Myanmar/Burma. During his visit
to Myanmar/Burma in November, the President of the European Commission José
Manuel Barroso reaffirmed the EU's support for the substantial reforms already
underway and announced an EU contribution of EUR 700 000 as start-up funding to
the Myanmar Peace Centre.

In June 2012, the FAC underlined the
strategic importance of Central Asia for the EU in review the EU-Central
Asia Strategy. The Council also highlighted security challenges associated with
developments in Afghanistan. A high-level dialogue on the issue was agreed with
Central Asian governments by HR/VP Ashton, at the EU-Central Asia ministerial
meeting and during her subsequent tour of the region in November 2012. Human rights and the need to engage further with civil society
remain important concerns for the region.

The Council conclusions in May reaffirmed
the long-term commitment of the EU and its Member States to support Afghanistan
during its transition, pledging to
maintain levels of assistance post-2014 and to support Afghan efforts to
strengthen civilian policing and rule of law. At the Tokyo conference in July, a mutual accountability
framework was established which established the benchmarks for continuation of international
support. Negotiations on the Cooperation Agreement for Partnership and
Development (CAPD) were also launched.

1.2. 
Leading the way in development policy

1.2.1. 
A more
strategic approach: implementing the "Agenda for Change"

The Commission's proposals presented in the communication
"Increasing the Impact of EU Development Policy: An Agenda for
Change"[8]
were endorsed by the Foreign Affairs Council (FAC) on 14 May 2012.

The "Agenda for Change" sets out a more strategic approach
to poverty reduction aiming at further increasing the impact of EU development
policy. To this end, it proposes a series of key changes in the way EU
assistance is delivered. These include, inter alia, a differentiated
approach so that grant aid is directed where it is most needed and can have the
greatest impact in terms of poverty reduction; concentration on a maximum of
three sectors per country; focus on good governance, democracy and human
rights, and inclusive and sustainable growth; greater use of innovative
financing mechanisms; improved policy coherence and increased coordination and
joint actions with Member States (for more details see chapter 1 part 4).

The recommendations of the Agenda for Change have been integrated
into the proposals for financial instruments for the period 2014-20, as well as
into the new programming instructions to EU Delegations.

In the context of the Development Cooperation Instrument (DCI), the
Commission has, among other things, proposed to stop bilateral aid to most
upper middle income countries and certain large emerging economies which have
sufficient domestic resources to address poverty, while considering new forms
of partnership with these countries.

Within the programming exercise initiated in 2012, the Commission and
the EEAS has also undertaken to ensure that EU development cooperation at
country level concentrates on a maximum of three sectors, drawn from the two
overarching priorities of human rights, democracy and good governance and
inclusive and sustainable growth.

Moreover, to further strengthen policies in priority areas, the
Commission issued specific communications in 2012 on "Social Protection in
European Union Development Cooperation", "The Roots of Democracy and Sustainable Development: Europe's Engagement
with Civil Society in External Relations" and "The EU Approach
to Resilience: Learning from Food Crises".

In 2012, the Commission increased the use of blending, where grant and non-grant resources such as loans and equity are combined
to create the right financing-mix for specific projects.
The EU established three new blending mechanisms for Asia, the Caribbean and
the Pacific. As a result, EU grants of more than EUR 400 million made investment
projects in beneficiary countries possible, with a total project volume of
approximately EUR 10 billion. The EU Platform for Blending in External
Cooperation was launched in December to further improve the performance of
blending mechanisms.

The EU and its Member States have also taken steps to improve
coordination and to make progress on joint programming (see chapter 1 part 1.4).

Commission services began defining an overall results reporting
framework and on reforming monitoring and reporting systems relating to the
implementation of projects and programmes. The Commission also organised
discussions with Member States’ experts to explore common approaches to reporting
results.

The approach to future EU budget support to third
countries[9] was endorsed by the FAC
on 14 May 2012 and translated into
practice (for further details see chapter 4 part 2.2).

1.2.2. 
        Responding to global challenges and supporting long-term
reforms

In recent years there has been an increase in the number of natural
and human disasters, such as droughts and conflicts in addition to the
emergence of long-term challenges that have led to increased food prices. In countries
where many people have insufficient access to food these factors have contributed
further to the vulnerability of the poorest. The EU has increased its support
to developing countries to strengthen their resilience to such shocks, for
example, by adapting and enhancing agricultural methods. In this respect, 2012
marked a critical year.

The communication "The EU Approach to Resilience: Learning from
Food Security Crises", adopted by the Commission in October 2012, outlined
ten critical steps to increase resilience for the world’s most vulnerable
people. These ranged from the design of national resilience strategies and
disaster prevention/management plans to efficient early-warning systems in
disaster-prone countries and innovative approaches to risk management.

The policy builds on the promising results of the EU's
resilience-boosting initiatives in the Sahel and the HoA, which formed part of
its response to the droughts in these regions. The Alliance
Globale pour l'Initiative Résilience (AGIR-Sahel) and Supporting Horn of Africa Resilience (SHARE)
seek to break the vicious cycle of drought, hunger and poverty through
sustained coordination between humanitarian and development assistance. (See
box in section 2.2 for more details on AGIR-Sahel and SHARE). Preparation began
in autumn 2012 on a communication to enhance maternal and child nutrition, with
a particular focus on reducing both stunting and wasting; adoption is foreseen
for March 2013.

EU assistance saves two million lives in Niger

Over a period of four months, EU food security
assistance to Niger helped save an estimated two million lives. The assistance,
allowing for the purchase of grain and the setting-up of cash-for-work
programmes, was exclusively channelled through the national government's food
security mechanism and covers the needs of one third of the population. Thanks
to prompt and decisive action, a more serious situation was avoided.

A communication on EU Support for Sustainable Change in Transition
Societies was adopted in October[10].
It examines what the EU has to offer to help countries in transition to
democracy, building on its own experiences in the enlargement process,
neighbourhood policy and development cooperation. It also sets out a
number of concrete measures to improve the way in which the EU supports these
countries so that they can achieve lasting reforms and avoid backsliding.

The
European Commission continued to play a key role in international negotiations on
the environment and development. Highlights from 2012 include participation in
the Rio+20 UN Conference on Sustainable Development in June 2012, the 11th Conference
of the Parties (COP11) of the Convention on Biological Diversity (CBD) in
Hyderabad in October 2012, and the COP18 of the UN Framework Convention on
Climate Change in Doha in December 2012.

At
the UN Conference on Sustainable Development (Rio+20) a declaration "The Future
We Want" was adopted. It was recognised for the first time that an
inclusive green economy is an important tool in achieving sustainable
development and reducing poverty. It also acknowledged that urgent action is
needed to tackle unsustainable patterns of production and consumption. The
possibility emerged to work with a broad range of willing countries to develop
policies on the green economy as a common undertaking. It
was decided to develop Sustainable Development Goals
(SDGs) and options for an effective sustainable development finance strategy. The
EU also secured international engagement in areas such as water, oceans, land
and ecosystems, food security, energy, sustainable consumption and production
(SCP) and social protection.

During
the climate change negotiations at COP18 in Doha in December 2012, the EU
continued to play a leading role in pushing for new and more ambitious
agreements on emission reductions. These will allow global average temperature
increases to remain below the two degrees that scientists consider the
threshold to avoid "dangerous" and unmanageable consequences. The
Doha outcome was a step in the right direction: it agreed to a second
commitment period of the Kyoto Protocol and a work plan for reaching a new agreement
in 2015 covering all countries (both developed and developing) which will enter
into force in 2020. While the global agreement is not yet a reality, fieldwork
to address climate change began several years ago and the EU remains an
important supporter of the need to mitigate its effects through adaptation and
cooperation with its partner countries throughout the world.

At
the CBD COP11, parties, including the EU, agreed on the ambitious target of doubling
total biodiversity-related international financial resource flows to developing
countries by 2015 and then to at least maintain this level until 2020. The EU
is the largest contributor of biodiversity-related international finance to
developing countries, representing 53 % of total aid for biodiversity. The
protection and enhancement of biodiversity and ecosystem services provides
significant benefits for development and the green economy, and contributes to
the overall aim of eradicating poverty.

Responding to Rio +20: expanding support for transition towards a green
economy and green business development

Greening the economy is an imperative if we are to halt the
continuous and accelerating degradation of the environment and the planet's
natural capital which are the very foundations for economic and human
development as we know it. In the face of the numerous global crises (environmental,
social, and financial) and increasing poverty and inequality, the green economy
model offers a perspective for generating economic growth which is both
inclusive and environmentally sustainable.

Advancing the transformation towards a green economy requires a
range of support measures with which to carry out change at the national and
global level. These include capacity development, technical assistance and financing.
The Rio+20 Declaration "The Future We Want" invites stakeholders to
support developing countries – particularly the least developed – upon request,
to achieve sustainable development, inter alia, through green economy
policies. In this, the international donor community, alongside other actors
such as financial institutions (including the banking sector) and the business
community at large, has a key role to play.

The
EU responded to this challenge by extending existing programmes such as Forest
Law Enforcement, Governance and Trade (FLEGT) and developing new initiatives
and partnerships. These include:

• the SWITCH family of programmes which
have been expanded with a new phase of SWITCH Asia as well as new activities in
the Mediterranean and Eastern Neighbourhood. These programmes aim to support
SCP and the development of a green business sector that generates growth,
creates jobs and reduces poverty in a way that is consistent with the
principles of sustainable development.

• the UNEP Green Economy Advisory Service[11], which supports governments with
initiatives to transform and revitalise their economies, has been extended to
the Caribbean region. Additional joint programmes have also been developed with
the UNEP supporting policy development and concrete actions in the field of eco-labelling
and sustainable public procurement, as well as resource efficiency and eco-innovation
in a number of developing countries. Policy development and guidance relating
to trade and green economy opportunities have also been developed.

• a second phase of the SEED Initiative[12], a global partnership for
sustainable development that aims to support development of social and
environmental entrepreneurships, was launched.

• green business development is supported through
country programmes, as is the case in Lebanon.

1.2.3. 
        Making a difference: new instruments and aid modalities

The external financial instruments proposed by the Commission on 7
December 2011 provide the tools for more prominent,
flexible and effective European external action over the period 2014-20. They
pursue the strategic objectives of EU external policy based on the Europe 2020
strategy, which provides a global vision of future EU action in a changing and globalising
world. They translate, in operational terms, the priorities of the Agenda for
Change and of the new vision for the European Neighbourhood Policy (ENP).

The new instruments will allow the EU to respond to global
challenges (such as climate change and hunger), to promote the EU's values and
support its interests abroad. They will also increase the impact of EU action
to work to eradicate poverty in the world and invest in the long-term
prosperity and stability of our Neighbourhood. Furthermore, they will help us
to strengthen international security, to take steps to prevent natural or
man-made disasters, and to respond more effectively when they occur.

In the midst of a global economic crisis, the EU must direct
its resources where they are most needed and where they will have the greatest
impact and added value. All instruments have been revised so that they are
better adapted to the evolving international context by permitting greater
flexibility and reactivity, making them better equipped to face these new
challenges. Examples include the Arab Spring with the European Neighbourhood
Instrument and promoting EU interests abroad and underpinning strategic
relations with emerging economies (such as China, Brazil and India) with the
new Partnership Instrument. The new instruments are based on the following:

• a
differentiated approach will be used in the DCI
with bilateral cooperation benefiting the poorest countries where the EU will
continue to deliver long-term programmed assistance focusing on poverty
eradication. Allocation will be based on needs, capacities, commitments and
potential impact. When it comes to strategic emerging economies, the EU will
focus primarily on other forms of partnership and will seek to better promote
its own strategic interests.

• strengthened
accountability will be applied and the allocation
and disbursement of funds linked to the progress made in implementing
commitments by the partner countries. Respect and promotion of human rights,
democratic values and the rule of law will also underpin EU external action
under the new instruments.

• increased
flexibility in the allocation of funds will allow a
response to urgent needs and to crisis situations with the possibility of using
non-programmed amounts. Flexibility is key to rapidly sourcing development
money in order to jump-start the recovery and transition process of a country emerging
from crisis.

• using resources
strategically by blending EU grants with other
non-grant resources such as loans and equity will unlock additional public and
private financing for investment projects in partner countries. This innovative
use of grants is designed to increase the impact of EU external cooperation and
development policy.

1.3. 
Keeping long-term promises
1.3.1. 
Progress in
achieving the MDGs and preparation of the post-MDG framework

Poverty and hunger

According to most recent figures available[13], the world has reached its
objective of halving the number of people leaving in extreme poverty ahead of
the target fixed in the Millennium Declaration in all geographic regions,
including in sub-Saharan Africa.

In 2012 global statistics highlighted that
the people going hungry had declined, indicating that 55 million people had
improved their food security; however, there remain 870 million people without
access to sufficient food. The EU is committed to seeing this number decline further.

EU food facility improves the lives of 59
million

In three years, the EU's EUR 1 billion food
facility has improved the lives of over 59 million people in 49 countries and
provided indirect support for some 93 million others. Two programmes that helped
facilitate these advances are a livestock vaccination programme, which has
resulted in the inoculation of over 44.6 million livestock, and a training programme
in agricultural production for 1.5 million people.

Fighting undernutrition is vital; in 2012 the EU committed itself to supporting
partner countries in reducing the number of children who suffer from stunted
growth by at least 7 million by 2025. Commissioner Piebalgs currently serves as
a member of the Scaling Up Nutrition (SUN) movement Lead Group, which provides
strategic direction for the movement. He also attended the Global Event on
Nutrition held in London in August, where he reiterated that the Commission was
ready to support partner countries to reach their targets to reduce the number
of stunted children. The EU played an active role in May at the G8 Summit where
a 'New alliance to improve food security and nutrition ' was launched. The EU
also played an important role at the latest G20 to make nutrition a top
priority for world leaders.

Too often, the most vulnerable members of society are
left behind in the creation of wealth and in sharing the benefits of growth and
development. The lack of social protection represents an obstacle to long-term
and sustainable development and the extension of basic
social protection guarantees remains a major challenge in many countries for
the coming years. Subsequent to a broad consultation
process, the Commission adopted the first communication on social protection in
EU development cooperation[14]
in August 2012. It outlines how future EU aid should work to support the
development of nationally owned social protection policies and programmes,
including social protection floors. Social protection
is included in the goals proposed by the High Level Panel on the Post-2015
Agenda and put forward in the Open Working Group on Sustainable Development
Goals. Following a request from the Council[15],
the Commission is examining how best to integrate social protection in the
post-2015 development agenda and to ensuring that social protection is included
in policy dialogues with partner countries.

Social
protection: increasing opportunity and reducing inequality

A lack of
social protection can be a barrier to long-term and sustainable development and
contribute to inequality. The EU works to improve employment conditions,
support job creation, self-employment and income generating activities, to
improve jobs for decent work, and combat child labour.

Some
examples of this are in the area of waste collection and recycling where the EU
has supported pre-collectors, waste workers, and recyclers in Ho Chi Minh City (Vietnam), Bogota (Colombia), Addis
Ababa (Ethiopia) and Antananarivo (Madagascar). This support aims to reinforce workers’ organisational abilities, increase revenue social inclusion, value
their profession and give them access to adequate and long-lasting social
protection.

Environmental sustainability

The MDG on sustainable access to drinking water was reached five
years ahead of the 2015 deadline. The objective of ensuring that 88% of the
world's population can benefit from a reliable supply of safe drinking water
supply was slightly exceeded[16].
This achievement reflects the concerted effort of the international community,
to which the EU made a prominent contribution through financial support
delivered through the national and regional indicative programmes, the Water
Facility and the MDG initiative.

However, huge
disparities continue among regions but also between rural and urban areas.
While coverage of improved water supply sources amounts to 90% or more in Latin
America and the Caribbean, Northern Africa and large parts of Asia, it is only
61% in sub-Saharan Africa. Worldwide 96% of urban population had accessed to
improved water supply services in 2010 against 81% of the rural population. The
sanitation MDG still remains off track, with no more than 63% of the world's
population having access to improved sanitation against the aim of 75% by 2015.
Here again, 44% of rural population has no access to an improved basic
sanitation against 8% in urban areas in 2010. Complementary efforts concerning
water quality are also to be taken into account in defining targets and
policies[17].

The EU is a key
player and leads internationally recognised initiatives on environmental
sustainability:

· 
the Global Climate Change Alliance (GCCA): by
the end of 2012 over 45 GCCA programmes financed from an envelope of more than EUR
285 million were being run or in preparation in more than 35 countries

· 
the EU Forest Law Enforcement, Governance and
Trade (FLEGT): Ghana, Liberia, CAR, Congo, Cameroon and Indonesia
concluded a Voluntary Partnership Agreement (VPA). Interest in FLEGT increased
with Guyana, Honduras, Laos and Ivory Coast asking to enter VPA negotiations.
Vietnam, Malaysia, Gabon and DRC countries are still in the negotiation
process.

· 
the ACP-EU Water Facility: a call for
proposals was launched and 15 projects were selected. Two projects were
approved within the Pooling Mechanism.

· 
the EU MDG Initiative: a call for proposals on
sanitation was launched within the Facility. In addition, under the EU MDG
Initiative, EUR 266 million was committed in 2012 to contribute to water and
sanitation MDGs in 19 ACP countries.

Sustainable energy

Worldwide 1.3 billion people lack electricity to light their homes
for studying or to conduct business. It is therefore clear that sustainable
development is not possible without sustainable energy. Moreover, nearly 40% of
the world's population rely on wood, coal, charcoal, or animal waste to cook
their food breathing in toxic smoke that causes lung disease and kills nearly
two million people a year, most of them women and children.

During the EU SE4ALL Summit in
April President Barroso therefore proposed the ambitious goal of helping
developing countries provide access to sustainable energy services to 500
million people by 2030. The Commission committed EUR 400 million to energy-related
actions in Sub-Saharan Africa through blending. It is also rolling out a EUR 65
million EU technical assistance facility and more than EUR 75 million from the
Intra-ACP envelope will be dedicated to rural electrification projects.

EU
supports the construction of a photovoltaic power plant in Burkina Faso, the largest
in West Africa

Currently,
only 15% of the Burkinabe population have access to electricity and the country
still heavily depends on energy imports. The strong reliance on fossil fuels
has a negative impact on the environment. Located in Zagtouli, on the outskirts
of the capital Ouagadougou, the new power plant will have 96 000 solar
panels. It will provide 32 gigawatt hours per year, the equivalent of 6% of the
country's current electricity production. This will cover the energy
consumption of around 400 000 people. EU support for the power plant
amounts to EUR 25 million; the European Investment Bank (EIB) and the French
Development Agency (AFD) provide loans of a total of EUR 38 million.

In the framework of the EU Energy Initiative and the Africa-EU
Energy Partnership, a stakeholder forum was organised in 2012. It allowed
private sector, civil society and research stakeholders in Europe and Africa to
explore opportunities and potential synergies.

Education

Good progress has been made in primary school enrolment, with the
global average net enrolment ratio reaching 89 % in 2010. Girls are now
almost as likely to be enrolled as boys. However, secondary school enrolment is
lagging behind at 66 %. Furthermore, progress towards universal primary
enrolment has slowed and inequalities in accessing education persist. They are related
to extreme poverty, marginalised populations and conflict-affected areas.

In the programming period 2007-13, the EU
has supported education and training in 45 countries as a focal sector with a
total of EUR 2.8 billion. In the same period, EU higher education programmes
were supported with EUR 1.2 billion.

40 000
Somali students gain access to education

Since 2010,
the Commission has helped more than 40 000 students in Somalia to gain
access to basic, primary and secondary education. With one of the lowest
literacy rates in the world - an estimated 80 % of Somalis are considered
illiterate - the Commission has focused on raising levels of literacy by
building or rehabilitating over 330 classrooms. With 4 000 primary and
secondary teachers qualifying and 5 280 trainees enrolling in vocational
training thanks to EU funding, the development of skills and promotion of
employment looks set to continue.

In the Global Partnership for Education,
the Commission focused on reinforcing local education groups and promoting aid
effectiveness. Teaching issues were a special focus for the Commission in the
International Task Force on Teachers for Education for All. The Commission also
reinforced contacts with the Association for the Development of Education in
Africa to promote education policy dialogue between donors and African partners.
It also played a prominent role in the triennial conference "Critical Skills
for Sustainable Development in Africa" in February 2012 in Ouagadougou.

A Memorandum of Understanding between the
EU and UNESCO was prepared and signed in 2012.

Gender equality

Girls have benefited most from the increase
in child enrolment in primary schools since 2000. Despite the fact that girls
generally face greater barriers at the secondary level, on average parity
between both genders has almost been attained. However, Africa lags behind with
82 girls per 100 boys enrolled in secondary education. The greatest regional
differences appear in higher education with Africa at 62 girls per 100 boys compared
to the developing world as a whole where parity has been achieved.

Measured by the extent to which women have
equal access to job opportunities, their share is increasing slowly, having
risen from 35 % in 1990 to 40 % 20 years later.

Additionally, there has been progress in
women’s representation in parliaments, albeit at a slow pace. Female
representation in parliaments within the developing world has risen from 12 %
to 18 % from 2000-2012 compared to the developed world which saw an
increase of 16 % to 23 % in the same period.

A bigger role for women in politics in Egypt

Women's
rights represent 25 % of the EU's ongoing support to civil society in
Egypt. The EU aims to address the obstacles to women’s full enjoyment of their
basic rights. Activities supported include election monitoring, raising
awareness of election violations and promoting women's participation in
electoral campaigns.

Health

There is global progress towards the health-related MDGs. However,
achievements are often unequally distributed in and across countries. Children
are significantly less likely to die of disease or malnutrition since the
launch of the MDGs in 2000, while global HIV infections continue to decline (with
the exception of Eastern Europe) and access to anti-retroviral drugs has
increased. There have been big improvements in maternal health and a reduction
in maternal deaths, but progress remains slow. There has also been a reduction
in adolescent childbearing and an increased use of contraceptives since the
launch of the MDGs, albeit at a slower pace. In particular, Sub-Saharan Africa
and fragile and post-conflict countries lag behind. In 2012 major programmes
implementing the 2011 EUR 1 billion MDG Initiative were set in motion in Ghana,
Zambia and Botswana.

Addressing maternal mortality requires
strengthening comprehensive healthcare systems, as stated in the 2010 Council conclusions
on global health[18].
The EU is delivering on its commitments to aid effectiveness in the health
sector by using bilateral programmes to accelerate progress towards achievement
of the health-related MDGs.

Improving
maternal and child health in South Sudan

The EU is
helping to improve maternal and child health in South Sudan, which has indicators
that are among the lowest in the world: South Sudan has 19 midwives, yet needs
2 000. By contributing to a pool to deliver basic services, the EU has
strengthened the healthcare system and supported county hospitals through
comprehensive emergency obstetric care and the building up of human resources.

Globally, the EU supported the
International Health Partnership in promoting the harmonisation and alignment
of health support to one national health strategy, one health budget and one
monitoring framework. The EU has used its influence on the Board of the Global
Fund to fight Aids, Malaria and Tuberculosis as well as to introduce a new
funding model more aligned with national strategies and plans.

Preparation of a post-2015 framework

Preparation for the
UN Special Event to follow up on efforts made towards achieving the MDGs
(September 2013) and more generally the post-2015 framework gained momentum
throughout 2012 and Commissioner Piebalgs was appointed as a member of the UN
Secretary General's High Level Panel on post-2015. At EU level a communication,
taking into account the outcome of a public consultation[19], is expected to be adopted in February  2013 setting out the
principles for an EU approach to an overarching post-2015 framework bringing
together poverty eradication and sustainable development, including the
follow-up to the Rio+20 Conference. The approach is expected to be adopted by
the Council in June 2013.

1.3.2. 
Focusing on
poverty

The Lisbon Treaty puts fighting poverty at
the core of European external and development policies. The EU has already done
much to help reduce poverty and in particular to support the achievements of
the Millennium Development Goals (MDGs). The EU and its Member States are
collectively the largest donor, as reported by the Development Assistance
Committee (DAC) of the OECD. Even though the global economic and financial
crisis, exacerbated by the food and energy crisis have seriously challenged
prospects for poverty reduction, progress has nevertheless been made towards
reaching the targets of the MDGs. However, this has been highly uneven among
regions, countries and population groups.

In April 2011, no low-income fragile or
conflict-affected country had achieved a single MDG and few are expected to
meet any of the targets by 2015. According to the World Bank nearly 1.3 billion
people in the world remain below the extreme poverty line with an income of USD
1.25 or less a day. Another 2.6 billion live on less than USD 2 a day and more
than 870 million people do not have enough to eat.

Progress in reducing poverty

All EU partners in Eastern Europe and the Caucasus covered
by the European Neighbourhood and Partnership Instrument (ENPI) are now
classified as Middle–Income Countries (MICs). While poverty in the region has
been reduced, social inequality and exclusion are still increasing at country
and regional levels. Regional needs are significant. Although the Republic of
Moldova[20] has been reclassified as a low–middle
income country, it remains Europe’s poorest country.

Mediterranean countries covered by the ENPI also have to
cope with poverty (all of them, apart from Israel and Palestine, belong to the
MIC category). The Arab Spring offers an opportunity for the southern
Neighbourhood to carry out reforms needed for better governance and inclusive
and sustainable growth for progress on poverty reduction.

EU assistance through the ENPI provides major support to
reduce poverty. Apart from Syria, the most difficult social situation remains
that of Palestine where, despite humanitarian assistance, more than 30 % of the
Palestinian population still live in poverty.

Iraq on the other hand is trying to emerge from the peak
of violence in recent history. More than 23% of Iraq’s population is still
below the poverty line, which affects mostly vulnerable parts of the society
(such as widows, internally displaced persons (IDPs) and orphans). In parallel,
Iraq is experiencing a constant GDP growth in the last couple of years (almost
10 % in 2011). This is mostly due to the increase of crude oil exports as well
as subsequent investments.

Sub-Saharan Africa has managed to cope with the crisis
better than expected and its growth rates are above pre-crisis levels. As a
result, many African countries have made progress towards the MDGs. For
example, four countries: Cape Verde, Ethiopia and Ghana are projected to
achieve most of the MDGs, if not by 2015, then soon thereafter. However,
serious challenges remain. About half of the population still lives on USD 1.25
a day, and development progress is neither reaching those most in need nor
vulnerable groups. Weak governance is another challenge.

Despite a significant growth
rate of the Asian economies, poverty is still widespread on the continent.
Afghanistan, Bangladesh, Cambodia, Laos, Myanmar/Burma, Nepal, North Korea,
Pakistan, as well as India, face challenges in terms of prosperity of their
population and the disparities existing between regions and the rural and urban
areas. EU cooperation through the DCI focuses on capacity building, social
infrastructures, energy efficiency, land management, climate change, food
security, environmental protection and trade integration, all of which have
spill–over effects on poverty alleviation strategies at regional and country
level.

The Pacific region faces the highest levels of
vulnerability, with very low coping capacity and resilience to shocks. Climate
change in particular is one of the greatest threats to the region and
challenges its ability to achieve the MDGs. The 2012 EU communication 'Towards
a renewed developed partnership with the Pacific region'[21] stressed the need
for synergy between development and climate change assistance, improved
management of funding for mitigation and adaptation to climate change as well
as the promotion of low carbon development. Consequently, the EU has increased
additional climate change funds for the Pacific in 2012.

Central Asian transition countries saw growth pick up in
2010 after the crisis caused weaker markets for commodity exports and lost
remittances from citizens working abroad. But overall in the region growth
rates fell, poverty levels rose and the urban/rural divide widened. To help
meet these challenges, EU support focuses on raising living standards,
developing the social sector and providing a social safety net. It also seeks
to improve the rule of law and public governance.

Progress in economic and social reform during the 1990s and early
2000s contributed to prolonged economic growth for Latin America and Caribbean
and poverty levels fell significantly. For example, more than 60 million people
were lifted out of moderate poverty between 2002 and 2012. However, 167 million
people, about 30% of the Latin American and the Caribbean population, still
lives in poverty and income inequality remains among the most acute in the
world. Haiti is the poorest country in the region and its reconstruction and
poverty challenges are being supported through a revised country strategy which
includes joint programming with EU Member States. For Latin America and the
Caribbean, EU programmes financed out of the DCI and EDF support the fight
against poverty by promoting social cohesion, equality, promoting sustainable
growth and backing regional integration. The EU policy dialogue with the region
has also been broadened to include inter alia economic competitiveness,
trade, migration, environment, energy, climate change, governance, research and
technology and sustain­able development.

1.3.3. 
Strengthening
human rights and good governance

In 2012, the EU continued to use its range of
external instruments to promote and protect human rights and good governance, as
well as to combat gender inequality in line with both the 2011 joint communication
"Human rights and democracy at the heart of EU external action – towards a
more effective approach"[22],
and the "Agenda for Change". Furthermore, the proposals presented in
December on the EU financial instruments (MFF package) show to what extent
human rights and democracy are no longer dealt with as a cross-cutting issue,
very often tackled only by the thematic instruments. They have become issues in
their own right which, through a sector-wide approach, avoid being considered
as mere ‘add-ons’ but become a foundation for more coherent and effective
programming. In addition, support to civil society worldwide has been
strengthened through the application of the European Instrument of Democracy
and Human Rights and the establishment of a new Neighbourhood Civil Society
Facility as an integral part of the EU response to the Arab Spring.

Over 130 strategies taking into account
the views of civil society were finalised worldwide in 2011. During
2012, the EU continued this process, developing human rights strategies for
almost 160 countries. The EU remained active in multilateral
fora at the UN, the Council of Europe (CoE) and the Organisation for Security
and Cooperation in Europe (OSCE) in order to set the standards of human rights
and to promote their universal application.

In 2012, the EU continued to vigorously support
electoral processes around the world by sending EOMs and Electoral Expert
Missions (EEMs) as well as providing electoral assistance and support to domestic
observers. EOMs were sent to Senegal, Algeria, Timor-Leste and Sierra Leone. EOMs
in West Africa facilitated successful presidential elections in Senegal and
Sierra Leone, in difficult conditions which the missions helped resolve. An Election
Assessment Team (EAT) was sent to Libya while EEMs were also deployed in Egypt,
Yemen, El Salvador, Guinea Bissau, Senegal, Mexico, Angola and Ghana. In
December 2012, the EU deployed a first Electoral Follow-Up Mission to Malawi
with the task of studying the progress made in electoral reforms and
contributing to the preparations of the 2014 elections.

At the beginning of 2012, the EU received implementation
reports from nine Delegations on their work as pilots on democracy support in
line with the Council conclusions of November 2009 (Benin, Ghana, Bolivia,
Lebanon, Mongolia, Kyrgyzstan, Indonesia, Maldives, and the Solomon Islands). Work
in support of democracy was incorporated into the Strategic Framework and
Action Plan adopted in June and a consolidated Joint Report on implementation was
adopted in October and presented to the Member States. The continuation of this
work is intended to end the first generation of pilots and the lessons learned will
feed into the launch of a second. In September a joint seminar between the EEAS
and Commission services celebrating the International Day of Democracy took
place. The EEAS also participated in a the CoE panel at the World Forum for
Democracy in October

1.3.4. 
Mainstreaming
of cross-cutting issues

Gender

The mainstreaming of gender equality and women’s rights is a legal
obligation in the EU. It is a challenging task which requires a systematic
approach to ensure that staff at all levels have the competences and know-how
necessary to ensure that the gender dimension is integrated into sector
programmes ranging from health and education to private sector development,
food security and infrastructure. To achieve this, various tools and training
modules have been developed and gender advisory services have been made available
for staff in Delegations and at headquarters. The EU Plan of Action on Gender
Equality and Women’s Empowerment in Development 2010-15 has mainstreaming of
gender as a principal objective. The second report on the implementation of the
plan in 2012 shows that further progress has been made in more partner
countries and that an increasing number of sectors are covered. Thus, the EU is
now using gender-sensitive indicators in its support of sectors such as
water and sanitation, health, education, food security and rural development in
31 partner countries. The issue of gender equality is being raised more frequently
in political dialogue with partner countries and in sector programme policy
dialogues. Furthermore, preparation is under way in EU Delegations to further
strengthen gender equality in the EU's cooperation in the next programming
period 2014-20.

Increased use of gender statistics and progress in reducing inequalities
is being reported. This creates conditions for better accountability in order to
demonstrate that women are equally benefiting from EU-funded development
activities. An example of this is the EU’s support to “engender” private sector
development in Senegal where the use of these indicators has resulted in more
than half of the supported businesses being run by women.

Environment
and climate change

Since Rio+20, the thinking on the green economy has developed
rapidly. The Commission aims at linking the mainstreaming of environment and
climate change in development cooperation with this wider concept of the green economy.
A draft document exploring this approach is expected in 2013.

The Commission remains committed to working with Member States to
develop an EU-wide strategy to integrate environment and climate change in
development cooperation. The need for further progress in integrating the three
strands of sustainable development was underlined in the outcome document of the
Rio+20 Conference, "The Future We Want".

Regional seminars
for EU Delegations were organised to train staff on greening development. In
2012, a one-day course was introduced in recognition of the rising importance
of the green economy. Additional workshops targeting the Overseas Countries and
Territories, the Caribbean and Asia were delivered in the context of the Global
Climate Change Alliance (GCCA). With these, the Commission has trained over 200
senior officials. The courses targeted Ministries of Finance, Planning and
Environment in an effort to catalyse the mainstreaming of climate issues in the
budgeting process. There is now a strong demand to repeat the workshops at
regional and national levels.

Culture

Culture continued to be supported as a cross-cutting dimension of
social inclusion, freedom of expression and promotion of diversity. Specifically,
in 2012, calls for proposals were launched at regional level (Neighbourhood
East, ACP countries) and projects were launched at country level (such as Mauritania,
Tanzania, Ethiopia and Algeria).

1.3.5. 
Cooperation
with non-state actors and local authorities

The roots of democracy and sustainable development:
a new policy for the EU's engagement with civil society

In
September 2012, the communication "The Roots of Democracy and Sustainable Development:
Europe's Engagement with Civil Society in External Relations"[23] was adopted. The
communication, which was endorsed by the Council in October[24], proposes
an enhanced and more strategic approach to the EU's engagement with local civil
society organisations (CSOs) in developing, Neighbourhood and enlargement countries.
The EU recognises the importance of a dynamic, pluralistic and empowered civil
society and of constructive relations between states and CSOs.

The new policy responds to contrasting
developments, ranging from the international recognition of CSOs as key
development actors to severely shrinking space for CSOs to operate in many
countries. It also builds on the results of the Structured Dialogue on the
Involvement of Civil Society and Local Authorities (LAs) in EU Development
Cooperation (2010-11) as well as
the results of an online stakeholder consultation on the subject.

The focus of the new policy is on civil society's
contribution to building stronger democratic processes and systems of
accountability and to achieving better development outcomes. It puts forward three priorities:

· 
enhancing efforts to promote a conducive environment for CSOs in
partner countries.

· 
promoting meaningful and structured participation of CSOs in the
domestic policies of partner countries, the EU programming cycle and in
international processes.

· 
increasing the capacity of local CSOs to perform their roles as
independent development actors more effectively.

Dialogue process

The Policy Forum on Development, put forward by the Commission in
2012, will continue the dialogue with CSOs and LAs. The forum will organise two
meetings per year in Brussels where participants will share best practice and
engage with the Commission on EU development policies and programmes. An
interim phase of the Policy Forum was launched in 2012, providing time for
consultation and discussion with the stakeholders of the Structured Dialogue on
the future set-up. Two interim meetings took place in Brussels in May and
October, bringing together approximately 50 CSOs and LAs from Africa, Asia,
Latin America, the European Neighbourhood and Europe, as well as a number of EU
Institutions and the Member States. Consultations and debates focused, among
other issues, on the post-Busan Agenda for Aid Effectiveness, the communication
"Civil Society Organisations and Local Authorities in Development",
the post-2015 development agenda and the new CSO-LA Strategy (2014-20).

Local authorities

The Commission has continued to cooperate closely with LAs,
particularly in order to redefine and reinforce its policy within the new
global framework for EU development cooperation that was launched in 2011 with
the Agenda for Change. The Issue Paper "Local Authorities on Development"
was prepared by the Commission services in the first half of 2012 and was
widely distributed later in 2012 in order to consult with relevant stakeholders
at four levels:

· 
the country level, through the EU Delegations

· 
the regional level, through seminars held in
collaboration with the European Platform of Local and Regional Authorities for
Development (Platforma)

· 
the European level, through info points with the
European Parliament, the Committee of the Regions and experts from the EU and Member
States and the Policy Forum on Development (CSOs and LAs)

· 
the international level, through spontaneous or
requested contributions from UN bodies and other development partners,
including United Cities and Local Governments (the global association of LAs).

The results of the consultation will inform the new Commission communication
"Local Authorities in Development", to be adopted in the first half
of 2013.

As a follow-up to the Structured Dialogue (SD), the Commission organised
a seminar on dialogue with LAs from the Neighbourhood South Region in Tunis in
November 2012. The EU Delegation in Lebanon organised a SD seminar at the national
level in March 2012.

In cooperation with the Committee of the Regions the Commission
started preparing the third “Assizes of Decentralised Cooperation” in 2012.
These are scheduled to take place in Brussels in April 2013. Launched in 2009, the
Assizes allow LA representatives from the EU and partner countries to conduct
political dialogue on development cooperation with European Institutions as
well as to exchange experiences on decentralised cooperation.

The Commission has thus continued strengthening its strategic
relationship with LAs at the political level while continuing to co-finance
projects proposed by them.

1.3.6. 
Financing for
development

In 2012, the Commission presented its 10th
annual Accountability Report on Financing for Development[25], which covered all aspects of development
finance as framed by the Monterrey Consensus and the Doha Declaration.[26] It showed that mobilising more development
financing from all avail­able sources was a necessary, but not sufficient,
condition to fight poverty and foster development. It also showed that the EU's
contribution to supporting developing countries went far beyond its Official
Development Assistance (ODA).

The EU still has some
way to go to reach its 0.7% ODA/GNI collective target by 2015. EU collective
ODA amounted to a total of EUR 55.2 billion in 2012, corresponding to 0.43 %
of combined GNI.[27]
The total ODA of the EU Member States alone that year stood at EUR 50.6
billion, or 0.39% of combined GNI, showing a decrease for the second consecutive
year. However, the EU collectively remains the world's largest donor. Furthermore, in
2012, the EU delivered on its commitments on fast-track climate finance.

In light of international developments in 2012 (Rio+20[28],
the pledge of developed countries to double resources for biodiversity by 2015[29],
climate finance negotiations[30],
the post-2015/MDG discussions), the Council has invited the Commission to
address issues of financing and other means of implementing global policy
objectives through a comprehensive and integrated approach.[31] An upcoming
Commission communication as well as the accompanying 2013 Accountability Report
will elaborate on initial elements for a common and all-embracing EU approach
to financing development and other global policy objectives beyond 2015.

Table 1: ODA table with preliminary 2012
data and estimates 2013-2015[32]

Table
2: 2012 ODA levels and 2015 individual targets of the 27 EU Member States

Table 3: Global comparison (disbursements 2012)

1.3.7. 
The role of the
private sector

The importance of private sector development for growth is widely
recognised. In the first place, the private sector creates jobs and income,
which are the best insurance against extreme poverty. In the second, the sector
also provides goods and services to the poor, such as food, telecommunications
and financial services. Some businesses provide very specific products and
services such as microfinance, micro-insurance or generic medicines. A dynamic
private sector can therefore be a source of innovation to meet the specific
needs of the poor. Furthermore, the private sector generates tax revenue which enables
public authorities in partner countries to provide basic infrastructure, create
a business enabling environment and to provide social safety nets to the
poorest. Lastly, a stronger and more diversified private sector can help to strengthen
civil society by empowering marginalised groups, generating income and offering
wider access to education and health services. Overall, private sector
development is one of the most effective ways to achieve the objectives of
sustainable growth and poverty reduction.

Since 2003[33]
EU support for private sector development has mainly focused on creating an
enabling environment for small, medium and large companies through a wide range
of interventions. These include support to improve the business environment,
strengthen specific policies (such as trade, innovation, competitiveness and
access to finance - including microfinance) and to build capacities of business
intermediary organisations such as chambers of commerce and business
development service providers.

Total EU assistance in the area of Private Sector Development
reached EUR 2.4 billion in the period 2004-10. This roughly amounts to EUR 350 million
per year, or 3 % of EU assistance in 2010. Out of the total of EUR 2.4 billion,
EUR 0.4 billion has been channelled as sector budget support.

The importance of improving the business environment, promoting a
competitive local private sector and improving
access to business and financial services was reaffirmed
in the “Agenda for Change” in 2011[34].
In addition, it acknowledges that a more active engagement with the private
sector is not limited to tapping the potential of businesses to stimulate and
sustain growth, and improve people's lives, but also to leverage additional
private funding for development assistance. It therefore emphasises the
importance of developing new ways
of engaging with the private sector, notably to leverage its activity and
resources to deliver public goods and to extend the scope and scale of the EU
regional blending facilities to further leverage financial resources for
development.

The Commission has extended the EU regional blending facilities
worldwide by establishing the Pacific and Caribbean investment
facilities in early 2012[35],
launching a comprehensive study on engaging the private sector in development
and extending the blending activities of the EU in December 2012. The study will
identify, describe and compare existing Commission and Member States' blending
initiatives and explore further blending opportunities. It also targets those EU
initiatives aiming at private sector development, private-public dialogue and the
promotion of development partnerships with the private sector and
public-private partnerships for the delivery of public goods. The study will
also present options and recommendations on the setting up and implementation
of private sector windows within these facilities. Results of the study are
expected in 2013.

1.4. 
Better and more effective aid
1.4.1. 
Aid
effectiveness and joint programming

The Busan 4th High Level Forum on Aid Effectiveness in
2011 mandated the Working Party on Aid Effectiveness to
finalise the working arrangements of the Global Partnership for Effective Development Cooperation. The
Commission represented the EU in the Post-Busan Interim Group which was formed
in early 2012 to prepare the final proposals. The last meeting
of the Working Party on Aid Effectiveness in Paris endorsed the monitoring framework and the mandate of the
Global Partnership. This included the formation of a steering committee composed
of three co-chairs and 15 steering committee members of which the Commission,
as representative of the EU, is a member. The first meeting took place in December 2012.

The following priority work areas for the partnership were defined
by the Steering Committee:

•           changes on the ground since Busan

•           domestic resource mobilisation

•           private sector

•           knowledge sharing

•           inclusiveness.

The overriding idea is for the Global Partnership to contribute to
the post-2015 development framework paying particular attention to the above
areas. Specific deliverables on these areas are to be defined.

Commitments to implement joint programming and the EU Transparency
Guarantee were two key EU deliverables at Busan (see chapter 4.2). As a follow-up to Busan, the EU also reviewed its plans to further untie
its aid.

In January 2012, the EU and Member States jointly asked their                                                                                                                                              
embassies and Delegations in 11 candidate partner countries to assess the
feasibility of joint programming. Joint programming was taken forward in six of
the 11 countries canvassed, namely Ethiopia, Ghana, Guatemala, Laos, Mali and
Rwanda. Joint programming in Haiti and South Sudan had already started as part
of an earlier process.

In Guatemala and Laos draft joint programming
documents were received in December 2012, responding to national development
plans; discussions with Member States on the ground are expected to continue into
2013 to "fine tune" these documents. In Ghana the joint programming
process is built on the Busan-inspired Compact that had already been agreed by
the government and most donors. It includes an analysis of the strategic
direction of the development of the country and ways to implement the aid
relationship. The EU and Member States will translate this into an operational
division of labour. In addition, the EU and Member States will prepare a Joint
Framework Document, encompassing the wider EU-Ghana relationship.

Joint programming in Ethiopia will build on the existing EU (plus
Norway) Joint Cooperation Strategy of 2011 while in Rwanda an advanced joint programming
document - fully synchronised with the new national development cycle of the
government - is expected by May 2013. It builds on the existing and relatively
well advanced division of labour process led by the Rwandan government itself.
In Mali joint programming has been put on hold due to the current political instability
but will be reviewed in 2013. In Haiti elements of joint programming have been
implemented. In South Sudan joint programming agreed in 2011 is currently being
implemented and a revised joint programming document is foreseen for 2014.

Lessons have been learnt from the countries in the first wave of joint
programming. It is clear that joint programming processes are most effective
when driven at the partner country level and where they have led to local
solutions adapted to specific circumstances. Ownership
and, where possible, leadership (as in the case of Rwanda) by partner countries
is important. In Rwanda and Ethiopia, non-EU actors are taking part. While in most
cases only EU donors have been involved so far, although it is important to
remain open to other committed non-EU actors. Above all, experience confirms
that synchronisation with partner countries' planning cycles is crucial.

Following discussion with Member States, and information received
from EU Delegations, a list of additional partner countries with the potential
for joint programming was drawn up. In December 2012, EU Heads of Mission in
these countries were asked to assess and report on their feasibility.

1.4.2. 
Cooperation
with the donor community

OECD

Close cooperation with the Organisation for Economic
Cooperation and Development (OECD) on develop­ment issues continued in 2012 at
all levels. Throughout the year, the Commission actively participated in the
work of the OECD Development Assistance Committee (DAC), as the EU is a full
member.

The Commission contributed to discussions at senior and
ministerial level covering the future global development agenda, including the
post-2015 development goals, the Global Partnership for Effective Development
Cooperation and external financing for development. Additionally, it helped to define
an OECD Strategy on Development (adopted in May 2012) and to promote more
active involvement of emerging donors in the OECD's work. Commissioner Piebalgs
participated in the OECD Global Forum on Development and co-chaired a
high-level event organised by the OECD as part of the 50th Anniversary of its
Development Centre.

In 2012, the DAC examined the EU's development cooperation as part
of the Peer Review exercise. The final report, published in April, recognised
the EU's role as a major global player in development because of its size,
geographical coverage and the partnership dimension of its aid programmes. The
report gave credit to many of the EU’s strengths and acknowledged that progress
had been made in making EU aid more effective since the last peer review in 2007.

Bilateral relations with traditional donors and emerging economies

As part of the broader EU-US strategic dialogue, the Commission
initiated regular consultations with its US counterparts under the EU-US
development dialogue established in 2009 to reinforce cooperation on the ground
and at policy level. In 2012 this process helped raise global political
awareness as regards food security and resilience and led to better coordination
of aid effectiveness in the post-Busan context. Issues related to
"security and development" have become part of the dialogue agenda
and are now regularly discussed by both sides. Dialogue on development related
issues continued throughout 2012 with two other countries, Japan and South
Korea.

Emerging economies play an increasing role in development and the
Commission is therefore looking to engage with these new players on global
issues and on sharing lessons learned. For example, in 2012 the EU and Brazil
continued to give importance to the role of triangular cooperation as one of
the areas of the strategic partnership.

1.4.3. 
Cooperation
with international organisations

United Nations

During the course of 2012 the Commission was involved in different
UN-related activities with an impact on development. It participated in the
main UN conferences, contributed to the debates in the UN General Assembly and
the UN Economic and Social Committee (ECOSOC), and took part in the Development
Cooperation Forum (DCF). It was also involved in major initiatives taken by the
UN Secretary-General in the field of development, such as the SE4ALL initiative,
the High Level Panel on the post-2015 Development Agenda, the Scaling Up
Nutrition Movement and the Education for All Initiative.

A key event in this respect was the UN Conference on Sustainable
Development (Rio+20) which will have a significant impact on the future of our
development work. The Rio+20 Declaration "The Future We Want"
includes commitments in a number of thematic and cross-cutting issues e.g. on
the development of an inclusive green economy, processes for the establishment
of Sustainable Development Goals and of a High Level Political Forum as well as
on the financing of sustainable development. In 2012 the Commission started
working on the follow-up to Rio+20. Ensuring coherence and coordination between
the Rio+20 follow-up and the post-2015 development framework is of great
importance and should lead to these two processes merging.

An equally important event was the XIII United Nations Conference
for Trade and Development (UNCTAD XIII). The Doha Mandate (the outcome
conference document) reaffirmed UNCTAD as the UN focal point for the integrated
treatment of trade and development, as well as interrelated issues. In light of
changes in the economic landscape, the EU emphasised the need to have suitable
policies. While many developing countries have been integrating into the world
economy, others such as the LDCs continue to lag behind and need to be
addressed.

The meetings of the UN General Assembly and the UN ECOSOC triggered
important debates on development issues and a series of Resolutions and
Ministerial Declarations were adopted shaping the future work of the UN on
development matters. Among other issues, the DCF discussed the future of
development cooperation in the context of a changed global environment, new
financing tools for development cooperation and the links with sustainable
development in a post-Rio+20 context.

Working in partnership with the UN system and ensuring a fruitful
cooperation with its agencies, funds and programmes (UN AFPS) remained an
important objective for the Commission in 2012. In 2012 the Commission signed
three Memoranda of Understanding (MoU) with UNWOMEN, UNESCO (both of which were
co-signed with the EEAS) and the International Fund for Agricultural
Development (IFAD) in order to give more substance to its Strategic Partnership
Agreements with UN entities. These MoUs are the legal basis of the Strategic
Partnership Agreements and represent the formal commitment of the co-signatory
institutions to continue their cooperation in areas of common interest.

Cooperation with the United Nations Development Programme (UNDP) and
the United Nations Industrial Development Organisation (UNIDO) was discussed at
the highest level. The EU-UNDP strategic partnership was reviewed and both
sides reaffirmed their interest in further developing cooperation in areas of
common interest and working together towards building solid foundations for
peace and development and promoting the MDGs and sustainable development.
Cooperation with UNIDO continues to produce tangible results by stimulating
economic diversification and competitiveness and both parties have agreed to
foster this cooperation.

G20 and G8

The 2012 Mexican presidency of the G20 concentrated on food security
and infrastructure and on delivering on the 2010 Seoul Multi-Year Action Plan
on Development commitments. The Commission was particularly active in the
context of the trade pillar of the action plan and supported Mexico's proposals
to add inclusive green growth to the G20 development agenda. The green growth
agenda is designed to help structurally transform economies into being
climate-friendly over the medium term, and especially to help build the
capacity of developing countries to design and implement their own green growth
policies and strategies. The Commission pressed hard for action on the critical
issue of fossil fuel subsidy reform. It continued to express strong support for
the representation of groups such as the AU, both at summits and at other
preparatory meetings wherever practical.

The Commission continued to be active in the development related
work of the G8 during 2012, where the main focus was on agriculture and food
security with the launch of a 'New Alliance to improve food security and
nutrition'. The EU played an active role with other G8 leaders to found a
partnership between partner governments in Africa, G8 countries and the private
sector to lift 50 million people out of poverty in the next ten years by
supporting agricultural development.  As is now the custom in the G8, much effort
was put into the Commission's contribution to the G8 Accountability Report. The
2012 report concentrated on food security, markets and trade and health. Moving
towards 2015, the G8 is concentrating its development efforts on delivering on
pledges to support achievement of the MDGs. The G8's focus is on key areas such
as maternal and child health, where in 2010 Presidents Barroso and Van Rompuy
made an additional EU pledge of EUR 50 million for the G8 Maternal and Child
Health Initiative. Collectively, G8 members use the accountability process and reports
to monitor these commitments. The G8 also continued to deliver on the Deauville
partnership[36]
in support of the Arab Spring countries.

International Financing Institutions

The Commission’s initiative in 2011 to
create a Taskforce for an enhanced dialogue with international financing
institutions (TF) was followed up successfully in 2012 through intensified Commission
engagement with the International Monetary Fund, World Bank Group, African
Development Bank, Asian Development Bank and Inter-American Development
Bank (IMF, WBG, AfDB, AsDB and IDB).

Based on a set of converging development policy
priorities, the Commission initiated high-level development policy exchanges
and promoted stronger partnerships.  With IMF this covered public finance
management (PFM), vulnerability and shock absorption mechanisms, fragility and
capacity building. Work with WBG and AfDB on Africa included, for example, budget
support in fragile contexts, sustainable energy for all and food and nutrition
security. Exchanges with IDB were on budget support, citizen security and
regional initiatives/blending in Latin America and Caribbean. The Commission
also engaged in various contacts between EuropeAid and the AsDB, on climate
change in cities, on regional economic outlook, and on regional integration.

Commissioner Piebalgs addressed the 85th
and 86th WB/IMF Development Committee at its Spring meeting in April
(Washington) and the Annual meeting in October (Tokyo).

1.4.4. 
Coherence between
development and other policies

The EU is a major global actor. Its policies can therefore have a
strong impact, both positive and negative, on developing countries. The Lisbon
Treaty requires the EU to take into account the objectives of development
cooperation in all its policies. Not only does this mean making efforts to avoid
negative impacts by identifying the most damaging incoherencies and correcting
them where possible, but also looking for synergies between the objectives of
EU policies generally and EU development objectives. This principle is referred
to as Policy Coherence for Development (PCD)[37].
The ambition is to improve EU policy so that it provides benefits for both the
EU and developing countries.

The work programme on policy coherence for development for the
period 2010–13 issued by the Commission[38]
serves as the guiding document for promoting PCD across EU policies. It covers
five broad challenges:

trade and finance 
 food security 
 climate change 
 migration 
 security

For each of these issues, the Commission promotes discussion between
non-development policy experts and development experts.

In order to inform policy making, the Commission also conducts and
actively supports progress on measuring development impacts of EU policies,
most often on a case-by-case basis. For example, in 2012, a study was launched
to assess the impacts of biofuel production in developing countries from the
point of view of PCD. It will be concluded in February 2013.

In 2012, the Commission focused on the follow-up to the 2011 publication
of the third biennial "whole-of-the-EU" PCD report[39]. This mainly covered the
dissemination of the report and the Commission's participation in discussions
with the Council and the European Parliament which led to the adoption of
Council Conclusions on Policy Coherence for Development[40] on 14th May 2012 and,
on 25th October 2012, to the adoption by the European Parliament of
a resolution on the EU report on policy coherence for development (2011)[41]. This follow-up process has
been important to ensure coherence and shared ownership of as well as
commitment to the PCD among all EU institutions and EU Member States.

The follow-up also included further public information and
communication efforts, with the Commission participating in various PCD-related
conferences and seminars in 2012, particularly on food security, agriculture
and trade. To raise further awareness and promote good practice, the Commission
has developed a training course on PCD and plans to conduct more sessions with
both Commission and EEAS staff in 2013.

2012 has also been the year in which more systematic cooperation
with the EEAS on PCD issues was established.

Cooperation between researchers in Europe and developing countries
continued to be supported through the Seventh Framework Programme (FP7). Since
2007 it has provided EUR 440 million to researchers in developing countries to
enable them to collaborate in projects with their European counterparts. The
Commission also adopted the communication "Enhancing and Focusing EU International
Cooperation in Research and Innovation: A Strategic Approach"[42]. One priority will be on
research and innovation targeting global challenges in health, food security,
renewable energy and climate change which greatly affect developing countries.

Information and communication technologies
(ICTs) can contribute significantly to poverty reduction and the achievement of
the MDGs. EU support for ICTs includes the project ‘ACP-Information
And Communication Technologies  (@CP-ICT)  Programme’, aiming to support
ACP governments and institutions in designing, implementing, monitoring and
evaluating their ICT national, regional and continental policies towards
sustainable development. It also includes AfricaConnect, a project aiming at
developing a regional high- speed Internet network in Southern and Eastern
Africa, connecting National Research and Education Networks (NRENs) to each
other and to GÉANT (European high-speed backbone network for research and
education), in order to provide the region with a gateway to global research
collaboration. GÉANT is interconnected by EU funding with southern
Mediterranean partner countries (through EUMEDCONNECT3), Latin America (through
ALICE2 with RedCLARA-the Latin American Research and Education Network), Asia
(through TEIN4 and CAREN) and the Caribbean (through C@ribnet)[43].

1.5. 
Outlook 2013

In 2013, the Commission will advance with
the implementation of the Agenda for Change which will continue to inform the
programming process for the 2014-20 Multiannual Financial Framework (MFF).
While the differentiation will only take effect upon the entry into force of
the new financing instruments, in 2013 the Commission will work towards
ensuring that the transition to new partnerships is not disruptive. It will
pursue the implementation of programmes already committed under the current MFF
and focus remaining commitments and on-going operations on ensuring their long-term
sustainability.

Negotiations with the European Parliament and the Council on the MFF
2014-20 will continue, with a view of reaching an inter-institutional agreement
leading to the adoption of the financial instruments’ regulations by 2013.

In promoting Policy Coherence for Development (PCD) in EU
policymaking, the Commission will prepare the fourth edition of the Biennial EU
Report on Policy Coherence for Development that is scheduled for publication in
2013.

Post-2015

The year 2013 will greatly contribute to the shaping of discussions
on the post-2015 framework and the EU intends to be actively involved in this
process.

At UN level, a UN special event on reviewing the progress on the
MDGs is scheduled for autumn 2013. In parallel, the process started to
elaborate Sustainable Development Goals (SDGs) as agreed at the UN
Conference on Sustainable Development in Rio, initiated in 2012, is likely to
yield first insights in the second half of 2013.

In addition, the UN High-level Panel on the Future of Development,
of which European Commissioner for development Andris Piebalgs is a member, is
expected to submit its final report at the end of May 2013.

At the EU level, the Commission will adopt the communication "A
Decent Life for All: Ending Poverty in Giving the World a Sustainable Future"
in February 2013 which will propose the key principles for an EU approach to
the post-2015 process.

Council conclusions on this document, expected to be adopted in June
2013, should reinforce the common EU approach to the post-2015 discussions.

The European Report on Development 2013 “Post
2015: Global Action for an Inclusive and Sustainable Future” is funded by the Commission and seven EU Member States. It will
touch on the core issues related to the future of development policy beyond
2015 and will be presented in Brussels in April 2013.

The issue of a post-2015 development framework is planned to also be
the central theme of the European Development Days in 2013.

2. 
Chapter 2 - Implementation: geographic overview

Introduction

This chapter presents the EU's external
assistance in the main geographic regions. The geographic instruments covered
here are the European Neighbourhood and Partnership Instrument (ENPI), the
Development Cooperation Instrument (DCI) and the European Development Fund
(EDF). The EDF is the main source of financing for EU assistance to Sub-Saharan
Africa (except South Africa), the Caribbean and the Pacific regions (ACP). The
EDF is separate from the EU budget, which finances external assistance to other
geographic areas and the thematic aid programmes.

This report does not cover the Common
Foreign and Security Policy (CFSP)[44]
or the current Instrument for Pre-Accession Assistance (IPA), which is covered
by a separate report[45].
A short section of this report is dedicated to humanitarian assistance[46].

While some figures and data can be found
throughout this chapter, detailed financial information can be found in Chapter
5, Financial Annex.

2.1. 
European Neighbourhood and the Middle East
2.1.1. 
European
Neighbourhood & Russia

Introduction

Mutual accountability and a shared commitment to
human rights, democracy and the rule of law are at the core of the renewed European
Neighbourhood Policy (ENP)[47].
In line with the incentive-based approach, this involves a high level of
differentiation and gives each partner country scope to develop its
relationship with the EU according to its aspirations, needs and capacities. Closer
economic integration and stronger political co-operation on governance reforms,
security and conflict resolution - including joint initiatives in international
fora on issues of common interest are key aspects of the ENP.

Above all, the ENP seeks to support 'deep and
sustainable democracy' and to form partnerships by: intensifying political and
security cooperation; supporting inclusive and sustainable economic and social
development; creating growth and jobs; strengthening trade ties, including
offering gradual economic integration in the EU single market; improving sector
cooperation; promoting further mobility and enhancing regional partnerships.

To implement this new policy, substantial -
partly additional - funding for the Neighbourhood for the period 2011-13 was
earmarked. In 2012, the umbrella programmes for providing additional support
for the Southern and Eastern Neighbourhoods (SPRING and EaPIC respectively) were
consolidated and several allocations under these programmes have been made. Country
allocations were announced to three countries in the Eastern Neighbourhood (Republic
of Moldova, Georgia and Armenia) for a total amount of EUR 65 million. In the Southern Neighbourhood, allocations under the SPRING
programme were made inter alia to Tunisia, Jordan and Morocco.

The renewed ENP and its key principles are is
also reflected in the Commission's proposal for the new European Neighbourhood
Instrument (ENI), part of the overall proposal on the 2014-20 Multiannual
Financial Framework (MFF). Negotiation of the new ENI proceeded well and had
entered trilateral discussions with the Council and the European Parliament at
the end of 2012.

The Southern Neighbourhood and the Arab
Spring

Throughout 2012, the EU implemented its response
to the Arab Spring in accordance with the two joint Commission/HR/VP
communications issued in 2011[48]. These communications set out an incentive-based approach
(the so-called “more for more” principle) designed to support partners who
deliver on reforms and build “deep and sustainable democracy”.

The EU issued several political condemnations of
the repression in Syria and applied a set of measures including economic
sanctions, trade embargoes, asset freezes and visa bans. The EU provided
humanitarian assistance to refugees from Syria.

Following the events of the Arab Spring,
President Barroso, HR/VP Ashton and Commissioner Füle regularly visited the
region, among other things to convey the EU's political commitment to the
Syrian people and to all countries engaged in the democratisation process. At
the 5+5 Summit in October[49],
President Barroso, accompanied by Commissioner Füle, also met with the leaders
of the Maghreb. EU task forces meetings organised by the EU Special
Representative for the Southern Mediterranean region (EUSR) with Tunisia,
Jordan and Egypt have enhanced EU engagement in a tailored and differentiated
way by mobilising all of the EU's assets, to catalyse the public and private
sectors.

Support for elections was a key focus of 2012 and
the EU deployed full observation missions to Tunisia, Jordan, and Algeria and an
Election Assessment Team (EAT) was sent to Libya. The EU provided technical
assistance to help the authorities organise elections in Tunisia, Libya, Egypt
and Morocco and supported civil society organisations (CSOs) in raising public
awareness of the democratic process and training domestic election observers. The
EU is also providing extensive support to help build democratic institutions.

The role of civil society is crucial to the
democratic debate and to ensure better public accountability. The Commission
created the Neighbourhood Civil Society Facility in 2011 to support civil
society and promote reform. It also increased its support to the Anna Lindh
Foundation, which facilitates the action of civil
society in the Euro-Mediterranean Region through promoting shared values and
intercultural dialogue, civil society and NGO to participation in democratic
transition and reform processes. Furthermore, the
Commission is providing financial support to the newly created “European
Endowment for Democracy” to support emerging political/social movements and
grass roots organisations.

In addition to the EUR 3.5 billion already
programmed for the 2011-13 period, the EU is providing EUR 700 million in new
grants for the southern Neighbourhood. The European Investment Bank (EIB) can
now provide additional loans of up to EUR 1.7 billion (EUR 1 billion from the "Mediterranean
mandate" and up to EUR 700 million to address climate change).
Furthermore, the enlarged European Bank for Reconstruction and Development
(EBRD) mandate – as first proposed by the EU - enabled an extra EUR 1 billion to
be mobilised for activities in Egypt, Morocco, Tunisia and Jordan.

To improve agricultural productivity, the
Commission launched an agriculture and rural development (ENPARD) initiative.
The EU is also financing programmes to boost small and medium enterprises (SMEs)
and reduce unemployment. In the areas of energy and transport, the Commission
continued its support for regulatory reform and market integration and is
consulting with Member States and Partners on the establishment of a
Mediterranean Energy Community. On the environment, the EU has continued to support
the cleaning up of the Mediterranean through the Horizon 2020 initiative.

Following the Council's adoption of negotiating
directives for Deep and Comprehensive Free Trade Areas (DCFTAs) with Morocco,
Jordan, Egypt and Tunisia in December 2011, preparatory work has been completed
with Morocco so that negotiations should start in early 2013. Preparatory work has
also progressed well with Tunisia.

Dialogues on migration, mobility and security
launched in 2011 with Tunisia and Morocco aiming at the conclusion of mobility
partnerships have progressed in 2012, and those with Morocco are nearly complete.
This will allow the Commission to request a mandate from the Council to
negotiate visa facilitation and readmission agreements.  In December the
Dialogue on migration, mobility and security was also launched with Jordan.

An additional budget for Erasmus Mundus led to
an increase in the number of student grants which rose from 599 in 2010 to 1 462
in 2012. The number of grants for Masters/PhDs rose from 34 to 161 in the same
period. Additional funds for the Tempus programme led to an increase in the
number of projects from 23 in 2010 to 34 in 2012. European Training Foundation (ETF)
funding was increased by EUR 1 million in 2012 and the Commission is extending
the e-twinning programme for schools to Tunisia and Egypt.

The EU continues to affirm its engagements with
regional organisations. In 2012 it took over the Northern Presidency of the
Union for the Mediterranean (UfM) and is currently providing support to the UfM
secretariat to develop regional projects. In November 2012, the EU-League of
Arab States Ministerial agreed a comprehensive political declaration and joint
work programme. The EU also encouraged regional integration in the Maghreb,
including through a joint communication by the Commission and the HR/VP. The
Commission has signalled its readiness to support initiatives launched in the
5+5 context.

The Eastern Neighbourhood

In 2012, the Eastern Partnership (EaP) made
significant progress both on the bilateral and multilateral track.

An important step was the joint communication “Eastern
Partnership: A Roadmap to the Autumn 2013 Summit[50]” on May 15 2012.
The accompanying bilateral and multilateral roadmaps will guide implementation
of the Partnership in the run-up to the Autumn Summit
which will be held in Vilnius in November 2013.

In July 2012 the Foreign Ministers of the Eastern
Partnership (EaP) welcomed new areas of cooperation: in public administration
reform, transport and migration and asylum. The Civil Society Forum of the EaP
participated in the multilateral meetings and national platforms have now been
established in all six EaP countries.

Russia

At the EU-Russia Summit in Brussels on 21 December 2012,
leaders on both sides underlined their determination to develop this Strategic Partnership
further on the basis of common interests and openness to discussing existing
differences. The Summit welcomed progress in the Partnership for Modernisation,
the EU-Russia Energy Roadmap and cooperation with satellite navigation, civil
protection and research and innovation. In connection with the latter, it was
announced that the year 2014 will be the EU-Russia Year of Science.

Legislative changes in Russia limiting the activities of
civil society and the exercise of fundamental rights are a matter of concern.
This issue was raised at both EU-Russia Summits in 2012, during the Human Rights
Consultations and in discussions with the European Parliament.

Foreign policy cooperation on Iran, Afghanistan and the
Middle East continues to be good. However, differences
continue over Syria and divergent views on the protracted conflicts in the Common
Neighbourhood have become more accentuated.

Russia's accession
to the WTO last year was a major step forward; effective implementation of all WTO
commitments remains crucial for full benefits to be reaped. President Putin's
confirmation during the December 2012 Summit that the new agreement was of
great importance to Russia should give renewed impetus to the talks. Progress
has been made on mobility and visa issues.

The Partnership
for Modernisation, a pragmatic framework which provides added momentum to
EU-Russian cooperation, is now being fully implemented. Twenty three EU Member
States have concluded bilateral modernisation partnerships with Russia,
reinforcing and underpinning the EU-Russia partnership.

Aid effectiveness and donor coordination

In 2012, the EU continued to play an
important role in a donor coordination process in many ENP partner countries.
Sector budget support (SBS) has been an important form of assistance and been
used to increase ownership and aid effectiveness in line with the Paris Declaration
and the Backbone Strategy. In several partner countries, such as Algeria and Belarus,
the EU is also the main donor.

The EU Delegations acted as the driving
force in promoting local donor coordination by organising regular coordination
meetings with the EU Member States, international finance institutions and
other donors (for example in Azerbaijan, Belarus, and Moldova). In contrast,
donor coordination by the national authorities remained relatively weak in some
partner countries, such as Ukraine.

Aid coordination is driven by a number of
working groups: EU Cooperation Counsellors and thematic working groups, as well
as dedicated and co-ordination meetings in the framework of budget support
programmes. By promoting sector coordination, the EU has established a fruitful
dialogue with donors in key sectors such as justice, agriculture, environment,
energy, regional development, trade and support to civil society. Furthermore, when
possible the EU has increasingly aligned its cooperation to the partner
country’s own strategies (e.g. Algeria, Tunisia, Georgia, and Armenia). In
Georgia, for instance, the working group on agriculture has played a key role
in reviewing the national agriculture strategy, paving the way for SBS. In
Belarus, the EU organised coordination meetings with the main implementers of
EU assistance to civil society while in Moldova the EU Delegation is leading
the donor coordination on Transnistria.

Aid effectiveness and donor coordination
are of particular importance to partner countries facing crisis situations. The
EU has taken a leading role in non-humanitarian donor coordination in Syria in
order to enhance the sharing of information and the coordination of existing support
to the Syrian population as well as to coordinate preparation efforts for the ensuing
transition period.

In Libya, local coordination is implemented
at both EU level and within the United Nations Special Mission to Libya's
coordination structure. This coordination was reinforced throughout 2012 with
the development of the EU Delegation to Libya that was opened in 2011. Complementary
capital-based coordination meetings take place in Brussels every two months to
address specific topics such as governance and security. Concerning Egypt, the
Donor Partnership Group worked throughout 2012 to reinvigorate donor
coordination and engagement with the new government. In Palestine, the EU
continued to play a leading role in donor coordination including at the local
EU Member States level.

The EU continued to promote specific initiatives to bolster
commitment and drive development. For example, the EU Delegation, alongside the
UN, took the lead in a formal aid coordination mechanism with the Tunisian
government as part of a concerted attempt to maximise impact and ensure that the
strategic focus of assistance is in line with the country's needs.

Working towards the MDGs

In 2012, several ENPI programmes, mainly
delivered through SBS, were directly linked to the MDGs. In addition, some
EU-funded projects - particularly grants implemented by NGOs - supported a
number of these goals. This was especially the case with projects related to
primary health care and HIV/AIDS, access to safe water, internally displaced
people, refugees and people with disabilities.

In the current crisis context in Syria, the
support provided to the Syrian population and to Syrian refugees in the
neighbouring countries (notably in Lebanon and Jordan) has contributed to the
fight against extreme poverty (MDG 1).

A number of programmes in the southern
Neighbourhood contributed towards the achievement of universal primary
education (MDG2). In Libya, for instance, the education programme "Better Quality
Education and Increased Inclusiveness for All Children" promotes universal
primary education by supporting access to quality education for all children,
including those with special needs and those affected by the conflict, particularly
internally displaced children. The EU has ensured that Palestinian refugees are
provided with education services through over 700 United Nations Relief and Works Agency for Palestinian Refugees in the Near East (UNRWA) elementary, preparatory and secondary schools and ten
vocational training centres in Palestine and its neighbouring countries
(Jordan, Syria, Lebanon). In Morocco, there has been an increase in the enrolment
of girls in school in rural areas as well as in school attendance of children
from poor families.

Promoting gender equality and empowering
women (MDG3) was supported through various EU programmes. For instance, the "Women's
and Children's Rights" programme in Ukraine promoted gender equality and
non-discrimination at work. An EU project supporting women’s active
participation in local elections and decision-making processes in Armenia aimed
to strengthen the knowledge and capacity of local authorities to bring about participatory
and gender-sensitive governance. The project also supported gender advocacy
campaigns at the local level. A similar project in Libya has built on women's
capacity to participate in political life, to take part in the constitutional
process and to fight discrimination. In addition, the education programme in
Libya promotes a gender-sensitive school environment in which textbooks and
other teaching materials have been reviewed against gender discrimination. In
the southern Neighbourhood, a new regional programme "Spring Forward for Women"
has been adopted which will help marginalised women access and participate in economic
and public life.

In Georgia, Moldova and Morocco, the EU supported
reforms of the primary health care system which contributed to maternal health
(MDG 5) and the combating of HIV/AIDS, malaria and other diseases (MDG 6). In Tunisia, support for basic
and intermediary healthcare services in the most impoverished regions also
contributed to these MDGs by increasing the range of available healthcare
services in these regions and improving access to them.

In Libya, the EU has been delivering a
comprehensive package of care services to people with HIV. Around 90 clinicians
were trained in patient care, while over 350 health care workers in hospitals
have been sensitised to HIV/AIDS. Infection-control strategies to reduce the
impact of hospital-acquired infections in Libya have been enhanced in several
hospitals - including in neonatal intensive care hospital units (MDG 4 - reducing
child mortality rates). Moreover, activities facilitating the integration of TB
and HIV services have been undertaken in order to improve the management of
both diseases. In Morocco, the EU supported the government in establishing
medical insurance for the poorest in order to make health care affordable to
them. EU support also increased the number of chronic diseases taken in charge
by public hospitals and improved access to obstetric services in public
hospitals. Thanks to EU support there was also an increase in the number of
births attended by qualified medical staff (MDG 4).

The EU also actively contributed to
environmental sustainability (MDG 7) through regional projects aimed at
increasing the use of renewable energy, depolluting the Mediterranean Sea and
using marine resources more effectively. A specific programme to improve the
supply of drinkable water in Gaza, as well as the management of solid waste,
has been set up. Both are issues of great concern for the people of the Gaza Strip.

Implementation and results

Bilateral cooperation

Southern Neighbourhood

In response to the wave of events that has
swept across the Southern Neighbourhood since the beginning of 2011, the EU has
kept up its substantial level of support to southern partner countries in 2012
by coordinating and bringing to bear all its instruments and policies.

In the Southern Neighbourhood, a few partner
countries benefited from the SPRING programme supporting their efforts in terms
of democratic and economic reform. Under this umbrella programme, the provision
of funding is linked with commitment to and progress in, deep democracy and
respect of human rights. Allocation of funding was announced for six countries
(Algeria, Egypt, Jordan, Lebanon, Morocco and Tunisia), with disbursement to be
based on partner countries' fulfilling specific sets of benchmarks.
Implementation has started in Tunisia, Jordan, Lebanon, and Morocco.

Maghreb

The EU contributed EUR 34 million to environmental
protection in Algeria via a new programme focusing on the coastal areas
around Algiers. EU cooperation also targeted the fisheries sector (EUR 15
million). Agriculture and rural development have already been supported by several
EU programmes in recent years helping to strengthen quality systems in
agriculture and national food production.

In Libya, the impact of assistance
programmes prepared after the revolution in support of democratic transition started
to be felt in 2012. Under the Public Administration Facility programme, an
induction seminar was carried out for General National Congress members. In the
education sector, 103 schools damaged by fighting have been repaired and/or
cleaned. Training programmes to help teachers identify and support students
with special needs were provided to 80 teachers, social workers and headmasters.
An additional 106 public school teachers and those working with internally
displaced persons' (IDP) camps were trained in positive discipline, children's rights
and child-centred teaching. In the civil society sector, four training centres
were set-up and over 1 200 civil society activists participated in
training sessions, of which 40 % were women. In addition, the European
Instrument for Democracy and Human Rights (EIDHR) has funded activities in the
areas of democratisation, women's rights, media training, support to torture
victims, national reconciliation and capacity-building related to the
elections.

In Morocco, the EU pursued its
support to social protection, education, literacy and health. It also supported
the government’s rural development policies and the construction of
infrastructure in landlocked areas. In 2012, three new programmes were adopted:

· 
the reform of public finance management (EUR 75
million).

· 
 support to the National Initiative for Human
Development (EUR 25 million) which aims to improve access to quality basic
social services in the poorest areas of Morocco with a view to reducing social and
regional inequalities.

· 
a programme supporting the Moroccan forestry
policy (EUR 37 million).

Additionally, eight SBS programmes were
implemented amounting to a total of EUR 73.2 million in EU financial
assistance. This type of support has proved invaluable in advancing policy
dialogue with Morocco and assisting the country with the social policies and
reform processes that it has embarked upon (e.g. in the field of health and
education).

In Tunisia, the 2012 Annual Action Plan
(AAP) was composed of two key actions: the provision of support for basic and intermediary
healthcare in the most impoverished regions of Tunisia (EUR 12 million) and a
budget support programme to support economic recovery (EUR 68 million). Jointly
implemented with the World Bank and the African Development Bank, this was the
first State Building Contract specifically tailored for an economy in
transition. Under the SPRING programme support to Tunisia has been earmarked
for: capacity building for civil society (EUR 7 million); justice sector reform
(EUR 25 million); the support of the most densely populated neighbourhoods (EUR
33 million) and the implementation of the Association Agreement and its
transition (EUR 15 million).

Mashrek

Despite political instability and a
series of transitional governments, the EU kept up its commitments to Egypt
in 2012 by adopting new programmes targeting those in most need. An existing energy
programme was scaled-up for EUR 30 million while three new programmes,
amounting to EUR 130 million were approved. One programme will improve the
health of 15 million Egyptians in four governorates in Upper Egypt through
improved water and wastewater services (EUR 10 million). Continuing EU support for
technical and vocational education, as well as training reform amounting to EUR
50 million, will improve the employment prospects of young Egyptians and
contribute to the competitiveness of the Egyptian economy by providing a skilled
workforce. In partnership with the World Bank the EU supports short-term job
creation and youth employability through the Emergency Employment Investment
Project (EUR 70 million).

In Lebanon, the EU continued to
provide assistance to: raise the living conditions of Palestinian refugees in the
country; to assist the government carry out mine clearance, improve the quality
of education and vocational training curricula and support the work of the
national employment agency. It also adopted projects designed to reinforce
democratic governance by supporting the Lebanese Parliament and assisting the
government to fulfil its international human rights obligations. Through the
SPRING programme, the EU also proposed to assist with electoral reform.

To mitigate the impact of the Syrian crisis
in Lebanon, the EU launched humanitarian and non-humanitarian aid programmes in
support of refugees and host Lebanese communities. In 2012, the ENPI provided EUR
15 million to assist the Lebanese government address the effects of the Syrian
refugee crisis. EU assistance provided to Lebanon in 2012 amounted to EUR 84
million, of which EUR 22 million from SPRING).

In the light of the crisis and
the systematic vio­lations of human rights in Syria, the EU has
suspended all cooperation with the Syrian government since 2011. However, in 2012 it remained
committed to delivering aid in support of the Syrian people, refugees,
students, human rights defenders and civil society in general. Complementing humanitarian
assistance, two special measures totalling EUR 48 million were adopted to assist Syrian civil society
and Syrian refugees in the neighbouring countries. The funds address the medium
and longer-term needs of the population (for example in education, vocational
training, livelihoods and the capacity building of Syrian CSOs). Support has also
been provided to human rights organisations and NGOs to promote activist
networking and advocacy, the monitoring of human rights violations, digital
security, support to Syrian bloggers and the independent media.

As in the previous year, EUR 2 million was
allocated for twinning programmes between Israeli and EU Member State
institutions designed to align Israel to EU standards and norms. An
additional EUR 0.5 million was allocated to the Civil Society Facility.

In Palestine, the EU continued to give strong support to the
Palestinian Authority (PA) so that it can provide essential services and
maintain a functioning administration. EU funds are conveyed through the Mécanisme Palestino-Européen de Gestion de l'Aide Socio-Economique (Pegase), which has shown itself to be a reliable and effective
system enabling the PA to pay its employees, pensioners and most vulnerable
citizens. Alongside direct financial support to the PA, the EU continued to
support the United Nations Relief and Works Agency for Palestine Refugees in
the Near East (UNRWA), which provides essential health, education and social
protection to Palestinian refugees in the Gaza Strip as well as neighbouring
countries.

The third component of bilateral
cooperation with the oPt consisted of development projects that focus on
sectors such as the rule of law, private sector development and water
infrastructure as well as in areas of concern relating to the stagnation of the
peace process, such as East Jerusalem and Area C, the part of
the West Bank under direct Israeli occupation.

The 2012 AAP for Jordan included three new initiatives targeting:
the justice sector (EUR 30 million), security sector reform (EUR 5 million) and
media and civil society support (EUR 10 million). In addition, the EU mobilised
support for Syrian refugees in Jordan, and provided non-humanitarian assistance
- principally education for Syrian refugee children in Jordan (EUR 20.8
million) - by working with UNICEF. Jordan also benefitted from an additional EUR
70 million allocation from SPRING, with EUR 30 million of this earmarked for
education reform, electoral system support, justice and businesses. EUR 40
million was allocated in the form of a Good Governance Development Contract – the
first budget support of this type in the Neighbourhood region – designed to
support democratisation and economic reform.

Eastern Neighbourhood

In Armenia, the EU continued to support reforms in justice,
public finance management (PFM), trade and education. Budget support in the
justice sector contributed to reforms leading to improved quality and access to
judicial services. New court buildings were built and training for lawyers was carried
out. Budget support for vocational education and training (VET) continued to
help the education system adapt to current job market needs. The renovation of
twelve multi-disciplinary colleges across the country was completed and several
training courses for directors and teachers were held. The new EaP's Comprehensive
Institu­tion Building (CIB) programme paved the way for capacity development of
core institutions negotiating new bilateral agreements with the EU: the Association
Agreement (AA) included a Deep and Comprehensive Free Trade Area (DCFTA). Additional
funds were granted to Armenia via the Eastern Partnership Integration and
Cooperation (EaPIC) programme to give additional support to the VET and justice
reforms. This increase in financial assistance was in line with the
“more-for-more” principle.

In Azerbaijan, SBS operations contin­ued to stimulate reforms
in the energy and justice sectors and a new programme in support of rural
development was signed. Planned sector budget programming in public financial
policy was not approved by the national authorities and consequently the total
funding for Azerbaijan in 2012 was reduced. Nevertheless, the EU maintains an
interest in continuing the policy dialogue on PFM. The twinning instrument
continued to be very successful with one of the highest rates of implementation
in the region. By the end of 2012 there were 13 ongoing twinning projects and
six more in preparation in areas such as statistics and
standardisation/metrology.

Following the 2010 post-electoral crisis in Belarus, the EU
significantly stepped up its support to civil society, students and the
independent media with a package worth over EUR 40 million to cover the period
2011-13. Two new programmes to promote the green economy and facilitate mobility
exchanges between Belarus and the EU were adopted in 2012.

EU funding provided to Georgia in 2012 supported policy
reforms in key sectors, such as agriculture, which employs almost 50 % of
the population. This support was timely as Georgia was preparing its first
comprehensive agriculture strategy to tackle competitiveness and employment.
The EU will support the implementation of this national policy, with a focus on
small farmers' associations. This support is in line with the objective of the
European Neighbourhood Programme for Agriculture and Rural Development
(ENPARD). In addition, the CIB programme supported key national institutions
involved in negotiations for future EU-Georgia agreements (Association
Agreement, including a DCFTA). Among the institutions that received EU support,
the public defender ombudsman's office gained international acknowledgement for
its independence and professionalism. Through the EaPIC programme, Georgia
received additional funds to strengthen human rights in the criminal justice
sector and to work on migration and border management, in accordance with the
"more for more" approach.

Ongoing budget support operations boosted reforms and stimulated
positive changes in Moldova. For example, the "Economic Stimulation
in Rural Areas" programme supported the implementation of regional
development policy. Through this programme, the EU also provided additional
assistance to help drought-affected Moldova during the summer. Additionally, budget
support in the health sector helped reforms in the primary health care system.
The EU also played an increasingly active role in the peaceful settlement of the
Transnistria region helping to build confidence, promote economic and social
development and encourage dialogue between LAs, civil society and others. In
2012, Moldova benefited also from increased financial assistance via the EaPIC
programme.

Energy, energy efficiency, migration, institution building and local
development were key sectors in EU cooperation with Ukraine in 2012. On
energy, the EU continued supporting sector reforms and facilitating an
alignment with EU norms and commitments in the Energy Community which Ukraine
joined in 2011. Sustainable social and economic development at local level was
boosted with a new programme for a community-based approach to local development.
Further twinning projects were launched in the areas of rail transport and
satellite navigation. The sector policy support programme (SPSP) for
administrative reform, approved in 2011, was cancelled because of lack of
progress with the civil service law. Lack of progress in public financial management
also led to a "review" of sectoral budget support payments as a
whole. At the end of the year a partial payment was made for partial progress,
as the Ukrainian government approved a concept paper and prepared an action plan
to improve public financial management.

The key aspects in the EU-Russia bilateral cooperation are the
Partnership for Modernisation and support to civil society. EU funding focused
mainly on justice and trade-related matters, particularly on technical
standards and accreditation systems. With EU assistance, Russia acceded to the
1980 Child Abduction Convention. At the end of 2012 a new project on
anti-corruption cooperation in the business sector was launched. Founded in
2011, the EU-Russia Civil Society Forum facilitated contacts between Russian
and EU civil society actors.

Regional cooperation

Cross-cutting issues such as environmental
protection, combating sea pollution, fighting organised crime and terrorism are
most effectively tackled at a regional level, complementing bilateral cooperation
programmes. Throughout 2012 the EU continued to actively use pre-existing
platforms for regional cooperation such as the EaP and the UfM.

The EU has also responded to the call for
stronger engagement with civil society as set out in the revised ENP by
launching the second phase of its Neighbourhood Civil Society Facility which
strives to increase the role of CSOs in furthering public accountability. A new
project was launched to strengthen the capacities and competencies of
journalists from the Neighbourhood in the area of European affairs.

Through a coordinated effort between the
European Institutions and all Member States, a European Endowment for Democracy
(EED) was established in 2012 as a private law Foundation under Belgian law. Its
objective is to support pro-democracy activists and/or organisations fighting for
democratic transition in the Neighbourhood and beyond, using dedicated and flexible
procedures.

Regional cooperation south

Regional cooperation with southern
neighbours in 2012 continued to focus on meeting the challenges of the popular
uprisings that have shaken the Arab world and prompted calls for dignity,
democracy and social justice.

Support for human rights, democracy and
good governance has been strengthened through programmes such as EuroMed
Justice III as well as a joint EU-Council of Europe programme. The EU also
launched an ambitious programme aiming at the political and economic
empowerment of women in the Southern Mediterranean in the context of the events
that unfolded after the Arab Spring.

In 2012 the EU remained actively engaged
with regional organisations, such as the League of Arab States and the UfM,
taking over the Northern Co-Presidency of the UfM in March 2012. This allowed a
more dynamic political exchange and a better articulation of UfM activities
with EU sector policies and priority programmes including: the Mediterranean
Solar Plan, the de-pollution of the Mediterranean as well as the development of
Motorways of the Sea and land highways. At the EU-League of Arab States (LAS)
Ministerial Meeting held in November a clear political message was given to
establish a practical cooperation between the EU and the LAS. It endorsed a
joint work programme in various fields such as the empowerment of women, crisis
management, humanitarian action, human rights and civil society.

In 2012 micro, small and medium enterprises
in the region started to receive support through the SANAD (meaning
"support" in Arabic) fund, which facilitates lending to local
enterprises via local banks and microfinance institutions.

In the area of transport, implementation of
the regional transport action plan continued and several new projects were
launched including: Aviation II and the creation of a special Mediterranean cell
in the European Aviation Safety Agency; a project aiming at reducing road accidents
in cooperation with the International Federation of Red Cross and Red Crescent
Societies; a project helping to improve the effectiveness of rail and road
transport, as well as a series of projects relating to use of satellite
navigation services in the region.

New projects have also been launched in the
area of water and the environment, tackling issues such as the sustainable consumption,
production and management of water. Support was also given to LAs in the region
to assist with the design and implementation of local sustainability strategies
such as improving energy efficiency and environmental protection.

Regional cooperation east

During 2012, support to the EaP was boosted
with key programmes in the areas of democracy, good governance and stability, economic
development, climate change, energy and the environment, and establishing contacts
between people. Five EaP flagship initiatives on border management, support for
SMEs, energy, civil protection and environmental governance are also well under
way.

To support democratic development a EUR 5 million
Police Cooperation programme was approved to increase cooperation on
cross-border crime and the rule of law in 2012. EUR 7.25 million was mobilised
for the management of the Armenia-Georgia and Belarus-Ukraine borders. The EUR 4
million Council of Europe Facility continued to support electoral and judicial
reforms and the fight against corruption and cybercrime. The EaP Civil Society
Facility allocated EUR 13 million to support the role of civil society in policy
making.

Concerning economic development, EUR 34 million
was mobilised under the SME Flagship Initiative for investment and trade facilitation
(East-Invest), the Enterprise Growth Programme-Business Advisory Services
(EGP-BAS) and an SME Financing Facility. SME policy performance was reviewed by
the OECD. In the field of transport, a EUR 3 million initiative to improve road
safety and to continue to develop a pipeline of infrastructure projects in the
EaP was launched through the TRACECA programme.

Energy cooperation remained a top priority
in 2012. Ongoing projects funded with EUR 46 million under the INOGATE programme[51], continue to support the EaP
Energy Flagship and regional energy markets. The Covenant of Mayors'
secretariat in Kiev and Tbilisi as well as a number of pilot projects in the
region were financed with EUR 6.5 million. With the support of the Commission's
Joint Research Centre (JRC), methodologies and tools for Sustainable Energy
Action Plans (SEAPs) were adapted to the needs of cities in partner countries.
Support was provided to cities developing their own SEAPs.

The agriculture and rural development
sectors were assessed in 2012 and a set of common challenges for the region
were identified. These will be discussed under the newly established EaP Panel
on Agriculture.

In the field of environment and climate
change three new programmes were launched in 2012 on: Green Economies (GREEN - EUR
10 million), Forest Law Enforcement (FLEG II -, EUR 9 million) and Climate (EUR
18 million). These programmes will help partner countries move towards the EU acquis
and integrate environment and climate change into their national strategies.

Concerning people-to-people contacts, EUR 29
million was allocated to the EaP "Youth in Action" window to support
some 1 400 projects affecting some 21 000 young people and youth
workers.

Inter–regional dimension

Inter–regional operations support both the Southern
and Eastern Regions with activities that can be managed more efficiently and
flexibly at inter–regional level. These include two institution–building
instruments: the Technical Assistance and Information Exchange instrument
(TAIEX) and the Support for Improvement in Governance and Management (SIGMA).
TAIEX aims to foster political and economic cooperation, focusing on the
approximation, application and enforcement of EU legislation through the
provision of short-term expertise, workshops and study visits. In 2012, 383
events, involving around 10 000 beneficiaries from 16 Neighbourhood
countries and Russia, were organised.

SIGMA is a joint initiative of the OECD and
the EU, which helps partner countries install governance and administrative
systems. SIGMA is active in eleven neighbouring countries: Algeria, Armenia,
Azerbaijan, Egypt, Georgia, Jordan, Lebanon, Moldova, Morocco, Tunisia and Ukraine.
Support focuses mainly on legal frameworks, civil service and justice, public
procurement, financial control and external audit. In 2012, 43 SIGMA actions
were approved. SIGMA and TAIEX activities are complementary to twinning
projects selected in the ENP countries.

Through twinning, the EU has continued to
help partner countries across the Neighbourhood acquire the necessary skills
and experience to adopt, implement and enforce EU legislation through exchanges
of public sector expertise. In 2012, 30 twinning projects were approved for 12
Neighbourhood countries with an overall budget of approximately EUR 35 million.
These focus on institutional capacity building and legal
harmonisation/approximation in the fields of finance, trade and industry, justice
and home affairs.

The 2012-14 Regional Communication
programme contributed to a greater understanding of EU policies and highlighted
the cooperation projects carried out in the ENPI region. Results included the
launch of the first ever Neighbourhood Barometer (an opinion poll among
citizens in the Neighbourhood) and the training of more than 200 journalists.

The Tempus IV and Erasmus Mundus II inter-regional
programmes are part of a strategy promoting higher education and training. In
2012, EUR 59.5 million was mobilised for Tempus to modernise and reform higher
education systems in partner countries. Erasmus Mundus received EUR 76 million
to promote student and staff mobility. Additionally, the
Commission is extending the eTwinning programme to schools in EaP countries as
well as Tunisia, and has increased support for the activities of the European Training
Foundation in the Southern Mediterranean region.

The financing
of the current Euro-Med Youth Programme has more than doubled with an
additional EUR 6 million added to the original EUR 5 million budget. These
extra funds will be allocated to the eight participating countries and to
technical assistance. An EaP window in the Youth in Action programme was
opened and a symposium on youth policy development was organised in Tunis in
August in cooperation with the Council of Europe (CoE) and the Arab League.

In spring 2012, the Commission
launched a policy dialogue on higher education and youth policies with Ministerial
counterparts, universities and other key stakeholders from the South
Mediterranean region.

The 2012-13 EaP Platform 4 work
programme extends cooperation to education, youth, research and innovation,
culture, the audio-visual sector and information society by increasing dialogue
between the EU and partner countries and reinforcing their participation in
education, research, youth and culture programmes.

A EUR 3.7 million programme was launched to
support the participation of ENP countries in the work of EU Agencies.

Following the organisation by the EU of a high-level
Euro-Mediterranean Conference in April on research and innovation, a EUR 2.5
million action was launched to support the coordination of national and
regional policies and activities of the European Member States vis-à-vis de
Mediterranean partner countries (ERA-NET). This will contribute to discussions
on a long-lasting and sustainable coordination mechanism between the EU, its
Member States and the Mediterranean partner countries in research and innovation.

The Neighbourhood Investment Facility (NIF)
combines grants and risk capital with loans provided by European finance
institutions for energy and transport infrastructure, the environment and SMEs.
Projects supported in 2012 were wide-ranging and included support for Line 3 of
the Cairo Metro and contributing risk capital to the Green for Growth Fund to broaden
the range of operations.

Cross-border cooperation

Calls for proposals worth about EUR 650
million have been launched and some 350 projects have been contracted and are
generally well advanced. Most Cross-Border Cooperation (CBC) projects support
social and economic development as well as common challenges (e.g. health,
environment, education). In addition, EUR 285 million has been mobilised for 45
large scale projects mainly concerning border crossing point infrastructure,
energy, transport and the environment. The contracting of projects will
continue throughout 2013.

Monitoring and evaluation

In 2012, Result-Orientated Monitoring
(ROM) missions were implemented in all ENPI countries, except Syria and Libya. ROM
coverage in the Neighbourhood reached 42 % of
all ongoing projects/programmes and 34 % of the overall budget.

In all, 417 ongoing interventions
(281 national projects, 64 regional programmes and 72 sub-regional CBC
projects) were reviewed using ROM methodology while 45 completed projects were assessed
ex-post amounting to a total budget of EUR 1.5 billion.

A continued improvement in the ENPI
region was visible with the average score of the national projects increasing
to 2.91 in 2012. About 83 % of the Neighbourhood portfolios scored "very
good" (A) or "good" (B). For national projects this amounted to an
increase of 6 % over 2011 while, at 5 %, the
share of "non-performing projects" was virtually halved for the same
period. The regional portfolio increased by around 20 % over 2011 and
was fuelled by the ENPI CBC sub-regional projects
which scored high on ownership and capacity building - which are usually
problematic.

An analysis of the Development Assistance Committee (DAC) criteria demonstrates
high relevance (3.05) which confirms good programming for approximately 86 %
of national interventions. Impact prospects were the second highest at
2.95 while efficiency, at 2.80, was the lowest scoring criterion. The spread in
scores between the regional portfolios for ENPI East and South was wider
than for national projects, but relevance and impact were also the highest-scored
criteria (East 3.08 and 3.09, South 2.90 and 2.82, respectively). Efficiency
was again the lowest scoring criteria in both the ENPI regions with the East at
2.87 and South at 2.70.

Relevance and impact scored highly in about 85 % of
the national and regional projects, and potential sustainability was as at least
"good" for 75 %. However, challenges remain
with regard to efficiency. About 30 % of all ENPI national and 36 %
of regional projects in ENPI South need to improve their performance (in terms
of inputs used, work with partners and implementation of activities).
Effectiveness scores low in 45 % of regional interventions in ENPI South
as problems persist such as delivery of results in the aftermath of the Arab
Spring.

The majority of interventions reviewed were in the social
infrastructure and services sector and showed good performance (84.21 % of
national projects and 78.79 % of regional portfolios were given A and B
scores). Projects implemented in the government and civil
society sub-sector contributed significantly to good overall sector
performance. Projects in the economic infrastructure and services, and production
sectors followed closely behind.

Table 4:

Table 5:

Outlook

The implementation of the renewed ENP will remain the main focus
throughout 2013, with particular emphasis on democracy building and good
governance. Strengthening democratic accountability will require continued civil
society support via the Civil Society Facility and through the newly
established European Endowment for Democracy. Continued implementation of the more-for-more principle will also
remain a priority in 2013 to be implemented mainly through the SPRING and EaPIC
umbrella programmes.

In the Southern Neighbourhood, an
additional EUR 150 million will be made available for the SPRING programme for allocation
among partner countries on the basis of continued progress with democratic
reform. Cooperation will focus on support for human rights, democracy, good
governance and inclusive and sustainable growth. Work with private sector,
civil society representatives and local and regional authorities will be
reinforced as their role in the development of inclusive democratic societies
in the region increases.

Concerning the situation in Syria, the EU
will keep providing support to the Syrian population and refugees (including in
neighbouring countries, notably Jordan and Lebanon) in order to attenuate the
effect of the crisis on the population. In Palestine the EU is committed to the
two-state solution and has continued its efforts to help the parties move
towards a negotiated solution. In line with this objective the EU will continue
to support the Palestinian Authority to build the democratic institutions of
its future State.

In the course of 2013, ongoing DCFTA negotiations
with Morocco and Tunisia are expected to make steady progress. The ongoing
negotiations on mobility partnership declarations with Morocco and Tunisia are
expected to be finalised in 2013.

In the eastern Neighbourhood, the EU will
focus on sectors which are instrumental to democracy building and sustainable
economic development such as justice, public finance reform and regional
development. Support for agriculture, rural and/regional development will be a
priority, for instance in Azerbaijan, Armenia and Georgia.

The EU will continue to assist institutions
negotiating new bilateral agreements with the EU in the framework of the EaP
(Association Agreement and DCFTAs). In Ukraine, the EU will be further reorienting
its assistance towards the goals of the AA with a view to getting it signed in
2013. In Moldova, a specific action in support of the visa liberalisation
process could be envisaged.

EU cooperation activities in Belarus will
focus on health and social inclusion, local and regional economic development
and the environment. In Russia, ongoing activities under the Partnership for
Modernisation and Civil Society Forum will continue, and new calls for
proposals will be launched for civil society.

Securing education for displaced Syrian
children

Displaced Syrian children excluded from education
are being assisted by a EUR 10 million EU programme.
Implemented through UNICEF, its objective is to provide 5500 vulnerable Syrian
and Jordanian children in 39 schools across Jordan with access to free formal education and other relevant education
services, along with those in host communities in
Jordan. The project supports the Jordanian education
system at national and community levels.

Boosting civil society in Libya

In 2012, over 850 Libyans participated in
training sessions and workshops facilitated through the 'Civil Initiatives
Libya' project, a further group of 15 civil society representatives took part
in a study visit to Europe. Another 2 150 Libyans - of whom 832 were women
- attended training activities organised in four training centres set-up in Tripoli,
Benghazi, Misurata and Sebha.

This comprehensive support is improving the
capacity of civil society activists and local authorities to play a leading
role in public service delivery and is promoting good governance. Training
sessions included: strategic planning; project cycle management; voter
education; elections monitoring; advocacy skills; the constitutional drafting
process; transitional justice and mine risk education. This is contributing to
the gradual emergence and development of a more inclusive and sustainable civil
society.

Trailblazing renewable energy in the Southern
Mediterranean

A benchmarking report has been issued on the
integration of renewable energy into the electricity systems of nine Southern
Mediterranean countries alongside studies on the infrastructure required. The
three-year EU-funded, “Paving the Way for the Mediterranean Solar Plan” project
is promoting greater use of renewable energy across the Southern Mediterranean.
It has set up a platform for dialogue to explore the possibilities of a
harmonised regulatory framework for investments in renewable energy across the
nine countries involved.

Energy reform support programme in Azerbaijan

Energy is one of the main priorities in the
EU-Azerbaijan cooperation. The EU supports Azerbaijan in developing its Energy
Sector Strategy, focusing on alternative and renewable energy sources and
energy efficiency technologies. This includes developing the required
legislative framework and institutional setting. The EU-supported Energy Reform
Support Programme has led to the creation of a new institution, the State
Agency of Alternative and Renewable Energy Sources. Through this agency the government
endorses the importance of renewable energy and energy efficiency.

Reducing Moldova’s energy import dependence

A kindergarten in Ermoclia village in Moldova is
the first public institution to be heated with energy from biomass thanks to a
successful energy and biomass pilot project promoting the use of renewable
energy in rural communities. The project, which will be replicated throughout
Moldova - including the breakaway Transnistria region - aims to reduce the
country's dependence on imported energy sources by helping it to fulfil its
potential to produce energy from its own prodigious renewable sources. It aims
to increase awareness of renewable energies, promote energy efficiency and
improve heating systems in public buildings by using waste from local
agricultural enterprises.

The Republic of Moldova is one of the few
countries in the region which depends almost entirely on imported energy
sources leading to high energy prices and large debts to foreign suppliers. The
extension of the project to Transnistria may help reduce the region's
dependency on energy supplies from Russia and also contribute to sectoral
confidence building due to exchanges of expertise.

2.1.2. 
Middle East

Introduction

The Middle East peace process

The EU stepped up its efforts to advance the Middle East
peace process in 2012, continuing to lend full support to the HR/VP to
re-launch direct talks between the parties, as well as supporting Jordan, in
particular, at the beginning of the year to secure this objective. The HR/VP
visited the region numerous times during 2012 and remained in close contact
with stakeholders. The EU continued to encourage both the Israelis and
Palestinians to return to the negotiating table. However, the Palestinians maintained
that they would re-enter negotiations only if Israeli settlement construction,
including in East Jerusalem, was frozen. Israel did not comply with this demand.
In the Foreign Affairs Council (FAC) conclusions of May and December 2012 the
EU reaffirmed its commitment to a two-state solution while expressing grave
concern about developments on the ground, which threaten to make this
impossible to attain.

There was no tangible progress in the implementation of
the 2011 reconciliation agreement between Fatah and Hamas, which should have
led to the holding of general elections. Direct EU financial support to the Palestinian
Authority contributed to its ongoing state-building efforts, although the
effect of this was undermined both by a shortfall in funding from donors in the
region and Israeli action concerning Palestinian tax revenues (see below).

In November, a major escalation of violence took place between
armed groups in Gaza and Israel, leading to the death of an estimated 158
Palestinians and six Israelis. The HR/VP was active in pursuing a ceasefire as
a stepping stone to a longer-term solution to Gaza’s isolation. Throughout the
violence she maintained close contact with key players in the region and beyond
- particularly with Egypt, the US, Israel, the Palestinian Authority, the UN
and the Arab League. The EU expressed its readiness to make use of its instruments
to support efforts to sustain the ceasefire which came into effect on 21
November. This included the possible reactivation, in the appropriate way, of the European Union Border Assistance Mission (EUBAM Rafah).

On 29 November the UN General Assembly voted in favour
of Resolution A/RES/67/19 granting United Nations non-member observer state
status to Palestine. In response, Israel stopped transferring the clearance
revenues it collects on behalf of the Palestinian Authority and accelerated
settlement activities beyond the Green Line by depositing 3 426 housing
units for approval in the E-1 area as well as approving major construction
plans in the settlements of Ramat Shlomo, Givat Hamatos and Gilo. This was
widely criticised by the international community, including the EU. In
December, the Council adopted conclusions expressing strong opposition to
Israeli plans for new settlement construction, stating that the EU would
closely monitor the situation and its broader implications, and act
accordingly.

Arabian Peninsula, Iran, Iraq and Yemen

Political development, reconciliation and reform in Iraq
remained challenging in 2012. The national partnership government, formed after
nine months of difficult negotiations following the 2010 general election, has struggled
to function effectively and a general agreement on governance between the major
political actors was not fully implemented in 2011. The political situation
worsened during 2012.

EU-Iraq relations have however improved with the
signature of the Partnership and Cooperation Agreement in May 2012, which underlined
EU commitment to a comprehensive political and economic engagement with Iraq.
The agreement provides for regular political dialogue on bilateral, regional
and global issues while improving trade arrangements and pledging cooperation
in diverse areas. Most parts of the agreement took effect on 1 August 2012
(provisional application).

The EU is working on a gradual strengthening of the
bilateral relationship and continuing its bilateral support in technical
capacity and capacity building as well as transferring expertise. With the
adoption of the first ever multiannual Country Strategy Paper (CSP) for
assistance to Iraq (EUR 58.7 million 2011-13) in November 2010, the EU shifted
its support from emergency reconstruction activities towards regular
development cooperation and long-term capacity-building. EU assistance in the
medium-term is concentrated on the sustainability of Iraq’s institutions, the
improvement of management and civil service capacity along with boosting the
provision and quality of basic services (health, education, water and
sanitation). The EU continues to assist the Iraqi government in its efforts to
unlock and invest in its own substantial resources, by providing assistance in
the areas of good governance and democratisation and promotion of human rights

In parallel, the EU's financial instrument for
cooperation with industrialised and other high income countries and territories
(ICI+) provides an new approach to promoting political and economic interests
and goes some way to developing a mutually beneficial partnership with Iraq. A
specific initiative has been designed to support the establishment of an EU-Iraq
Energy Centre that will further promote energy cooperation.

Yemen saw serious unrest
in 2011. The EU cooperated closely with the Gulf Cooperation Council (GCC),
which brokered an agreement on political transition. The October 2011 UNSC
resolution n° 2014 – unanimously adopted - led to then-President Saleh formally
signing the GCC initiative for a transfer of power, while the ruling party and
the opposition coalition signed the implementation mechanism in November 2011.

In accordance with the GCC agreement, elections took
place on 21 February 2012 with vice president Hadi, the consensual candidate,
elected with 99 % of the votes cast. The elections triggered the second,
two-year phase of the transition during which a conference for national
dialogue will be held in order to draft a new and fully democratic constitution.
The preparations for the National Dialogue Conference (NDC) are at an advanced stage
but the launch - originally foreseen for September 2012 - did not take place.

A major stumbling block remains the division of NDC seats
between the former governing (GPC) and opposition (JMP) parties and the
inclusion of groups not involved in the GCC agreement, notably the Southern
Movement and the independent youth, women and CSOs.

"G10", an informal group composed of EU Heads
of Delegations, the P5 Ambassadors and the Ambassadors of the Gulf States
present in Sana'a, is closely monitoring the GCC initiative and its
implementation mechanism.

Progress is further threatened by a fragile security
situation, the continued strong presence of Al Qaeda (although the situation
improved considerably in 2012) and the "spoilers'" attempts to derail
the transition process.

Cooperation under the DCI has increased with an
additional EUR 10 million allocation for the 2012-13 period. In 2012 state building
and social welfare programmes amounting to EUR 25 million were initiated.

The humanitarian situation in Yemen remains of great
concern; food insecurity is a daily reality for nearly half the population and
a major threat to the physical and mental development of the young. This
problem can only be addressed through a concerted international effort. The
Commission therefore released EUR 40 million in 2012 to assist addressing the
country's needs.

EU cooperation activities in Iran are limited to
non-sensitive areas such as anti-narcotics and assisting Afghan refugees
through support for non-state actors. In line with the EU's dual track
approach, efforts to engage with Iran in meaningful negotiations on its nuclear
programme continue.

Aid effectiveness and donor coordination

Donor coordination advanced at the donor conference
on Yemen in Riyadh in September 2012 where USD 7.8 billion worth of
pledges for the country's development was set aside.

The Commission was instrumental in setting
up and funding multi-donor trust funds in Iraq. This multilateral approach has
allowed the priorities of the Iraqi authorities to be taken into account
alongside those of the EU.  EU cooperation is therefore moving from joint
assistance with UN agencies to more direct cooperation targeting the
development of sector policies and strategies. This is a key factor in
developing a culture that targets national interest via national policies and
will also be the opportunity to improve donor coordination and division of
labour.

Working towards the MDGs

Most MDG indicators have worsened in the
aftermath of the 2011 crisis in Yemen: poverty and food insecurity have affected
half the population and many children remain out of school. The EU addresses
these challenges by improving social services in social protection and health,
and by launching economic development programmes, primarily targeting youth,
the unemployed and women.

Iraq faces
considerable challenges in its efforts to meet the 2015 MDGs, particularly in
primary school enrolment rates (at 85 %), maternal mortality (84 per
100,000 live births) and access to improved water sources (presently 57 %
in rural areas) The EU is addressing these challenges by improving health and
water management services as well as targeting the unemployed through improved
education services.

Implementation and results

Governance ranked highest in the EU's cooperation priorities for
Yemen in 2012. The Commission adopted an EUR 18 million package to address
democracy and governance which includes the holding of credible elections in
2014. The EU will support these elections by strengthening the capacities of
the Supreme Commission for Elections and Referenda, aiding the development of a
new voter register and promoting increased participation of women in the
election process. The programme will also help the Yemeni authorities to
further develop a civil register so as to address human rights violations made
possible by the absence of key documents such as birth certificates. To this
end, in 2012 the EU worked with UNICEF to increase the number of registered births,
as part of its wider child protection programme.

The EU and the Iraqi government signed a financing agreement to
implement the 2011 water management programme. The 2012 Good Governance project
was also approved. In addition, the first ever ICI+ programme for Iraq to
establish an EU-Iraq energy centre was approved by the Commission in December
2012.

Due to the ongoing dispute over the
country’s nuclear programme the EU's mandate for cooperation with Iran is
limited. Implementation of projects by local or European CSOs is hampered by
administrative obstacles such as difficulties in issuing visas and carrying out
international bank transfers. The current EUR 4.8 million portfolio of twelve
projects includes thematic programmes in the fields of democracy and human
rights (EIDHR) and non-state actors (DCI-NSA) aimed at promoting the
empowerment of vulnerable people, and supporting community-based initiatives.

Outlook

As in other Arab countries, the Arab Spring
movement in Yemen opened a window of opportunity that has helped to put
the country back on the path of genuine development granting greater opportunities
for political participation from all parts of society and better resource
distribution.

Iraq’s achievements
in terms of governance, democracy and the rule of law remain fragile and must
be consolidated, EU support, therefore, remains crucial in these areas. The
country has significant oil/gas revenues which currently contribute only
marginally to inclusive economic growth; institutional capacities also need to
be strengthened.

In view of the events of the Arab Spring
and the forthcoming presidential election in 2013 in Iran, it will be
interesting to see whether Iranian civil society is able to steer the
authorities towards more political freedom, fewer human rights violations and fewer
barriers to foreign cooperation.

Supporting
a new national development plan in Iraq

Alignment
to the country's national development strategy is one the principles of the Paris
Declaration and the EU has taken significant action to bring this about by helping
the Government of Iraq prepare its new 2013-17 National Development Plan (yet
to be finalised). The EU's early involvement in this
process in the form of technical assistance has
significantly improved the chapter on draft governance
both in terms of quality and substance.

2.2. 
Sub-Saharan Africa & all ACP programmes

Introduction

The EU has launched several initiatives to
enhance the coherence and effectiveness of its multi-faceted engagement with
the Sahel region, Sudan and South Sudan and the Horn of Africa (HoA).

During 2012, the EU Strategy for Security
and Development in the Sahel - one of the poorest regions of the world - started
to be implemented in Mali, Mauritania and Niger along four main axes:
development; good governance and internal conflict resolution; political and
diplomatic cooperation; ensuring security and the rule of law and countering
violent extremism. By the end of 2012 some EUR 15 million have been mobilised
to help face security challenges and build the rule of law in Niger. Additional
resources will be mobilised in 2013 for the Sahel region, in coherence with
existing EDF development actions. However, practically all actions in the north
of Mali had to be suspended following the army coup in March and the subsequent
terrorist takeover. The CSDP 'EUCAP Sahel' mission (designed to strengthen
security coordination and planning) was successfully established in Niger, with
liaison officers in Bamako and Nouakchott helping to prepare possible extensions
to Mali and Mauritania. The regional Sahel Counterterrorist programme 'CT
Sahel' was also extended and strengthened.

The Electoral Commission's adoption of a
timetable for parliamentary elections in May 2013 has allowed the EU to sign
the 10th EDF with the Republic of Guinea and to start implementing urgent
programmes in direct support to the population in the areas of water, health
and support to civil society. 80 % of the 10th EDF funding will, however, remain
in reserve until free and transparent elections have actually been held. The EU
has also unblocked funds in support of the elections in order to safeguard the
electoral process and contribute to a peaceful political climate.

Nine months after the independence of South
Sudan, Sudan and South Sudan found themselves on the brink of war, when South
Sudanese forces captured the oil rich Northern area of Heglig in April 2012. A
Roadmap adopted by the AU Peace and Security Council, re-enforced by UNSC
Resolution 2046, eased tensions and facilitated the resumption of negotiations
under the auspices of the African Union's High Level Implementation Panel
(AUHIP), led by former President Mbeki. These culminated in the signing of a
package of agreements by the two presidents in Addis Ababa in September.
However, implementation has not gone well and the outstanding issues of Abyei
and borders still pose a serious risk to the agreements. South Sudan's unilateral
stopping of oil production in January has left both countries in acute economic
crisis. The EU, notably through the EU Special Representative for Sudan, has
actively contributed to mediation efforts by the AU and followed with concern
the slow pace of implementation of the agreements signed. The security situation
and resulting humanitarian crises in the provinces of Blue Nile, Southern
Kordofan, Abyei and Darfur remain a particular focus.

In the year since the Strategic Framework
for the HoA was adopted, the EU’s political engagement with the region has
intensified. The EU Special Representative for the HoA has travelled
extensively to address the challenges addressed in the Strategic Framework, now
the reference document for EU action in the region. It continues to provide a
holistic approach to the EU’s multi-faceted engagement in the region with a
view to supporting the people of the Horn to achieve greater peace, stability,
security and prosperity under an accountable government.

The launch of the Horn of Africa Strategic
Framework was welcomed by the African Union (AU) as well as the
Intergovernmental Authority on Development (IGAD), which has a specific HoA
mandate. The EU-IGAD political dialogue in April 2012 was particularly timely
in giving a clear political endorsement. The comprehensive nature of the Framework
-covering peace and security, drought resilience, counter piracy and terrorism,
and infrastructure and energy - was welcomed.

Giving further support to governance, the
EU deployed electoral observation missions (EOMs) to Sierra Leone and Senegal and
expert missions to Ghana, Burkina Faso and Cote d'Ivoire. The EU is actively
following-up the recommendations of the EOMs.

Africa-EU
partnership

The
Africa-EU relationship reached new levels in 2007 with the adoption of the
Joint Africa-EU Strategy (JAES) which put in place a framework for enhanced
cooperation with Africa as a continent. The Africa-EU Summit in November 2010
approved the second JAES action plan for 2011-13, confirming the joint commitment
to deliver, in eight thematic partnerships: peace and security; democratic
governance and human rights; trade, regional integration and infrastructure;
MDGs; energy; climate change and the environment; migration, mobility and
employment; science, information society and space.

Under the
African Peace Facility (APF), the EU renewed its support to the African Peace
and Security Architecture (APSA) and Peace Support Operations. Specific
initiatives funded included: the AU Mission in Somalia (AMISOM); the Economic
Community of Central African States (ECCAS) Mission for Consolidating Peace in
the Central African Republic (MICOPAX) and the Mission of the Community of West
African States to Mali (MICEMA). Support has also been
provided to the AU to coordinate action against the Lord's Resistance Army.

Through the
Early Response Mechanism (ERM), the EU supported mediation efforts in the
"Roadmap for Ending the Crisis in Madagascar" and the initiative of
the Intergovernmental Authority on Development (IGAD) to engage in a
pre-election peace campaign in Kenya.

The Political
and Security Committee of the European Union (EUPSC) and the Peace and Security
Council of the African Union (AUPSC) held their 5th joint consultative
meeting in May at a time characterised by continued challenges in the Horn of Africa
and political, security and humanitarian crisis in parts of West Africa. The
discussions, which focused on Somalia, Sudan and South Sudan, Guinea Bissau and
Mali, reaffirmed the commitment of both sides to enhance their efforts towards
crisis prevention and resolution. They reiterated their commitment to increase
coordination on global issues, to continue APSA cooperation and recognised the
need for predictable, flexible and sustainable funding for AU-led peacekeeping
operations.

The AU-EU
Human Rights Dialogue continued to have an important role. The last Dialogue
focused on AU-EU cooperation on racism; the right to development; the death
penalty; migrants' rights and measures to implement the UN Guiding Principles
on Business and Human Rights. The Dialogue also identified violence against
women and freedom of association as future themes.

In the
framework of the Africa-EU Governance and Human Rights partnership, the AU and
EU Delegations in Geneva jointly organised a Workshop on racism, with a particular
focus on racial discrimination and incitement to racial hatred. The meeting was
a first step towards strengthening cooperation in the Human Rights Council and also
identified as topics for future discussion: women's and children's rights;
universal periodic review, economic; social and cultural rights; freedom of
religion or belief; freedom of assembly and freedom of expression.

Aid effectiveness and donor coordination

Efforts to strengthen aid effectiveness in Sub-Saharan Africa
continue. In this connection, the first meeting of the steering committee of
the Busan Global Partnership was an important development policy event this
year.

In Sub-Saharan Africa, some countries are gradually moving through a
country-led process towards a more coherent programming exercise. This is
demonstrated by EU joint programming in, for example, Ethiopia, Ghana and South
Sudan. Other examples of good donor coordination include Mozambique and
Burundi.

Aid effectiveness and donor coordination in Mozambique

Budget support to Mozambique[52]
is well structured and coordinated through a group of donors who provide
general budget support. The G-19 is aligned to Mozambique’s 2011-14 poverty
reduction strategy. It delivers assistance on the basis of a Memorandum of
Understanding signed with the government that stipulates an enhanced political
dialogue on human rights, the rule of law, good governance, poverty reduction,
sound macro-economic policies and public financial management systems. The
Memorandum also includes a joint response mechanism in case of a breach of
these principles. These arrangements enabled a predictable flow of funds to the
Government of Mozambique in both
2011 and 2012.[53]

Aid effectiveness and donor coordination in Ethiopia

In Ethiopia, the EU is deeply involved in the implementation
of the aid effectiveness agenda through donor coordination and joint actions.
In 2012, the EU coordinated the update of the EU+ Joint Cooperation Strategy,
which forms the joint response by the EU and its Member States (plus Norway) to
Ethiopia's national development strategy. The EU is also an active member of
the Donor Assistance Group (DAG), which consists of 26 donor agencies. The EU
participated in 16 thematic/sector donor groups and co-chaired five. More than
80 % of 10th EDF funds are channelled through joint programmes.

Aid effectiveness and donor coordination in South Sudan

The EU pioneered joint programming in South Sudan and for the
first time a Joint Country Strategy was agreed with Member States in support of
the National Development Plan. The EU focused on agriculture, health, education
and the rule of law. The Joint Strategy was welcomed by the EU FAC.

Aid effectiveness and donor coordination in Burundi

Under the 10th EDF, the EU started joint programming with Member
States in Burundi. This involved a joint analysis of the Poverty Reduction
Strategy Paper and of the sectoral policies of the country, leading to a jointly
designed EU aid and sector interventions. This joint approach will increase aid
effectiveness and concentration, as the EU and the Member States each focus on
a limited number of sectors with leadership being agreed for each of the EU-supported
sectors.

Aid effectiveness and donor coordination in Ghana

In Ghana the EU and seven Member States established a Joint
Framework Document in response to the "Government of Ghana: Development
Partners' Compact", which confirms Ghana's current development agenda and
sets out the issues to be solved together with the government of Ghana and
development partners. In line with the EU Joint Framework document, full joint
programming is expected to start from 2017.

Working towards the MDGs

Despite good prospects to achieve universal
primary education by 2015, Sub-Saharan Africa is still off-track and unlikely
to achieve key MDG targets on time. To date, 47 % of the population is struck
by extreme income poverty. Child mortality (deaths of children under age of
five per 1 000 live births) has fallen by more than one-third between 1990
and 2010. However, progress is still too slow to reach the envisaged two-thirds
reduction. Maternal mortality (maternal deaths per 100 000 live births) has
nearly halved since 1990 with a decline of 47 % but 85 % of deaths still occur
in Sub-Saharan Africa and Southern Asia. Of course, progress and results vary
greatly on country-by-country basis. The following examples highlight the
impact of development projects supported by the EU in contributing to boost
progress towards achieving the MDGs in Ethiopia, Rwanda and Zimbabwe.

Progress towards MDGs in Ethiopia

In recent years, Ethiopia has made good progress towards most
of the MDG targets. Primary school enrolment rose from 68.5 % in 2005 to
85 % in 2011, while in the same period the under-five mortality rate
declined from 123 to 88 per thousand live births and access to potable water
increased from 52 % to almost 80 %. This has had a notable impact on
the economy as a whole, as well as on social and development indicators. The
multi-donor programme 'Promoting Basic Services (PBS)' has contributed
significantly to this positive trend. It allowed the hiring of more than 100 000
additional primary school teachers, 38 000 additional health extension
workers and the operation of 11 000 new health posts and 2 100 health
centres. As an important donor to the PBS programme, the EU disbursed EUR 40.6
million in 2012. With the recruitment of additional school teachers, students
will be able to study in better conditions and the quality of primary education
will increase, thereby increasing their success rates as well as their chances of
completing primary education. A similar situation is observed in the health
sector as a result of recruiting additional staff: patients receive better
treatment and the quality of health services improves. As a result, the chances
of reaching the health MDGs are increasing significantly.

Working towards the MDGs - Rwanda

Rwanda is one of the rare African countries that are expected to
reach the MDG targets by 2015. EU support to the government of Rwanda aims at
building a social protection system that tackles poverty and inequality, helps
reduce vulnerability and contributes to economic growth. The EU has also been providing
SBS for decentralised agriculture impacting inter alia on food security.
In 2011 production targets of key food security crops were exceeded by 69 %.
Overall, the successful implementation of these programmes has contributed to
the reduction of Rwanda's poverty rate from 57 % to 45 % in the last
five years. Extreme poverty also dropped from 35.8 % in 2006 to 24.1 %
in 2011. Furthermore, Rwanda has already attained and exceeded the 14.5 % UN
target on the prevalence of underweight children of less than five with a score
of 11 %. By supporting food security with special focus on children and
mothers, EU support is expected to have a positive effect on health and
development indicators. This assistance will therefore have a long-term impact
on the health status of the Rwandan population as a whole.

From regress to progress towards MDGs in Zimbabwe

Recognising the urgent need to reverse the decline on Zimbabwe's progress
towards the MDGs, the EU and certain Member States started funding innovative
aid delivery mechanisms administered by UNICEF which pooled together donor
resources in support of the priority goals defined by the Government of
National Unity. By channelling funds through UNICEF rather than the government,
the Transition Funds allowed EU development partners - which had suspended
official development cooperation - to provide direct support to the population
in close collaboration with the government.

To date, the Education Transition Fund has distributed more than 20
million textbooks to all primary and secondary schools in Zimbabwe, thus
bringing the pupil/textbook ratio to 1:1, the best in Sub-Saharan Africa. The
Health Transition Fund also distributes essential medicines to all primary
health care facilities in rural areas of Zimbabwe. It has succeeded in keeping
the availability of essential medicines above 80 %. Retention allowances
paid to doctors have brought vacancy rates in rural areas to less than 30 %,
down from 70 % in 2011. Monthly allocations for operational costs that
have started to be delivered to rural clinics and district hospitals will
result in lower costs to users.

MDG initiative for Africa

The 10th EDF Mid-Term
Review (MTR) of the ACP country strategies and programmes showed that, while
the overall picture has many differences, most ACP countries are still lagging
behind their MDG schedule. Launched in 2010 at the MDG Summit in New York, the EUR
1 billion MDG Initiative aims to foster faster progress. It provides funding for
the most off-track goals as well as performance-based funding benefiting countries
that have successfully implemented aid.

Togo: supplying
water to neglected areas

A EUR 16.7 million budget has been allocated to the water and
sanitation sector by the EU’s MDG initiative in Togo’s Maritime region in the
south - where almost half of the population lives and 90 % of economic
activity is concentrated. Only 13 % of people in this area have access to
drinking water drawn at traditional water points or pumps. By 2016, 467 water
points and 6 000 latrines will be built or rehabilitated, while 8 500
public workers and stakeholders will receive training. Two projects, organised
jointly with UNICEF and the German Red Cross, aim to supply drinking water and
sanitary installations to 140 rural communities in the region as well as
providing training in hygiene to families, focusing particularly on children.

Puntland (Somalia): better
use of land to reduce hunger and food insecurity

In Somalia, 20 years of war and
the absence of institutions have led to severe land degradation. For livestock,
which is the main pillar of the Somali economy, there is less and less vegetation
and access to food is a major problem for the population. Malnutrition affects up
to 20 % of the population in some areas of Puntland in times of crisis. The
MDG Initiative has therefore selected a project that supports farmers who move
their camels, cattle, sheep and goats through the rangelands. It aims to raise 1.5
million people that earn less than a dollar per day above the poverty line. The
programme will support leaders and elders to better manage the natural
resources on which their communities depend. Among other things, they will be
given funds to rehabilitate and improve areas of pasture, carry out water
harvesting and protect water points. Other activities may include the
reforestation of grazing lands or the construction of small dams to avoid
erosion, as well as the rehabilitation of existing water ponds.

Implementation & results

General
overview

Results were
good in 2012. Several Sub-Saharan African countries
exceeded their annual targets due to better than expected implementation of
projects and programmes. The most notable example was the disbursement of a EUR
40 million budget support tranche to Malawi in December 2012 after positive
developments in the country.

There was significant progression towards
the MDGs through direct EU cooperation with African partners (see section 2 of
this chapter) and through EU participation in global initiatives such as the
Global Fund against AIDS, Tuberculosis and Malaria and the GAVI Alliance.

Building
resilience: AGIR and SHARE

AGIR

Food crises and under-nutrition
are a chronic challenge in the Sahel region, and building long-term resilience
and pursuing disaster risk reduction, particularly at community level, is key
to avoiding the frequent recurrence of severe food crises in the Sahel. To
sustainably improve the resilience of the most vulnerable populations, the
Commission invited representatives of the countries of the Sahel, regional organisations,
multilateral development and humanitarian aid agencies, NGOs, donor governments
and members of the European Parliament to a high level conference on 18 June
2012. This resulted in an agreement to launch a partnership for resilience
through a multi-stakeholder initiative (AGIR–Sahel/Alliance globale pour
l'initiative Résilience - Sahel).

The declaration was signed by
representatives of over 30 countries, UN and humanitarian agencies, and
organisations including the World Bank, the African Development Bank, the
Organisation of Islamic Cooperation, ECOWAS and the West African Economic and Monetary Union (UEMOA). It provides a roadmap for increasing the
resilience of victims of chronic malnutrition in the region. As well as a
potential investment of EUR 750 million over three years to build seasonal safety nets,
consensus was also found on: the need to invest in healthcare and other social
sectors; the functioning of food markets; the empowering of women including
those working in agriculture.

SHARE

In conjunction with heightened insecurity in
south-central Somalia, the 2011 drought in the HoA precipitated a crisis
situation. A number of factors underlie people's vulnerability in the HoA:
population growth and increasing pressure on resources; rural poverty; low
productivity and weakened terms-of-trade; insecure access to land and water;
weak governance; insecurity and prolonged geo-political instability. The EU
reacted with massive humanitarian assistance to the HoA allowing for
life-saving support. At the same time, the Commission launched the Supporting HoA
Resilience (SHARE) initiative to encourage investment in the areas of recovery
and resilience.

Plans valued
at over EUR 250 million were formed to step-up EU engagement in 2012-13. These included:
support for agricultural and livestock production; nutrition; livestock health;
water supply as well as natural resource management. In the SHARE framework,
the Commission argues that a greater relative emphasis should be placed on the
lowlands of the Horn - largely coinciding with the areas where (agro-)
pastoralism is dominant. The SHARE approach was formalised in a Staff Working
Document and the Council Conclusions in May 2012, which were followed by the
mobilisation of recovery assistance for those countries' most affected by the
drought in the HoA.

Major African
programmes, policies and initiatives were also supported, with the involvement of several Directorates General of the
Commission. The agriculture sector benefited from the
support of the Comprehensive Africa Agriculture Development Programme (CAADP).
In the area of climate change, support targeted policy-making at pan-African
level as well as programmes such as the Great Green Wall for the Sahara and
Sahel Initiative aimed at fighting desertification and land degradation. The
African Union Programme for Infrastructure for Development in Africa (PIDA) obtained
support for the coordination and implementation of infrastructures of strategic
importance for the continent through the African Infrastructure Trust Fund,
enabling the blending of grants and loans, and active involvement of the
private sector. EU-Africa cooperation also focused on tackling the technical
barriers to trade and supporting the progressive realisation of the Continental
Free Trade Area (CFTA). Moreover, there was EU support for African research
through grants managed by the African Union Commission while the Nyerere
programme facilitated the exchange of students among African countries.

A high-level Conference on the second European and Developing
Countries Clinical Trials Partnership (EDCTP) programme[54] took place at which the
Commission proposed an increase in its funding from EUR 200 million up to EUR 1
billion for the second phase of the programme (2014-2024). EDCTP involves the
development and testing of new medicines against HIV/AIDS, malaria and
tuberculosis.

The first initiative of European and African countries to jointly
fund collaborative research projects was agreed in the framework of the FP7
international cooperation action ERANET (ERAfrica)[55]. The joint call will be
launched in January 2013 with a budget of €11 million and offers research
funding in the areas of 'renewable energy', ‘interfacing challenges' and 'idea
driven research'. The initiative concerns cooperation and joint funding by ministries
and public institutions from 15 countries.

The African Higher
Education Harmonisation and Tuning initiative launched in the framework of the
Joint Africa-EU Strategy is particularly successful. The sixty universities
selected from across the continent in November 2011 are completing work and, as
a result of the initiative's success at the grassroots and political levels,
follow-up activities are planned in 2013 and 2014.

Despite the strong competition from all over the world, African
students are performing well in their pursuit of Erasmus Mundus scholarships
and there have been important cooperation activities with institutions from the
two continents. African researchers are also active in the Marie Curie
programme. There was an increase in applications for both Erasmus Mundus and
the Intra-ACP Academic Mobility programme in 2012.

Connecting
research communities across sub-Saharan Africa

The low internet penetration in Sub-Saharan
Africa is one of the main reasons for the lack of skilled technical,
operational and managerial staff. As a result, research activities and
cooperation with researchers in other parts of the world are restricted. The
AfricaConnect project, a collaboration between 20 partners, aims to establish a
high-capacity Internet network for research and education in Southern and
Eastern Africa, to provide the region with a gateway to global research
collaboration. The project runs from 2011-2015 with an EU contribution of EUR
11.8 million (80% of the total).

In order to facilitate the implementation of the JAES and its
successive Action Plans, a new support mechanism was established in 2012. This
mechanism provides technical and administrative support for JAES implementation
in the run-up to the Fourth Africa-EU Summit in early 2014 and prepare the
ground for the future Pan African Programme.

In 2012, the total commitments from the EDF amounted to EUR
3.7 billion - EUR 344 million above the annual target of 3.4 billion. In
Sub-Saharan Africa, the target of EUR 2.8 billion was exceeded by 18 %, as
EUR 3.3 billion was committed. The main reason why commitments were higher than
expected is that the EU support to the "Sustainable Energy for All" (SE4ALL)
initiative was approved for EUR 400 million. This programme was not included in
the annual forecast due to uncertainty as to whether it would be approved by
Member States in the Council. The programme is financed entirely from the four
Sub-Saharan Regional Indicative Programmes (RIPs) and covers: Central Africa (EUR
33 million); Eastern and Southern Africa (EUR 193.5 million); Southern Africa (EUR
32 million) and Western Africa (EUR 141.5 million).

The target for
Sub-Saharan Africa (under the EDF) was set at EUR 2.5 billion whereas actual
disbursements amounted to EUR 2.86 billion, exceeding the target by 14 %. This
was mainly due to a EUR 150 million payment under the EU Support to the SE4ALL
initiative which was not included in the annual target.

The first
commitments under the Banana Accompanying Measures were made in 2012; three Sub-Saharan
African countries are affected by this 2012-13 programme: Cameroon (EUR 41
million), Ghana (EUR 7.2 million and Ivory Coast (EUR 38 million). Ghana has consumed
its full indicative allocation, while Cameroon and Ivory Coast each has another
EUR 7 million available for commitment in 2013.

Bilateral cooperation: the case of Chad

In 2012, EU bilateral programmes with
Central African countries continued to focus on good governance and sustainable
development. In Chad, 2012 saw the inauguration of the courthouse in Goz Beida,
the central service for the technical police and a detention centre in Doba,
significantly improving prisoners' living conditions. These are results of the EUR
25 million EU programme for the justice sector. There was also progress with the
revision of the penal code. Through a EUR 25 million programme, the EU
continued to support security sector reform and contributed to the Détachement
Intégré de Sécurité (DIS) which provides security in areas hosting refugees,
displaced persons and humanitarian contingents in the east and south of Chad.
Through its local development programmes (EUR 41 million), the EU supported
food security and biodiversity through an integrated management of natural
resources. In February 2012, the programmes were expanded to address the
specific needs of returning Chadians following the Libya crisis. Moreover, in
response to the food crisis, the EU approved a EUR 20 million programme for
food insecure communities. Finally, the EU supported activities to improve access
to water and sanitation (EUR 80 million). This long-standing EU assistance has
contributed to increasing the access rate to drinkable water from 20.7 %
of the population to 42.9 % in 2010. Through an additional EUR 29 million
support from the MDG initiative, the country is on its way to reaching the MDG
target of 60 % by 2015.

Bilateral cooperation: budget support in Niger

The European
Union is funding a SBS programme in Niger to strengthen food security as weather
conditions in the Sahelian countries do not permit self-sufficiency. Data from
the 2011 harvest reported a net cereal deficit of 191 000 tonnes for Niger
for 2012. In autumn 2011, the National Mechanism for the Prevention and
Management of Food Crises and Disasters (DNPGCCA) presented a support plan to
respond to the anticipated food crisis and, in 2012, the European Union
allocated EUR 42.5
million to Niger. This has contributed to mitigating the impact of the crisis
on vulnerable groups by funding 13 % of general food insecurity operations
and the purchase of 61 000 tonnes of crops. In addition, it enabled
"cash for work" operations, food provision at moderate prices, as
well as the transport of crops to vulnerable groups. As activities started
early, a dramatic situation was avoided. The first phase of the operation
supported 2.98 million people between November 2011 and April 2012. The second
phase allowed access to food or financial support for more than 2 million
vulnerable people between May and June 2012.

Support to the police forensic science
laboratory in Ghana

As part of a EUR 3 million EU project, the
existing Ghana forensic science laboratory has been fully modernised and
extended. New acquisitions and facilities include state-of-the-art equipment
for DNA and chemical analysis, a photography laboratory, and software for
document analysis and facial composition. More than 50 officers have received
specialised training in modern forensics and the legal framework for
investigations has also been revised. The Ghana Police Service and Ghanaian
society will both benefit: it will give the Ghana Police Force an up-to-date
facility where they can work in a way that respects people’s fundamental
rights.

Bilateral cooperation: budget support in
Tanzania

In Tanzania,
the EU has an ongoing EUR 300 million general budget support programme (MDG
Contract) which covers the period 2009-15. From this amount EUR 47.75 million
was disbursed to Tanzania in 2012. Disbursement was based on encouraging
progress against key poverty reduction targets, in particular, in education and
health. There were steady improvements in different health and education
indicators, including: the proportion of
districts in which at least 60 % of births take place in health facilities;
the total number of patients enrolled in health institutes as well as exam
pass rates of primary school pupils. In terms of governance and accountability,
there was progress in the fight against corruption (e.g. through high level
dialogue and the publication of a national survey). With regard to macro and
public financial management, the alignment of the approved budget to policy
priorities was positive.

Bilateral
cooperation: the justice sector in Somalia

The EU Rule of Law programme in Somalia
aims at strengthening access to basic structures of justice through activities
such as legal aid to vulnerable groups by financing scholarships for law
students and training for judiciary staff. In 2012, over 150 members of the
judiciary underwent judicial training in Somalia; legal aid was delivered via
"legal clinics" to 3 000 people and over 300 law scholarships
were granted. EU funding also supported "mobile courts" which give poor
people in remote areas better access to the justice system.

Regional
cooperation: West Africa

In 2012, the EU and West Africa reviewed use of the 10th
EDF envelope in order to improve the low commitment rate of the on-going
Regional Indicative Programme. The Mid-Term Review concluded that the strategy
adopted for the region was still relevant but that there was a need to strengthen
the identification and formulation of projects. A pipeline of EUR 398 million
was agreed as well as a EUR 141.5 million contribution to the SE4ALL initiative
in West Africa. Lastly, EUR 26 million was transferred to the general reserve
of the 10th EDF. The projects still to be formally adopted target food
security, regional integration, private sector competitiveness, ECOWAS capacity
building for peace and security as well as interconnectivity infrastructures.

Regional cooperation: Eastern and Southern Africa and Indian Ocean

In 2012, the EU adopted eight new projects amounting to EUR 106
million in Eastern and Southern Africa and Indian Ocean regions. These projects
aim at protecting natural resources in the Indian Ocean, improving food security
in the HoA and strengthening road and energy infrastructure in Uganda and
Tanzania. Another EUR 193.5 million was committed to energy access
infrastructure in the region through the SE4ALL initiative.

Regional cooperation: Southern African Development Community

Many years of intensive capacity-building have paid off.
The secretariat of the Southern African Development Community (SADC) has put in
place the necessary internal reforms which enable it to adhere to international
standards on the management of funds, internal controls and audits. As a
result, SADC is now able to implement EU projects using its own procedures,
leading to increased ownership and efficiency. The EU has adopted six new
projects amounting to EUR 56 million, out of EUR 116 million of the region's
allocation for 2008-13. These target regional economic integration and
continued capacity building for SADC to consolidate its recent progress.

Regional cooperation: Forest eco-systems in Central
Africa

The European Union is currently financing with EUR 30
million the conservation and valorisation of the "Forest Ecosystems in
Central Africa" (ECOFAC) which aims to protect the exceptional
biodiversity of wet forests while improving local incomes. This project focuses
on the management of more than 200 000 km2 of tropical ecosystems
(including infrastructure and logistics) in order to safeguard them (both
institutionally and physically). This cross-border programme has shown encouraging
results in terms of the regional management of protected areas, which includes
the training of technical and administrative entities in charge of the parks'
management. Furthermore it benefits local populations. Twelve projects were initiated
in 2012, including: training eco-forest rangers; protecting mangroves; enhancing
natural heritage; developing forest management tools; maintaining logistical
equipment; rehabilitating and constructing small infrastructure (such as
clinics, schools and deposits) and reopening forest trails within the
boundaries of national parks.

Improved healthcare record for the Democratic
Republic of Congo

Lessening child mortality, improving maternal
health, decreasing mother-to-child HIV/AIDS transmission and preventing
gender-based violence – all are aims of a new EU-funded EUR 40 million
programme to help the country attain the MDGs. The EU has strongly supported
the health sector in DRC since the 7th EDF (1990-1995); from
humanitarian support to that of a structural nature to improve the
administration of national and provincial healthcare systems. In 2012, a 50%
reduction in the cost of healthcare was seen in DRC and an improvement in the
quality of services for 3 million Congolese. The European Parliament also
secured EUR 2.5 million of EU funding for a programme to improve access to
medical care for victims of sexual violence in East DRC.

EU sugar assistance to Mauritius energises
economy

Long-term EU support to improve the sugar
industry’s competitiveness and encourage economic diversification has put the
whole of the economy in forward motion. The EU is helping implementation of a
comprehensive ten-year economic reform plan for the sugar sector. It has
allocated over EUR 278 million to Mauritius for the period 2006-13 - in the
form of general budget support - under its Accompanying Measures for Sugar
Protocol countries (AMSP) programme. Since the start of the programme, sugar
yields have increased and the country is now producing refined and value-added
sugar, boosting the value of its exports. A sugar by-product, bagasse, is being
used to produce electricity and work is on-going to make ethanol from sugar to
blend with gasoline.

Monitoring (ROM)

Sub-Saharan Africa (including South Africa)

In 2012, 362 ongoing national projects
and 46 ongoing regional programmes, representing total EU commitments of more
than EUR 2.6 billion, were reviewed by independent experts in 44 Sub-Saharan
countries. Additionally, 67 completed projects which had benefited from a total
EU contribution of EUR 268 million and seven SPSPs were assessed (ex-post ROM).

Analysis of the results shows that 70.4 %
of national ongoing projects were performing "very well" or "well";
24.9 % of reviewed projects experienced some problems, and 4.7 %
encountered major difficulties. These results are in line with 2011 figures,
when the percentage of national ongoing projects encountering problems and
major difficulties accounted for 22.6 % and 5.9 %, respectively (it
should be noted, however, that the comparison is not based on the same sample
of projects). In terms of assessment of closed operations, 67.2 % received
good marks (compared to 61 % in 2011 from a sample of 49 projects).

In general, 86.7 % of assessed
ongoing projects received "very good" or "good ratings in terms
of relevance and design. Some constraints persist related to: efficiency 46.1 %
of projects reviewed faced problems with inputs and implementation of
activities; effectiveness, 45.3 % experienced some difficulties in
delivering results and sustainability, 43.4 % had problems. However,
potential impact remains "very good" or "good" for almost
79 % of visited projects.

As was the case last year, the main
sectors affected by ongoing national monitoring were social infra­structure and
services (with reports on 224 ongoing projects covering a budget of almost EUR 596
million) and economic infrastructure and services (39 reports, EUR 766
million). 71.9 % of social infrastructure projects assessed have received "very
good" or "good" marks, while for economic infrastructure this
figure rises to 76.9 %. The rate of projects facing major difficulties was
3.6 % and 5.1 %, respectively.

Productive sectors (agriculture, fisheries,
industry, etc.) were also monitored in 2012, with a total of 47 reports
produced for an overall budget of EUR 131 million. There were encouraging results
as 63.8 % of projects were judged to be performing "well" or "very
well". However, it was also noted that 8.5 % of visited projects had
encountered major difficulties.

Table 9:

Table 10:

Outlook

Lessons learnt from EU support to regional cooperation in Africa:
Mid-term review of the 10th EDF

Promoting regional integration has been a long-standing objective
and is set to remain so, as the EU has reaffirmed its commitment towards this
in the Agenda for Change. Under the 10th EDF the regional indicative programmes
have taken on a specific meaning, with the negotiation of Economic Partnership
Agreements (EPAs) and the strengthening of the political mandates of regional African
organisations. This context justified a doubling of the regional integration
allocation in comparison to the 9th EDF. The bulk of the envelope
(75 %) supports ACP regional economic integration. A second major focal
sector of African regional programmes has been support for political
cooperation. This sector, in turn, has two main components: support for the
implementation of the Joint EU-Africa Strategy and support for regional
mechanisms designed to promote peace, stability, conflict prevention and
security.

Despite the big increase in regional funding under the 10th
EDF, it must be acknowledged that, four years later, most EPAs have not yet
been concluded and there has been very limited progress with regional
integration in Africa. The rate of implementation of EU funds remains low.

Final year of the 10th EDF

Funds under the 10th EDF can be committed only until the
end of 2013. Approximately EUR 4.5 million needs to be committed in the course
of 2013 for ACP countries and Overseas Countries and Territories. Most of these
resources will be directed toward Sub-Saharan Africa. In order to ensure full
absorption of the 10th EDF, the EU and ACP countries undertook a
substantial review of national and regional indicative programmes in 2012. This
has also allowed the allocation of resources to major priorities such as
building long-term resilience and reducing the vulnerability of those most
affected by disasters in the Sahel and the HoA, as well as to support SE4ALL.

Multiannual Financial Framework, 2014-20

A decision on the amount of the 11th EDF for the period 2014-20 is
expected in early 2013. Pending the entry into force of this EDF, multi-annual
programming has started in Sub-Saharan countries, with an analysis of national
development strategies which will be used as much as possible as a basis for
the future indicative programmes for EU aid. In 2013, priority areas for
indicative programmes will be agreed by the EU and its African partners, taking
into account the priorities of their national strategies and the Agenda for
Change.

Africa-EU cooperation

Both Africa and Europe have undergone
important changes. Both continents also face global challenges and interact
with other key players in the international arena. Furthermore, Africa's population
and dynamic economy can help Europe meet some of its challenges. The proposed new EUR 1 billion Pan-African Programme within the DCI
is part of the on-going discussions of the Multiannual Financial Framework.
When adopted, it will provide dedicated support for the joint Africa-EU Strategic
Partnership. This programme will enable the EU to treat Africa "as
one" and to support the continental dimension of the Strategic Partnership
in the many areas where Europe and Africa have shared values, interests and
objectives.

The implementation of the current JAES
action plan will continue in the run-up to the fourth Africa-EU Summit in early
2014. In the area of peace and security, the African Peace Facility (APF) will
continue to support the operationalisation of the African Peace and Security
Architecture, provide funding for AMISOM and MICOPAX, and support to the peace
operation in Mali (AFISMA). New activities against piracy are envisaged in the
Indian Ocean. The EU-Africa Partnership will also support African research by interconnecting
national research networks in Eastern and Southern Africa and improved cooperation
in the areas of aviation and maritime transports.

To prepare for the next Africa-Europe
Summit in 2014, the EEAS and the Commission have started reflecting on ways to
further strengthen the EU's relationship with Africa, building on what has been
achieved so far in order to adapt the partnership to new circumstances. The
added value of the EU-Africa partnership as the overarching political and
policy framework for Africa-EU relations is clear. However, implementing this
ambitious strategy remains a challenge.

2.2.1. 
South Africa

Introduction

A Strategic Partnership was established with South Africa in
2006 in recognition of the country’s key role both in Africa and globally.
Under this partnership the EU and South Africa cooperate on political, trade
and economic matters, as well as on science and technology, the environment and
energy. During 2012, there was further action to build on the partnership’s
achievements. The HR/VP's attendance at the 5th annual South Africa-EU Summit
in South Africa in August 2012 provided a further opportunity to engage
President Zuma and his administration on a wide-ranging agenda. Good progress
was noted on implementation and there was open, dynamic and valuable discussion
of issues of joint interest, from global governance to peace and security. In
particular, there were helpful ideas for advancing the SADC/EPA negotiations
and anti-piracy cooperation. Given South Africa’s strong engage­ment in
conflict prevention and resolution in Africa, the EU and South Africa continued
their dialogue on peace and security matters and to jointly review respective
assess­ments and commitments. Cooperation was strengthened on human rights,
higher education, science and technol­ogy, space, the environment and climate
change.

Aid effectiveness and donor cooperation

During 2012 the new "global partnership"
came into play. The new emphasis on country-level activities has been supported
by the South African authorities, who are now starting to look at aid effectiveness
principles from two angles: as a recipient of support from outside and as a
provider of support to neighbouring and other African countries. Particular
themes received increased emphasis in the Busan Outcome document, notably the
role of civil society and the private sector and the fundamental issue of
capacity building. These areas will all be explored in further detail in the
future.

The EU is recognised by the South African government
as a good performer on aid effectiveness using country systems, with close to
80 % of its funding committed in the form of budget support. During 2012
there was a strengthening of donor cooperation, particularly between EU Member
States present in South Africa. An enhanced system of information sharing
between South African government authorities and the European Union took place
. Thorough discussion also took place between the EU and its Member States
jointly analysing national development plans. The EU+ Working Groups also
continued their work, with new emphasis being given to the areas of education
and environment, whilst work in the area of health and gender remained
particularly strong.

Working towards the MDGs

South Africa is a middle income country but
is a young democracy and is still very much scarred by its history of apartheid.
Indeed, it has one of the most unequal societies in the world with the spatial
settlement left behind by apartheid still very much in evidence. South Africa's
MDG performance remains much the same as in past years.  The country has
advanced towards poverty reduction (MDG 1) and education (MDG 2).
However progress in the area of health (MDGs 4, 5, and 6) is lagging behind,
mainly due to the continuing HIV/Aids pandemic. There has been satisfactory
progress on gender equality (MDG 3).

Implementation and results

In 2012 the remaining half of the EUR 250 million national
development policy support programme (NDPSP) - which will help implement the
national development plan - was approved. A EUR 5 million top-up to the Erasmus
Mundus Programme was provided, along with a EUR 1 million top-up to the Trade,
Development, and Cooperation (TDCA) Facility. Additionally, for the first time
an allocation of EUR 3 million was made from the Instrument for cooperation
with industrialised and other high-income countries and territories (ICI+)
comprising EUR 2 million for Erasmus Mundus Scholarships (for higher education
staff and students from Europe going to South Africa); as well as EUR 1 million
for business, culture and public diplomacy "outreach". At the end of
2012 just over EUR 850 million - or around 87 % of the total EUR 980
million 2007-13 envelope for South Africa - had been committed. The year 2012
was also a record year for payments, with EUR 142.8 million disbursed.

In the areas of health and education there has been continued EU
support in South Africa. In health, attention has focused on the piloting of
the country's National Health Insurance scheme with an ambitious programme to
improve the performance of the health system over the next thirteen years. In
education, the early childhood programme continues to progress, with an
increased number of universities participating in teacher training (14 400
students in 2012 compared to just over 10 000 in 2009). The Erasmus Mundus
programme continues to provide support with some 265 students and staff having
participated in 2011 and 2012.

In the area of governance the Legislative Sector Programme had its
third "oversight" consultative conference. As the conference involved
neighbouring countries, an opportunity was provided to share South Africa's
oversight model. Over 300 parliamentarians attended training courses; there
were over 40 outreach activities to take parliament to the people, and around
470 000 multilingual pamphlets explaining parliament were produced.

Through the justice programme, practical support has continued with
the establishment of 46 new community advice offices - each of which assists
around 200 people per month, including victims of violence, asylum seekers,
people involved in land disputes and those in need of social grants. At a more
general level, radio broadcasts raising awareness of constitutional rights have
been made to around 3.5 million people. The EU Delegation also continues to
support a number of human rights CSOs and engages with civil society on a
regular basis.

Gender and development is another crucial issue in South Africa, as
is gender-based violence. These issues are addressed in health, education, and
justice programmes and will be included in projects under preparation in the
areas of the environment and employment. The campaign to counter violence
against women and girls has been supported in the past though the Victim
Empowerment programme, and there are currently three smaller EIDHR grant
programmes for country-based support which are raising awareness on this
important issue.

In terms of results, the area of employment saw the establishment of
a Small Enterprise Finance Agency, in part motivated by the EU-financed Risk
Capital Facility (RCF). The RCF is in its second EUR 50 million phase (RCF2),
after having invested EUR 37 million under the first funding phase. To date,
the RCF has funded over 100 SMEs, as well as investment funds which in turn
invest in SMEs. Globally, the financial leverage effect has increased to more
than 200 % and more than 8 000 jobs have been or are expected to be
created. To date around 25 projects have been supported under the Employment
Creation Programmes, jointly supported with the UK department for international
development (DFID), and attention is now turning to how the programme might be
improved by widening the number of eligible organisations. The Youth
Empowerment programme has brought sports events to over 60 000 young
people.

In 2012 the NDPSP went into implementation. This programme is
designed to combine budget support with targeted capacity building activities.

2012 also saw the formalisation of relations
between South Africa and the EU in the field of education and training with the
signature of a joint declaration in Cape Town in May 2012. The first Senior
Officials' Meeting is planned for 2013, with the participation of experts from
both the EU and South Africa.

Monitoring

An independent monitoring mission took
place in 2012 to assess the results and quality of eight projects. Of these,
seven were evaluated as having performed well with respect to all five
assessment criteria (relevance, efficiency, effectiveness, impact, and
sustainability) while one was evaluated as performing with problems but without
serious deficiencies. Efficiency and sustainability recorded the highest
scores. The difficulties within the project, which was judged to have performed
below expectations, were largely due to the fact that the project was expected to
show results across two other countries in addition to South Africa. This had
greatly complicated implementation.

Outlook

The EU will continue to implement its
existing programmes in the areas of employment, capacity development,
governance, regional cooperation and the Trade, Development and Cooperation
(TDCA) Facility.  The new NDPSP is expected to start showing results in 2013,
especially in the area of public financial management. During 2012, an
infrastructure investment programme for South Africa was prepared. It is expected
to be approved in early 2013 and to start implementation later in the year.
This programme seeks to pilot the grant and loan "blending" approach,
and includes a South African bank as well as European development banks.

A programme promoting constitutional rights
is planned in support of the recently established constitutional development
branch in the Department of Justice. This covers socio-economic rights such as housing,
health, education, water and food which are enshrined in the country's constitution.

In the context of the Strategic Partnership
with South Africa, people-to-people and institution-to-institution contacts,
exchange of information and knowledge and trilateral cooperation will also be
promoted. These activities will take place within ongoing programmes and, where
appropriate, under the TDCA Facility.

Next year, work will continue on the design
of post-2013 cooperation, in close collaboration with Member States. Indeed,
2013 is a year in which discussions with South Africa can be expected in the
context of the international agenda relating to the implementation of the
Global Partnership for Development Effectiveness; the post-2015 development
framework; Rio+20 and sustainable development goals, as well as the G20
Development Agenda.

2.2.2. 
Intra-ACP programmes
(including water and energy)

"Intra-ACP cooperation" is designed to address
the shared challenges facing ACP States and is complementary to national and
regional cooperation under the Cotonou partnership. It is based on the principle
of subsidiarity and is implemented when activities at national and/or regional
levels would prove less effective.

The
mid-term review of the programme was concluded during 2012. It provided the
opportunity to reallocate resources to where they are most needed and where
they will have the greatest impact. In line with the Agenda for Change, the sectors
identified are: trade and private sector support, sustainable energy and agriculture,
PFM and education. The projects will address poverty alleviation, sustainable
development and the integration of the ACP countries into the world economy.

By
2012, a total of 86 % of the EUR 2.9 billion allocated to the intra-ACP
programme under the 10th EDF had been, or was in the process of
being, implemented. The 2012 Annual Action Programme for intra–ACP cooperation consisted
of a package of six programmes amounting to a total of EUR 67 million in the
environment, agriculture, education and infrastructure sectors.

In
2012, the Erasmus Mundus and intra-ACP Mobility programmes, concluded contracts
that have paved the way to the mobility of around 930 students and academics
from south to north or south to south. The AfricaConnect research network
project was officially launched, heralding the imminent connection of eastern
and southern African universities to the Gigabit European Advanced Network
Technology (GEANT) network.

The
African Monitoring of Environment for Sustainable Development project has
significantly improved the use of remote sensing data for environmental and
climate monitoring applications in Sub-Saharan Africa. It includes the
installation of 111 new EUMETCast stations, as well as the upgrading of stations
already in place. As a result, African national and regional institutions, as
well as the continent’s National Meteorological and Hydrological Services, can
now provide decision-makers with the information needed to manage the
environment more effectively and thus contribute to long-term sustainable
development in the region.

Water facility

As sanitation continues to be a major challenge, a specific call for
proposals was launched and finalised in 2012 under the Water Facility. Under
the EU MDG Initiative EUR 266 million was committed in 2012 to contribute to the
achievement of the water and sanitation MDGs in 19 ACP countries.

The EU also supports the New Partnership for Africa's Development
(NEPAD)/African Union Network of Water Centres of Excellence (ACE-Water) in
line with its development strategy to support south-to-south collaboration. Two
networks federating nine countries in Western and Southern Africa are working
together, with assistance from the Commission’s JRC, to develop the regional
capacities needed to improve links between research and policy making. This
applies particularly to the identification of priority needs in research,
higher education and capacity building for policymakers, as well as the design
of related implementation tools.

Energy

More
than 12 million people should benefit from an improved access to modern energy
services thanks to the projects already financed by the Energy Facility all
over the ACP region. An innovative blending instrument–
a pooling mechanism – has also been launched by the Commission under this
facility with a EUR 40 million budget made available. This new mechanism has
been conceived as a flexible tool to enhance private sector participation,
maximise the impact of Energy Facility grants and better coordinate at EU level
available resources and expertise in the sector. Through this mechanism the EU
has contracted five energy projects in 2012. These projects will provide access
to electricity to more than 2.6 million people across the ACP region.

In 2011, UN Secretary-General Ban Ki-moon called for the world to provide
"universal access to clean, affordable energy by 2030" and launched
the SE4ALL initiative.

In this context Commission President Barroso proposed during the EU SE4ALL
Summit Summit in April Summit in April 2012 the ambitious goal of helping
developing countries provide access to sustainable energy services to 500
million people by 2030. In order to turn this pledge into reality the
Commission is mobilising significant resources to immediately scale-up its
support for sustainable energy:

· 
EUR 400 million has been committed to energy
related actions in Sub-Saharan Africa, and will be implemented by using
innovative financial instruments.

· 
an EU technical assistance facility of EUR 65 million is being set up in order to
assist partner countries in refining their policies so that they can attract
the necessary private investments.

· 
EUR 75 million from the
Intra-ACP envelope will be dedicated to rural electrification projects.

The EU remains firmly committed to addressing the current and future
energy and development challenges through dialogue with its development
partners. The EU Energy Initiative (EUEI) and the Africa-EU Energy Partnership
(AEEP) are key vehicles for the Commission and Member States to jointly deliver
on these commitments.

As part of the AEEP, a stakeholder forum was organised in 2012. The forum
allowed private sector, civil society and research stakeholders in Europe and
Africa to explore opportunities and synergies with which to achieve progress in
the AEEP 2020 targets in renewable energy, energy efficiency, energy access and
energy security.

2.3. 
Latin America & the Caribbean
2.3.1. 
Latin America

Introduction

Preparatory work for the first EU-CELAC Summit (Seventh
EU-LAC Summit) in Santiago de Chile in January 2013 was carried out throughout
2012. Specifically, three EU-LAC senior officials' meetings were held together
with a number of preparatory events co-financed by the EU, notably on
investment-related issues, information and communication technologies, business
cooperation, social cohesion and civil society.

Signed in June and given European Parliamentary approval in
December, the EU-Central America Association Agreement and multi-party trade
agreements with Colombia and Peru are expected to provisionally enter force in the
second semester of 2013.

Two rounds of negotiations on the EU-MERCOSUR Association
Agreement were held in Brussels and Brasilia with progress being made in the
normative part of the agreement. During the Brasilia round, negotiators agreed that
further progress was conditional on the exchange of market access offers. It
was agreed to give the process a political boost by holding a ministerial level
meeting in the margins of the 2013 Santiago Summit.

The Sixth EU-Mexico Summit took place in Los Cabos, Mexico,
in June 2012. The Summit confirmed the good relationship with this Strategic
Partner, a key ally in the international arena notably on climate change, the
environment, human rights and, more recently, vis-à-vis trade
protectionist measures introduced in a number of Latin American countries.
International and global security challenges and the international economic
situation were also discussed. Although 2012 was an electoral year in Mexico,
the EU-Mexico high level dialogue continued, notably covering human rights
cooperation.

Preparation for the Sixth EU-Brazil Summit in Brasilia due
in January 2013 was undertaken. The EU and Brazil also continued to actively implement
the 2012-14 joint action plan. This has extended their cooperation to new dialogues
on general UN matters, drugs-related issues and engaging in negotiations on a
Framework Participation Agreement for EU CSDP missions. The EU and Brazil also
kept up an active political dialogue with cooperation continuing to advance
steadily in most areas.

The activities of the EU-LAC Foundation officially began in
2012, with three meetings of the board of governors taking place in March, July
and October. The Foundation organised a series of events including the I EU-LAC
Congress of Media Editors and attended the Ibero-American Summit in November in
Cadiz as observer. Talks on an agreement to give the Foundation international
status made good progress.

The EU-CELAC structured dialogue on migration continued with
the sixth High Level Meeting on Migration being held in Brussels in May and
covered issues related to migration and economic growth. The Seventh High Level
Meeting on Migration took place in November and addressed human trafficking and
migrant smuggling.

In relation to drugs, the 14th High Level Meeting of the
EU-CELAC Coordination and Cooperation Mechanism on Drugs (COPOLAD) was held, in
June, in Brussels. In preparation, for the high level segments, technical
meetings on migration and drugs were held. Specifically with the Andean
Community, the Eleventh EU-CAN Specialised Dialogue on Drugs took place in
October.

Security continued to be one of the main priorities on the
EU's LAC agenda and especially in Central America, where the situation remains troubling.
The EU is supporting the implementation
of the Regional Security Strategy, adopted by the Central American Heads of
State in June 2011. A new EUR 14 million programme was approved in response to
the priorities set out in the Regional Strategy. To better respond to the
security threats in Central America and the Caribbean - the worst affected
regions - preliminary internal discussions were launched to define an EU
strategy based on a comprehensive approach.

In the context of contractual frameworks
with individual Latin American countries, the Association Committee took place
with Chile and joint committees were held with Uruguay, Paraguay and Brazil.
Political consultations with key partners including the United States, Russia
and China were also held. In addition to a discussion of the overall policy in
the LAC region, these meetings discussed: security, trade, investment and
regional integration as well as country-specific matters. High level political
dialogues were held with Colombia, Bolivia and Peru, and expanded to new areas
of mutual interest such as extractive industries and business policy. The EU
also supported the launch of peace negotiations between the Colombian
government and FARC (Revolutionary Armed Forces of Colombia).

Bilateral and regional projects and
programmes totalling EUR 369 million were financed for Latin America in 2012
out of the DCI. The Latin American Investment Facility (LAIF) continued its
successful implementation with a total of 12 projects being approved by the
Operational Board in 2012. This represents a total LAIF contribution of EUR 128.8
million, helping to mobilised funds for a total of more than EUR  2.6 billion.
The LAIF contributed to projects in the energy, water and sanitation, private
and social sectors in 2012.

Aid effectiveness and donor coordination

A progressive phasing out of bilateral cooperation at the EU level (including
Member States) can be seen in the upper middle income countries of Latin
America. During this process, coordination with Member States has concentrated
on complementarity, exchange of information concerning ongoing operations and
joint visibility. In addition, new forms of cooperation are being explored
where triangular cooperation is also considered.

In the region's lower middle income countries, where
bilateral cooperation will continue to play an important role, there is still
strong commitment to improve aid effectiveness. As part of EU programming for
the period 2014-20, consultation and cooperation between the EU and its Member
States has progressed in 2012. In some countries, joint EU analyses of national
development strategies as well as joint response strategies are being developed,
which in some cases may lead to joint programming.

This takes EU coordination to a new level and should lead to improved
coherence, complementarity, impact and visibility. Generally speaking, there is
a good basis for the implementation of the aid effectiveness principles in the
context of the 2014-20 programming cycle under the DCI.

In Paraguay, the EU Delegation set
in motion a process of joint programming whereby the EU and the Member States
represented in the country will produce a joint analysis of the governance and the
social and economic situation in Paraguay. This will also be the basis for
drafting the individual development cooperation strategies.

Drive for aid effectiveness in
Guatemala

In January 2012, an EU joint
programming exercise, internally coordinated by the EU Delegation, was launched
bringing together the Commission, EU Member States and its main national
counterpart, Secretaría de
Planificación y Programación de la Presidencia (Segeplan). As meeting coordinator,
the Delegation prepared the agenda and invited EU Member States to submit
topics for debate. The meetings provided an opportunity to discuss the
operational aspects of aid effectiveness and division of labour and facilitated
further exchange of information, thus contributing to a more coherent and
coordinated process of project funding. It is likely that EU joint programming
will become a reality for several other countries of the region over the medium
term, with the EU Delegations playing a leading role.

In addition to the monthly head
of mission meetings, where not only external relations, but also major
development issues are treated, the EU Delegation chairs the EU Heads of
Cooperation meetings which take place every two months. During these sessions,
the EU Delegation provides information on ongoing projects, projects under
identification or formulation as well as on field missions, dispatches from
headquarters, forthcoming events and other initiatives of topical interest.

Working towards the MDGs

The 2012 UNDP Millennium Development Report noted that Latin America
as a whole has made significant progress towards the MDG targets. The region
had relatively high growth rates throughout 2012, with several countries
improving income distribution, raising per capita social public expenditure and
applying macroeconomic policies, thus lessening the impact of the financial crisis.

In Latin America, the main problems in attaining the MDGs are: the
effects of very low productivity gains between 2001 and 2011; differences in
under-nutrition rates between children in rural and urban areas (MDG 1)
and - despite significant progress in access to basic education - the limited
coverage and quality of higher education and gender equality (MDG 3). In
relation to MDGs 4, 5 and 6, the health conditions of the population have
improved. However, progress is still unevenly distributed and insufficient, as regards
some indicators like the high adolescent birth rate in the region. Furthermore,
in relation to environmental sustainability (MDG 7), Latin America
continues to have some of the highest deforestation rates in the world and
carbon dioxide emissions have been growing steadily.

Rural and urban inequalities in access to social services are
calling into question the achievement of the MDGs. This is the case for MDG
target 1.C, which calls for a halving of the proportion people suffering from
hunger and undernourished children between 1990 and 2015. While statistics
report a decline in the proportion of underweight children under five years old
(from 10 % in 1990 to 4 % in 2009), differences in under-nutrition
between rural and urban child populations in Latin American are the highest in
the world. However, there are positive trends as a combination of political
stability, adequate domestic funding, strong international support and genuine
policy dialogue has led to a sustained reduction in malnutrition disparities
between rural and urban populations.

Latin America met the Millennium development target related to
hunger reduction. However, malnutrition represents a significant problem in a
number of countries putting at risk the achievement of goals 1 and 4.

EU assistance to Peru contributes
to 8.8 % fall in child malnutrition

Between 2007 and 2011, rates of chronic
malnutrition in Peruvian children under five fell from 25.4 % to
16.6 %, at a higher rate in rural populations than in urban areas,
thanks to the implementation of the "Programa Articulado
Nutricional", which aims to reduce chronic malnutrition and poverty. As
a result of constructive and open dialogue with the government of Peru, the EU
has contributed EUR 60.8 million to the project.

In comparison to the rest of Latin America, where
the average rate of malnutrition is around 16 %, Peru has a particularly
high rate in children under five, which varies from
25 % at national level to 47 % in areas of extreme poverty. A combination of factors such as a shortage of quality food, poor
eating practices and inadequate sanitation and living conditions have been
identified as primary causes.

Supporting early childhood development in
Brazil and Peru

The project "Supporting Access to Basic
Services for Early Childhood Development in Brazil and Peru", to which the
EU has contributed EUR 3.8 million, aims to improve the lives of 192 300
people in Brazil and 5 500 in Peru, including children, caretakers and
organisations, through improvements in public health services and the capacity
building of civil society and local authorities.

Brazil and Peru have huge inequalities linked to
race, ethnicity, gender, social class and geographic location. Indeed, the
Northeast region of Brazil and the Andean Highlands of Peru comprise areas of
extreme poverty and many children still die from easily treatable diseases such
as pneumonia and diarrhoea. However, civil society and local governments are
mobilised to ensure the health and wellbeing of children under five from
excluded populations and synergies between child-focused policies and those
sharing best practice between local, national and international initiatives
have been recorded.

Implementation and results

Bilateral cooperation including budget support

In Brazil, the success of the ongoing project to support
sector dialogue in areas where both the EU and Brazil can learn from one
another's experiences with public strategies, policies and activities, led to
the approval of a third phase of the EUR 7.5 million support action under the
ICI revised Regulation. Under the same Regulation, funding worth EUR 1 million
was allocated enabling the European outward academic mobility to Brazil under
Action 2 of the Erasmus Mundus Programme.

In Colombia, in order to strengthen good governance,
including the rule of law and the fight against corruption, the EU approved an EUR
8.2 million project. In addition, to promote innovation and economic
development, while strengthening social and regional cohesion, an EUR 8 million
project to roll out digital television was approved under the ICI revised
regulation.

In 2012 in Ecuador, project implementation continued to make
good progress. Political dialogue was further intensified in relation to education
and sustainable development budget support programmes. In the use of the
latter, a new EUR 32 million programme was approved during the year.

Bolivia is one of the 13 countries with
the world's highest rates of biodiversity. In 2012 the EU and the National
Service of Protected Areas signed a EUR 18 million financing agreement (EU contribution)
to help preserve protected areas of national parks and prevent illegal
deforestation (PACSBio). This will be implemented through budget support and will
also give local actors the opportunity to ensure that development takes place
in the context of poverty eradication.

The year 2012 saw advances in the fight against illegal drugs in
Bolivia, with the United Nations Office on Drugs and Crime (UNODC) recording a
decrease in the production of coca cultivation. The EU played a key role in combating
illegal drugs and drug trafficking, which is a focal sector of the Country
Strategy Paper 2007-13 for Bolivia.

In Peru, the EU has contributed EUR 13 million to the Euro
Eco Trade Programme to support the Peruvian policy of promoting exports of
ecological products. The primary objective is to improve the capacity of key
actors along the value chain - from production to export - with particular
emphasis on the promotion of environmentally friendly agriculture and the preservation
of biodiversity and natural resources.

In Costa Rica, the security and justice sector financing
agreement linked to "Programa de Seguridad Ciudadana" (Prosec)
was signed with the authorities, with an EU contribution of EUR 13 million. The
action aims to support the national security strategy and contribute to public
security reform.

In Panama, with the adoption of the new National Strategy for
Public Security in June 2012 a sectoral policy dialogue on citizens' security is
now underway.

Social Cohesion Laboratory (SCL) II in Mexico
(EU contribution: EUR 11 million)

This project aims at
strengthening social cohesion in Mexico by promoting structural reforms that
foment equal opportunities in the access to basic public services, development,
justice, security and human rights.

Approved in 2012, the project
assists Federal institutions as well as the States of Oaxaca and San Luis
Potosí in reviewing, adjusting and implementing innovative public policies and
institutional practices. The main aim is to introduce more effective
participatory public policy and programme planning, design, execution,
coordination and monitoring processes.

This project will complement the ongoing
Mexico-EU Social Cohesion Laboratory I very well and add two new platforms to
those existing under SCL I: one on human rights and justice, and one on social
crime prevention and security.

In El Salvador, with the help of the
Support Programme for the Recuperation of the economy programme (PARE-ES), the
Ministry of Finance has increased the fiscal pressure to 15 % of GDP with
the aim of increasing it to 17 % by 2014. This intends to improve its
effectiveness in revenue collection, including customs and special levies.
Despite an unfavourable economic environment and low growth rates, it should be
noted that social expenditure has increased sharply.

El Salvador ended the year with a record investment of USD 833.4
million in social programmes and infrastructure. Of this, USD 354.7 million has
been invested in social programmes such as the Social Education Plan, the
Caring Communities, Health Reform, the Family Agriculture Plan, City Woman and
housing programmes. Two EU focal sector programmes - PROEDUCA (EUR 25 million) and
PACSES (EUR 47.4 million) - are supporting education and social cohesion
respectively.

In Guatemala the focus was on unemployed or under-employed
young people between the ages of 14 and 29 living in densely populated urban
areas or remote rural regions. This group does not benefit from social security
and falls outside the scope of labour rights monitoring. The newly approved EUR
12 million 'Youth Employment Generation and Vocational Training' programme will
help young people in the country to improve their technical and administrative
skills to improve their employment prospects and encourage them to set up their
own businesses. It will also provide an alternative to joining the rising
number of street gangs and organised criminal groups involved in drug
trafficking and contribute towards poverty reduction (MDG 1).

In Honduras, climate change, together with illegal logging,
is putting the safety and livelihoods of large parts of the population at risk,
particularly in rural areas. The new EUR 47 million 'Forest Sector Support
Programme' will help communities living in forest areas to better manage
natural resources in order to both improve their living conditions and to
preserve biodiversity. This programme will contribute to poverty reduction (MDG 1),
environment conservation (MDG 7) and support women's employment (MDG 3).

To help reach the national goals set for the sector, the government
of Nicaragua is drawing up the Integrated Sector Programme for Human
Water and Sanitation. The EU is supporting the first phase of this programme
through the LAIF, with a maximum contribution of EUR 50 million - of which EUR 30
million was committed in 2012. The project will contribute to raising the standard
of living of Nicaraguan families through solidarity and sustainable access to
drinking water as well as urban and rural sanitation, while fostering good environmental
practice.

"Tec-Nica" improves employability in
Nicaragua

The EUR 15 million Tec-Nica programme supports
the implementation of Nicaragua's national strategy for Vocational Education
and Training (VET) by providing professional qualifications to improve the population's
employability in the context of lifelong learning. Since 2003, the coordination
scheme, with donors established by the Nicaragua government, has been
remarkably positive and the current level of coordination and policy dialogue
in the education sector presents an excellent opportunity for further
implementation of this programme.

The establishment of a Working Group on VET
represents a key development in relation to government-donor coordination and
its key members participated in a workshop for the formulation of the
programme. Active participants are the EU, the Spanish Agency for International
Development (AECID), the Luxembourg agency for international Development
(LuxDev), UNICEF, UNDP, the Swiss development cooperation (SDC), the World Bank,
the United States Agency for International Development (USAID) and Japan
International Cooperation Agency (JICA).

Fighting organised crime and drugs in
Nicaragua

The EU has contributed EUR
10 million to a project that promotes good governance and security in Nicaragua
by supporting the country efforts to combat organised crime and drugs. Designed in the context of the Central America Security Strategy
(ESCA), and contributing to several of its objectives, it will be implemented through delegated cooperation with the Spanish
Agency for International Development Cooperation (AECID).

In this framework, coordination arrangements are
set up with the ESCA Group of Friends, and, in particular, with the Sub-groups
Combating Crime, and Prevention (coordinated by Germany) and Institutional
Reinforcement (coordinated by Spain). In Nicaragua, coordination among donors
working in the security sector will be implemented in the framework of the
Dialogue Forum, in operation since 2009, in conjunction with the national
police. This provides clear systems for coordination, accountability and
information exchange. Both Spain and Germany have expressed high expectations
for the project outcomes.

Budget support programmes represent almost 39 % of bilateral
cooperation in Latin America committed in 2012, with actions approved in Peru,
Bolivia and Honduras among others. The majority of budget support operations in
the region is in the form of sector budget support and most recently sector
reform contracts.

In Uruguay, relations with the EU in the cooperation sector
are smooth and productive. The country has reacted positively to the prospect
of ‘graduation’ in 2014 and the financing agreement for the innovation support contract
and Territorial Cohesion Policies, with a EUR 11 million EU contribution, was
signed in August 2012.

In Argentina, the implementation of cooperation activities is
proceeding well and no AAP in 2012 was foreseen.

In Mexico, sectoral policy dialogue is underway in the fields
of higher education and culture. A joint comparative study on the
internationalisation of higher education was completed in autumn 2012 and a
seminar is planned in 2013.

EU cooperation with Paraguay was affected by a number of
major events in 2012. On 22 June 2012, an impeachment procedure in the national
congress led to President Fernando Lugo being ousted and former vice president,
Federico Franco, taking his place. However, with national elections expected to
take place on 21 April 2013, EU cooperation has continued. Two important events
include the ratifying of the financing agreement for the Social Development
Policy Support Programme in March 2012 and the Paraguayan Congress' adoption of
the Personal Income Tax act (EU contribution EUR 31 million) in July.

A Mercosur biotechnology project (EU contribution EUR 2
million) was approved under the 2012 AAP and negotiations between the EU and
the Mercosur for an Association Agreement continued. The draft agreement includes
a chapter on cooperation which is expected to open up a number of cooperation
possibilities.

In line with commitments to support the Andean Community in
its fight against illicit drugs, EUR 6.5 million was approved for the Regional
Project to Support Demand Reduction of Illicit Drugs (PREDEM).

On research, a regular science, technology and innovation dialogue
has been established Under the EU-LAC Joint Initiative for research and
innovation and the second senior officials meeting took place in in Chile.
Progress has been made as regards the roadmap and four thematic working groups
for implementing the initiative. This work contributes to the preparation of
the EU-CELAC Summit which will take place in January 2013.

Regional cooperation

Several regional programmes for Latin America continued in 2012. They include:
ALFA III - a higher education cooperation programme between the EU and Latin
America - and AL-INVEST IV, which promotes the consolidation of Latin American
SMEs into the global market. The Alliance for the
Information Society (@LIS 2) pressed ahead to reduce the "digital
divide" to help integrate Latin America into the global information
society while EUROSOCIAL II continued promoting social cohesion in Latin
American societies. At the same time, EURO-SOLAR helped rural communities
without electricity in Bolivia, Ecuador, El Salvador, Guatemala, Honduras,
Nicaragua, Paraguay and Peru by providing access to renewable electric energy. Other
ongoing Latin American programmes include: URB-AL III which targets cooperation
on social cohesion matters between local authorities in the EU and Latin
America; COPOLAD, a regional programme aimed at
strengthening the capacity of participating countries to formulate sound
drug-related policies; EUROCLIMA, an environment programme fostering
coordination and knowledge-sharing; ALCUENET, a CELAC-EU network bringing
together 19 partners in R&T from both regions and the initiative "Strengthening
the dialogue between the EU and LAC to establish management models on migration
and development policies", an EU targeted project aimed at
strengthening capacities in Latin America and the Caribbean in the area of
migration.

Joint education programme sparks renewable
energy development in Latin America

The Joint European-Latin American Universities
Renewable Energies (JELARE) Project[56]
is a university cooperation scheme involving universities from Germany, Latvia,
Bolivia, Brazil, Chile and Guatemala. The project aims to mainstream renewable
energy development in Latin American countries by promoting research, forging
links between the private and public sectors, and establishing long-term
partnerships between European and Latin American institutions.

While renewable energy goals are high on the
political agenda in Latin America, and despite the wide availability of natural
resources, existing potential is not being fulfilled. One of the main stumbling
blocks is the lack of local expertise in order to plan, design, implement and
maintain renewable energy technologies.

Due to the innovative nature of this field,
higher education institutions are pioneers in this sector, both in terms of
providing research and educating future employees. With the help of a EUR 1.19
million EU contribution, JELARE has incorporated renewable energy into existing
research and study programmes as well as providing specialised undergraduate
engineering programmes on energy and joint research. One of the final outputs
of the JELARE partnership is a recommendation for improving the quality of
education and research activities offered by partners and for strengthening
their role in regional socio-economic development.

Citizens get involved in urban planning in
Latin America

A EUR 2.4 million contribution to a programme between the authorities of
two European and five Latin American regions is improving social and
territorial cohesion in Latin America. A greater participation by citizens in
municipal and regional discussions on land management matters has both improved
social cohesion and heightened the role of citizens in decision-making.

Two European regions: Toscana (Italy) and
Provence Alpes Côte d'Azur (France) partnered five Latin American regions and
municipalities: Viña del Mar (Chile), Centro Habana (Cuba), La Antigua
(Guatemala), León (Nicaragua) and Regional Community Punilla (Argentina) in the
programme which made use of innovative technology such as the Geographic
Information System for Public and Participatory (GIS-PP) management. The
respective management plans of all five municipalities have been approved.

Drugs consumption – a public health issue in
Latin America

The
regional Cooperation Programme between Latin America and the EU on drugs-related
policies (COPOLAD) initiated a project in 2012 to boost the knowledge of
national drug observatories across the continent, making a contribution to
improve public health.

Only
Colombia, Peru and Bolivia produce coca but since all Latin American countries
are transit points on various trafficking routes to North America and Europe,
domestic consumption of drugs has become a public health issue in Latin
America.

In
partnership with the European Monitoring Centre for Drugs and Drug Addiction,
the EUR 6 million programme organised in 2012 training workshops for staff –
from some 19 Latin American and Caribbean countries – to improve the analysis
of drug-related data and enable more effective and balanced
scientifically-based drug policies.

Understanding the impact of climate change on
societies and economies in Latin America (EU contribution: EUR 5 million)

The EUROCLIMA Programme has developed a series of
studies on the “Economics and Social Effects of Climate Change in Latin
America”. The aim is to strengthen the capabilities of regional actors and
generate useful information for decision-making in the region. Economic and
social analysis of the impact of climate change is essential for designing
efficient sustainable development strategies.

The studies show that agriculture and cattle
husbandry are particularly climate-sensitive activities. In other words,
changes in the climate have an impact on agricultural productivity, and as a
result on the income of farmers. This is particularly significant in Latin
America where much of the poverty is to be found in rural areas.

Concerning the methodologies for the analysis of
climate change, the evidence indicates that quantifying the impact of climate
change carries great uncertainty. Reasons are the long-term nature of change
and use of diverse methodologies. Defining a baseline which allows for
comparisons of the different scenarios is therefore fundamental. In addition,
the aggregation of the impacts of climate change must be subject to a cost-benefit
analysis in order to develop an optimal economic strategy.

In South America, the EU-FLEGT action plan, implemented in Brazil,
Colombia, Ecuador and Peru, aims to reduce illegal logging and to improve
forest governance.

The Commission supports the Latin American Centres of Excellence in
the water sector (RALCEA - Red Latino Americana
de Centros de Excelencia en Recursos Hidricos) in
promoting multi-stakeholder dialogue, capacity building, institutional support
and south-south cooperation. The JRC has facilitated Latin American policy
makers and the Centres of Excellence in identifying sector needs in terms of research,
higher education and capacity-building, as well as in implementing activities
in the three identified priority axes: regional hydrologic balance, water
quality and sanitation and stakeholder mapping and participation.

In May 2012, the Commission awarded financial support to the
recently established European Union–Latin America and Caribbean Foundation. Created
by Heads of State and Government at the 4th EU-LAC Summit in Madrid in 2010,
the foundation aims to strengthen the bi-regional partnership while increasing
visibility and discussing joint strategies.

The Latin American Investment Facility (LAIF) promotes additional
investment in key infrastructure focusing particularly on transport, energy and
the environment while supporting social and private sector development in the
region.

In 2012 additional financial support through LAIF and Action 2 of
the Erasmus Mundus programme was approved.

Start-up for research on sustainable public
transport in Latin America

The EU has put in motion research on the
obstacles to investment in sustainable public transportation in Latin America.
With a EUR 3 million
contribution from the Latin American Investment facility (LAIF), a first phase
of eleven consultancy studies will examine the current weaknesses in public
transport projects on the continent, covering issues such as town planning and
the lack of available resources to construct transport infrastructure.

The aim of the studies – focusing on Brazil,
Colombia and Mexico in a first phase – is to improve urban mobility and
economic development through innovative projects which are both financially
sustainable and environmentally friendly.

Monitoring

In 2012, 24 ROM
missions (17 country missions, 3 regional programme missions and 4 SPSP
missions) examined projects in 17 countries in the region (the Cuba mission being
postponed to January 2013). A total of 154 ongoing bilateral, regional and
sub-regional projects/programmes were monitored. Four SPSPs were monitored: in
El Salvador, Peru, Ecuador and Guatemala.

The total value of
ongoing projects monitored amounts to EUR 814 million, which represents 57 %
of the overall value of ongoing projects in the Region. In addition, a total of
44 completed projects/programmes were monitored ex-post with a total
value of EUR 134 million.

As the table shows,
79 % of projects in Latin America are performing "well" or "very
well" (categories I and II), while 18 % have some problems and 3 %
experience major difficulties (categories III and IV). The percentage of
projects doing "well" or "very well" has increased from 78 %
in 2011 to 79 % in 2012. The number of projects facing difficulties fell
from 22 % in 2011 to 21 % in 2012.

Table 11:

Table 12:

More than 80 % of the ongoing
projects/programmes monitored in 2012 in Latin America have been positively assessed
for relevance, impact and sustainability. However, concerning efficiency and
effectiveness, the performance level reached 63 %. Amongst the reasons for
lower performance levels with regard to efficiency and effectiveness are delays
in the formulation and implementation of the programme-estimates, a weak
original design without sufficient participation of local institutions or
problematic institutional management arrangements. Relevance (sometimes
obsolete because of changes of government priorities) and project design that
was not revised, insufficiently focused and occasionally over-ambitious may
also lead to a poor efficiency. Gender strategies are inexistent or poorly
designed, objective verifiable indicators (OVIs) are not gender related.

Outlook

Many
Latin American countries have made considerable progress in the development of
their economies, such as Argentina, Brazil, Chile, Colombia, Costa Rica,
Ecuador, Mexico, Panama, Peru, Uruguay and Venezuela.

In
line with the ”Agenda for Change” these countries will no longer benefit from
bilateral EU development aid which will instead target countries in greater
need of external support and where it can really make a difference, including
fragile states. This implies that these countries would "graduate"
out of bilateral development assistance.

In
Latin America, the Commission proposal is that bilateral aid in
2014-2020 will focus on
Nicaragua, El Salvador, Honduras, Guatemala, Bolivia, Paraguay and Cuba. Nonetheless,
in many 'graduated' countries projects/programmes financed
with DCI resources of the current programming period for 2007-2013 will continue until 2017 and beyond.
Moreover, these countries will be able to benefit from other financial
instruments such as thematic and regional programmes. The newly proposed
Partnership Instrument is intended to target cooperation with middle income
countries while other innovative ways of financing development – such as the blending
of grants and loans – will be further explored.

As for regional programmes for Latin America, implementation is expected to progress
as foreseen in the regional programming documents for 2007-13.
Regional EU-Latin America programmes have continued to enable Latin American
countries to benefit from cooperation in areas of
mutual interest, as well as
from the European experience in a wide range of areas. These include: higher
education, enterprise networks, green energy, social policy, migration and
security and development. New priorities for future regional programming will be identified
for the 2014-20 programming cycle.

EU
efforts to improve aid effectiveness and to promote dialogue between partner
countries on policy development, consolidation and ownership will continue.
Closer cooperation with the Member States will become a key element of the next
programming cycle which will place more emphasis on joint programming in order
to maximise the impact of EU development aid in the region. This will also help
joint efforts to address crucial challenges for the
region such as security
(including citizens’ security), good governance, climate change, energy and
social protection.

The
focal sectors of regional economic integration and regional security strategy were
reinforced in 2012, particularly in Central America, reflecting the need to
continue the EU support in these two areas. EU assistance in this field has
been all the more important given that rising insecurity exacerbates the
effects of poverty and hinders development.

This
focal sector of institutional strengthening was needed to reinforce the
capacities of the regional institutions to satisfactorily perform the
sub-regional cooperation with Central America. The economic and trade sector
has been able to support a wide range of stakeholders and sectors of the LA
economy such as business and investment, climate, SME competitiveness,
agriculture and tourism.

2.3.2. 
Caribbean

Introduction

Relations with the Caribbean region during 2012 centred on
following-up and finalising a number of initiatives launched in previous years.
Pursuing and strengthening political dialogue with the region remained a
priority, and a political dialogue between the EU and the Caribbean Forum of the
African, Caribbean and Pacific states (Cariforum) took place in 2012.

The Joint Caribbean-EU Partnership Strategy, which was
agreed in outline during the EU-Cariforum Summit in 2010, was finalised and
adopted by Cariforum and the EU and Member States in November 2012.

In the areas of trade and cooperation, implementation of the
EPA gained momentum with the organisation of the second trade and development
committee in Port of Spain and a ministerial council in Brussels; the
establishment of EPA implementation units in Cariforum states as well as
continued efforts towards optimising the EPA’s impact at national and regional
levels.

Finally, the Caribbean Investment Facility was established
which will be officially launched in March 2013.

The EU and Cuba continued to cooperate in post-hurricane
reconstruction and rehabilitation, notably after the damage caused by Hurricane
Sandy. Food security, climate change and renewable energies, culture and
education were other areas of cooperation. A more general reflection on the
future shape of EU-Cuba relations and the possibility to accompany the reforms
was pursued.

In 2012 in Haiti, the EU continued to provide assistance to
support the country's recovery. Delivery of humanitarian aid continued to
alleviate the living conditions of people displaced by the earthquake, to fight
the cholera epidemic and to cope with the consequences of tropical storms Isaac
and Sandy.  The visits of Commissioner Piebalgs to Haiti in March 2012 and of
President Martelly to EU institutions in November underscore a renewed and
strengthened dialogue in both cooperation and political fields. The EU has
welcomed the political and administrative reforms launched by President
Martelly and the new government under PM Lamothe, which should bring about a
consolidation of democracy as well as a more effective utilisation of EU and
international aid.

Aid
effectiveness and donor coordination

At local level, EU Delegations in the Caribbean participate
in and/or lead donor coordination with EU Member States and other development
partners present. In certain thematic areas/sectors, specific donor coordination
mechanisms exist. In most countries there are only a few donors present. Even
so, the Delegations are discussing in EU cooperation meetings in places such as
the Dominican Republic the prospects for improving the coordination of
policies, the harmonisation of procedures for programming as well as alignment
on the country's cycles, systems and procedures. In the Dominican Republic,
during the first half of 2012, the Delegation successfully used the EU Code of
Conduct in the field of cooperation, by agreeing joint analytical approaches to
education and drugs control with the Spanish development cooperation agency
AECID.

Haiti’s new donor coordination mechanism

Haiti’s new aid framework to organise and
implement plans for the country’s recovery, following the earthquake of January
2010, has been welcomed by donors. It is expected to lead to greater
coordination between government and the various entities – donors, civil
society and the private sector – contributing to the country’s continuing
rehabilitation. Launched in November 2012, the high-level ‘Cadre de
Coordination de l'Aide Externe au Développement d'Haïti’ – chaired by the
Haitian Prime Minister – brings together the key national and international
entities involved and gives the Haitian government a greater degree of
ownership over the recovery process. At the operational level, it assembles
national ministries and the local representatives of donors, replacing the
Interim Haiti Recovery Commission (IHRC). Set up in the immediate aftermath of
the earthquake, it is expected to improve the impact of aid.

At the regional
level, the Commission continues to urge the Caribbean Forum of ACP States to
enhance donor coordination. The Caribbean Community Secretariat (Caricom) has
endorsed the Busan Partnership for Effective Development Cooperation. While it
did not organise a coordination meeting in 2012, it has committed to holding
one in the first six months of 2013.

The regular high level dialogues between the EU and CELAC on drug
control and migration issues continues to play an important role, including by
facilitating coordination and cooperation on relevant EU-funded projects.

Working towards the MDGs

Caribbean countries have been making fairly good
progress towards most of the MDGs. However, the progress achieved in the region
has been mixed and unevenly distributed between and within countries, with some
targets still off-track.

As part of the EU MDG Initiative for ACP countries, additional
funding of EUR 20 million has been made available to Haiti.

MDG programme to boost food security in Haiti

The EU is helping Haiti to tackle food insecurity
and, in particular, malnutrition of infants. Launched in November 2012, the EUR 20 million programme will increase
production, processing and marketing of food. Some four million Haitians (of a
total population of 10 million) suffer from a lack of access to food. The
programme is part of the Haitian Government's food sovereignty strategy to
increase agricultural production, lessen food security and improve the
population's nutrition.

The programme will support, in particular, local
producers and invest in agricultural infrastructure in all regions of the
country: North-East, North-West, Centre, Artibonite and the South. It aims to
boost production, quality processing and packaging at competitive prices to
supply local markets and meet the needs of social services such as community
centres, hospitals and orphanages. There will be special emphasis on tackling
malnutrition in infants of less than 60 months, by increasing the capacities of
basic health centres to provide quality services.

The high maternal and neonatal mortality rates in a
number of Caribbean countries reveal the poor performance of national health
systems and the urgent need to invest in better access and to reinforce the
quantity and competence of health workers

Reducing maternal and child
mortality in Jamaica

Two of the MDGs of most concern
to the country are child mortality (MDG 4) and maternal health (MDG 5). The EUR
22 million Reduction of Maternal and Child Mortality (PROMAC) programme - financed by the EU’s MDG initiative - is improving both maternal and infant
healthcare.

Under PROMAC, the EU is working
with the country’s national authorities to improve the quality of services in
hospitals and primary health centres providing maternal and infant care. It is
also improving the capacities of the public entities responsible for these
specialised areas,

as well as giving information
and advice on maternal and infant care to the public at large.

Neonatal mortality accounts for
65% of all deaths of infants under five in Jamaica. Although the country’s
maternal mortality ratio has stabilised over the last decade, at around 100/100 000
live births, it is well above the MDG 5 2015 target of 25/100 000 live
births.

Implementation
& results

Bilateral cooperation

In 2012, EUR 486 million was committed in the Caribbean region from
the various cooperation instruments managed by the Commission. Five Annual
Action Programmes were approved under the 10th EDF, totalling EUR 29 million.
Nine other financial decisions were adopted totalling EUR 106 million. Guyana
and Jamaica also benefited from sugar accompanying measures financed under the
EU budget to increase the competitiveness of their sugar industries following
the reform of the EU sugar market. In 2012, these two countries received nearly
EUR 28 million in commitments.

Although generally speaking budget support remains a very important
implementation modality in the region, in 2012 only 32 % of all approved
programmes are operations implemented in this way.

Payments totalled EUR 319.8 million in 2011 for the Caribbean
countries and OCTs. As regards the EDF, Caribbean disbursements were EUR 126
million. Moreover, in 2011, the Caribbean received EUR 64 million under the
Special Framework of Assistance for Traditional ACP Suppliers of Bananas. These
funds contribute to the diversification of local economies the seven
beneficiary countries (Belize, Dominica, Grenada, Jamaica, St. Lucia, St.
Vincent and the Grenadines and Suriname) to cope with the effects of the
changes in the banana market.

2012 was a successful year for bilateral development cooperation
between the EU and the countries in the Caribbean region, both in terms of
payments under existing as well as in the adoption of new programmes.

As regards total payments (budget support and projects/programmes
combined) provisional figures show that disbursements under the EDF for the
Caribbean region reached EUR 210 million in 2012. Eligible countries also
benefitted significantly from payments under the Sugar and Banana accompanying
measures (payments of EUR 63 million and EUR 13 million respectively) and some
countries benefitted from thematic programmes. Cuba continues to be eligible
for disbursements under the EU’s DCI.

As regards budget support, the effects of the global economic crisis
translated into difficulties in meeting the EU’s strict macroeconomic stability
criteria and a number of larger countries met delays either with new
commitments or with tranche disbursement. However, a number of key
disbursements (i.e. in favour of Haiti, the Dominican Republic and Guyana)
could be carried out at the end of the year.

As far as new programmes (commitments) are concerned, progress in
2012 was good; both under the budget and the EDF.

Sugar and banana accompanying measures

2012 was the penultimate year for financial allocations to be made under
the accompanying measures for sugar and banana producing countries, from which
a number of Caribbean countries have benefitted over recent years. The last
allocations will be in 2013.

Funding decisions for a total amount of EUR 93.4 million were taken
for sugar accompanying measures in Caribbean countries in 2012, with the
following breakdown by country:

Barbados || 13 456 000

Belize || 12 003 000

Guyana || 23 355 000

St Christopher and Nevis || 12 925 000

Trinidad and Tobago || 31 724 000

Commission decisions under banana accompanying measures for
Caribbean countries were taken for an amount of EUR 79.2 million in 2012, with
the following country breakdown:

Belize || 13 280 000

Dominica || 15 270 000

Dominican Republic || 16 340 000

Jamaica || 4 730 000

St Lucia || 10 350 000

St Vincent & the Grenadines || 9 930 000

Suriname || 9 300 000

The corresponding sugar and banana sector support programmes will be
implemented over the coming years.

With respect to Cuba, the 2012 AAP - which contains support
for food security and an exchange programme in support of Cuba's economic
reforms - successfully passed the DCI Committee. With the adoption of the 2012
AAP, 100 % of the National Indicative Programme (NIP) for Cuba has now
been committed. Cuba continues to obtain very high scores in results oriented
project monitoring.

Regarding Haiti, the 2012 AAP, which included the programme
on food security of the MDG initiative successfully passed the EDF Committee
and was adopted. In addition, the ongoing housing programme was almost doubled
in 2012, now totalling EUR 46.5 million. These additional allocations to the
food security and housing sectors underscore increased efforts towards Linking
Relief, Rehabilitation and Development.

On 24 October 2012, Hurricane Sandy caused severe wind and rain damage
to the island of Jamaica. There was particular devastation on the banana
and plantain producing eastern section of the island, with an average of 95 %
damage to the crop in the most severely affected parishes. In response
to a request from the Ministry of Agriculture, the EU proposed to assist
farmers restore production in the shortest time possible by providing fertilizers
for rapid crop growth and insecticide to reduce borer infestation, which tends
to surge dramatically in the wake of hurricane damage.

The 2012 AAP in support of the education sector in the Dominican
Republic has been approved. Only one programme in support of LAs/NSAs
remains to be adopted in early 2013 in order to achieve 100 % commitment
of the NIP. Budget support payments were on hold temporarily as a result of
threats to macro-economic stability. However, since the new government took up office
and quickly announced fiscal reform and austerity measures - as well as
starting immediate negotiations with the IMF - the outlook for budget support
operations in the Dominican Republic are again favourable.

Regional cooperation

The 10th EDF Caribbean Regional Indicative
Programme, signed in November 2008, focuses on
deepening regional integration, achieving maximum benefits from the EPA and
mitigating potential adverse effects of the resulting adjustment process.
Programmes for the amount of EUR 81 million to support the establishment of the
Caribbean single market and economy, the implementation of the economic union
of the Organisation of Eastern Caribbean States as well as to assist Cariforum
with the implementation of the EPA measures and the Financing Agreements were
signed in March 2012. By the end of the year the vast majority of the
components of each programme had been contracted and first payments made.
Progress was also made with the institutional discussion of the EPA through a
series of meetings culminating in the joint Cariforum-EU Council meeting, which
was held in Brussels on 26 October 2012.

Two new programmes under the Caribbean Regional
Indicative Programmes were decided in 2012: EUR 2 million
to support the Caribbean Regional Information and Translation Institute (CRITI)
which services inter alia official Caricom and Cariforum agencies, and EUR
1.51 million to the newly-created Caribbean Public Health Agency (Carpha) which
merges five formerly autonomous health agencies.

Monitoring

In 2012, seven ROM
missions examined projects/programmes in 18 countries in the Caribbean region,
producing 88 ROM reports. A total of 53 on-going projects/programmes, nine ex
post, five SPSPs, 19 regional projects/programmes and two country
components of ACP projects/programmes centrally managed, were monitored. The
total value of ongoing projects/programmes monitored amounts to EUR 319.5
million, representing 54.83 % of the overall value of ongoing projects in
the region. In addition, a total of nine completed projects with a total value
of EUR 149.1 million were monitored ex post.

As the tables
below show, in 2012, 75.47 % of ongoing national projects/programmes in
the Caribbean were performing "well" or "very well", while
20.75 % have some problems and 3.77 % experience major difficulties.
The percentage of projects/programmes doing "well" or "very well"
has increased from 65.12 % in 2011 to 75.47 % in 2012. The number of
projects/programmes facing difficulties decreased from 33.89 % in 2011 to
24.52 % in 2012. However since the projects/programmes are not the same
this does not mean that the portfolio performance as a whole is improving.

Table 13:

Table 14:

Ongoing projects monitored in 2012 show that 90 % have scores
of "good" or "very good" for relevance and quality of
design and 85 % for impact. Regarding sustainability, 70 % of
projects have been scored as "good" or "very good".
Efficiency and effectiveness are found to be "good" and "very
good" in 60 % and 70 % of projects respectively. The most common
reasons for persisting problems in efficiency remain late start of
implementation units due to delays in contracting staff, and lack of experience
in EU procedures which affects procurement.

Outlook

Given the fact that 2013 is the last year for new commitments under
both the 10th EDF and the DCI (including Sugar and Banana
accompanying measures), it can be expected that important discussions on the
future of development cooperation will be held until the end of the year.

These discussions will be taken forward in accordance with the
relevant provisions of the Cotonou Agreement (2000-20). This 'programming'
process will lead to negotiations and the drafting of new NIPs as well as of
the new Caribbean Regional Indicative Programme.[57]
These documents will lay out the areas of cooperation for the coming years.

The upcoming programming discussions will likely be guided, on the
EU side, by the Agenda for Change. This could lead to a downward adjustment of
bilateral envelopes for some middle-income countries in the Caribbean region
and elsewhere.

A significant share of EU aid to the Caribbean region is delivered
in the form of budget support, which combines financial transfers to government
budgets with policy dialogue, performance assessment and capacity building. The
EU aims at strengthening the contractual partnerships with beneficiary
countries of this instrument, with the objective of increasing efficiency and
effectiveness of budget support in achieving development results. The resulting
new budget support guidelines bring new challenges for traditional
beneficiaries of this instrument, and these factors too should be taken into
account during the programming process.

One key priority for the year will be to ensure that new initiatives
and, where appropriate, budget increases, are prepared sufficiently early to
ensure that the region can draw maximum benefit from available funds.

2.4. 
Asia, Central Asia & the Pacific
2.4.1. 
Asia

Introduction

The EU was particularly active in Asia in 2012, with an
unprecedented series of high-level meetings, visits and summits culminating in
the 9th ASEM Summit in Laos in November. Good progress was made on Framework
Agreements, Partnership and Cooperation Agreements and Free Trade Agreements
with several Asian partners. Meanwhile the EU continued to engage with regional
organisations, with a strong focus on the Association of South-East Asian
Nations (ASEAN). A new EU-ASEAN action plan focusing on sustainable development
and inclusive growth for 2013-17 was agreed.

The EU also accompanied key developments in
ASEAN countries. In the Philippines, particular emphasis was put on
conflict-affected Mindanao where the EU supported the peace process as well as
community development. During the second half of 2012, the EU and its Member
States closed large parts of their successful cooperation with Indonesia in the
areas of disaster management and conflict resolution. A successful
consolidation of peace in the province of Aceh contributed to sustainable
outcomes and ensured that the impact of the donor community's efforts will
continue to be felt beyond 2012. The lessons learned are informing new
post-disaster and post-conflict recovery models in other parts of the world. In
Myanmar/Burma, the EU doubled its assistance for 2012-13 to a total
of EUR 150 million in support of ongoing reforms as well as projects in health
and education. Commissioner Piebalgs visited in February to assess the
ongoing reforms and encourage their continuation. HR/VP Ashton formally opened the
new EU office in Yangon during her visit in April. In September, the EU
launched procedures to reinstate the General System of Preferences (trade) that
will help Myanmar/Burma to expand exports to Europe. Inaugurated by President
Barroso in November 2011, the Myanmar Peace Centre - which plays a pivotal role
in the ethnic peace process - received EU start-up funding.

The year 2012 saw major progress in relations with Pakistan.
Of particular note was the launch of the EU-Pakistan strategic dialogue in
June 2012 during a visit by the HR/VP to Islamabad. This dialogue is
based on a new political framework - the EU-Pakistan 5-Year Engagement Plan - which
was endorsed by the FAC on 23 January. The plan aims to improve EU coordination
with Pakistan and expand relations to include: security, democracy, governance,
human rights, socio-economic development, trade, energy and a number of other
sectors. The political situation in Pakistan remained tense, with the
government engaged in a three-way political struggle between the
executive, the judiciary and the military. 2012 also saw preparations for the
general elections expected between March and May 2013. The EU fielded a fact
finding mission from 18 October to 6 November in order to evaluate whether
the deployment of an EOM would be useful, feasible and advisable. Pakistan
continues to face serious economic challenges, including an energy crisis.
Although there has been progress in the field of human rights legislation,
serious human rights problems remain. These derive from a range of factors
in part related to the country's weak state institutions and the growth of
extremism. Government and security forces struggled to contain a wave of
sectarian violence targeting Shias and other minorities in 2012. Council
conclusions on Pakistan in June 2012 underlined EU commitment to support
Pakistan both pre- and post-elections, but also EU concerns with the need for
Pakistan to intensify efforts towards political, economic, fiscal and energy
reform.

In Afghanistan, the first three phases of the
transition process have been completed, with more than 75 % of the
population now under the control of the Afghan government. In May, the FAC
reiterated the long-term commitment of the EU to Afghanistan, pledging to at
least maintain levels of assistance post-2014 and to support Afghan efforts to
strengthen civilian policing and the rule of law. These commitments formed the
basis of the EU's undertakings at the sequence of international conferences
held in Chicago, Kabul and Tokyo. These conferences put in place a
comprehensive international framework in support of increased security and
development in post-transition Afghanistan. Furthermore, negotiations began on
a long-term Cooperation Agreement on Partnership and Development which will
provide the legal underpinning of the EU's future engagements.

The EU has expressed concern about political violence in Bangladesh
and continued its dialogue with the government on health and safety issues in
factories serving the EU market. The treatment of Rohingya refugees from
Myanmar/Burma was also raised at a number of occasions.

The EU co-sponsored a resolution at the UN Human Rights
Council in March calling upon Sri Lanka to present a comprehensive
action plan for implementation of the recommendations of its own Lessons
Learnt and Reconciliation Commission. Human rights issues were also brought to
the Human Rights Council Universal Periodic Review in November and the EU
continued to monitor these developments carefully while considering options for
improved cooperation in a number of technical areas.

The Maldives' young democratic system was severely tested in 2012. After
weeks of opposition-led protest and a mutiny by the Police Force and the
Maldives National Defence Force (MNDF), the first democratically elected
President, Mohamed Nasheed, resigned in February. He was replaced by former
Vice President Dr Mohammed Waheed Hassan who took over as caretaker President.
The EU called upon the leaders of political parties to engage in a process of
political dialogue.

Further tuning of development cooperation with Mongolia
took place in 2012, which took into consideration the social and economic changes
brought about by the development of mining industries. Focus was on economic development
and diversification with an emphasis on vocational training for rural
development and support for public sector to modernize through, among others,
introducing EU norms and standards. These areas support the government strategy
on economic development together with the goals of inclusive and sustainable
development identified in the Agenda for Change.

The 12th India-EU Summit held in New Delhi on 10
February 2012 confirmed both parties' will to strengthen and re-balance the
political and security dimensions of their strategic partnership. Since the
adoption of the Joint Declaration on International Terrorism in 2010, security
cooperation has progressively moved to the forefront of the agenda; the 6th
EU-India Security Dialogue was held in Brussels on 25 October; the 2nd Cyber
Consultations took place in Delhi on 26 October; a practitioners’ workshop on counter-terrorism,
co-hosted by Europol and Eurojust, was held in The Hague on 11 and 12 December
and the 4th EU-India forum on effective multilateralism took place on 23 and 24
October in Brussels.

The EU-China Strategic Partnership was reconfirmed by
the intense dialogue and cooperation and two summits as well as the
Urbanisation Partnership, People-to-People Dialogue, and the High Level
Dialogue on Energy Security.

EU cooperation has remained focused on providing support for
China’s reform programme which includes strengthening the rule of law and
addressing domestic and global concerns such as the environment, energy and
climate change.

Existing energy projects, such as the Europe-China Clean Energy
Centre, the Institute for Clean and Renewable Energy and Switch Asia, have
delivered results in several areas and regions. Similarly, the EU-China Trade Project
has been instrumental in supporting the Chinese administration on grid standardisation
issues. An agreement to launch a project encompassing emissions trading
systems, green growth and waste management was signed. Thanks to their
strengthened partnership, the EU and China moved to a higher level of
commitment and held the first High Level Dialogue on Energy Security in 2012
between EU Member States and members of China’s national energy commission.

The EU and China have
launched a High Level People-to-People Dialogue (HPPD), as the third pillar of
EU-China cooperation. It aims to improve cooperation in education and training, culture,
multilingualism and
youth as well as to bring about a common understanding by increasing contacts
between citizens of both sides.

Aid effectiveness
and donor coordination

As relations with Asia rapidly evolve, the
EU is seeking to improve aid effectiveness by concentrating activities in each
country on a maximum of three sectors, while focusing on the countries that are
most in need.

In Afghanistan, the EU is
contributing to reducing aid fragmentation while increasing coherence,
harmonisation and coordination between donors and the Ministry of Public Health.
In this context system enhancement of "health action in transition"
will increase access to healthcare services by covering almost 50 % of the
Afghan population in 21 provinces, as well as in Kabul city, while ensuring
services are delivered in a more coherent manner.

The government and donors coordinate closely in Bangladesh and
have elaborated a Joint Cooperation Strategy which provides a division of labour
and lays out guidelines on effective EU collaboration so as to achieve key development
outcomes.

The
EU proactively promoted aid effectiveness in Nepal in a number of policy
dialogue fora on peace and stability, education and public finance management.
In summer 2012 the EU launched the long-term commitment to Nepal for the period
2014-20 and a consensus was reached on the three potential areas of assistance:
education, rural development and governance.

In Pakistan, the EU is actively seeking structured donor
coordination and providing synergies and complementarities of activities in
education, PFM and human rights. Political relations are increasing in
prominence since the launch of a strategic dialogue in June 2012. Both the
government and opposition leaders have expressed interest in EU election
observation assistance in forthcoming elections in 2013.

Vietnam is one of the most active
partners in implementing the Paris and Accra agendas and the EU is the lead
facilitator on the ground.  The Vietnam Partnership Document, which aimed to
adjust the Busan commitments to a country context, was finalised in 2012. The
EU actively supported its preparation by co-chairing the Aid-Effectiveness
forum alongside the Vietnamese Ministry of Planning and Investment.

Working
towards the MDGs

While Asia
has seen good regional progress in areas such as poverty reduction (MDG1) and
gender parity in education (MDG3), progress has been slower in other areas, notably
health. In a context in which significant internal wealth disparities persist
and large scale deprivation remains a challenge, the donor community should
focus on improving healthcare and basic services to lower mother and child
mortality rates as well as reducing hunger.

Afghanistan's health
indicators are among the world's most troubling. Nonetheless, the health sector
has shown considerable progress in the last decade with access to primary
health care services increasing to around 65 %. Such progress is largely
due to the implementation of the government-led Basic Package of Health
Services and an Essential Package of Hospital Services implemented by NGOs and
funded by the EU, USAID, and the World Bank.

Bangladesh has made consistent
progress with respect to life expectancy and child and maternal mortality
indicators in the human development index. It has also performed well in
agricultural production and has achieved a food surplus. Furthermore, poverty
levels have gone down 2 % every year and EU aid is helping to improve
primary school completion rates as well as the quality of edu­cation.

In the Philippines, EU support to
the health programme has resulted in the expansion of health insurance benefits
and a significant increase in the availability of medications, particularly for
the poor. 85 % of Filipinos are already insured, a figure which includes
the poorest 40 %. There is mixed progress on the health-related MDGs: while
maternal health remains a challenge, the reduction of child mortality is on
track. The adoption of the Reproductive Health Bill calling for government-funded
contraception and improving reproductive health, was a major political
breakthrough supported by EU policy.

Implementation and
results

A key moment for Afghanistan in 2012 was
the Tokyo Conference in 2012. Alongside the Afghan government, this was attended
by numerous high-level international stakeholders, including Commissioner
Piebalgs. The Conference reaffirmed respective
commitments and mutual accountability. In turn, the international
community reaffirmed its commitment of aligning 80 % of aid with the national
priority programmes and channeling at least 50 % of its development
assistance through the national budget.

During 2012, total EU health and social
protection support amounted EUR 185 million. The EU continued its engagement in rule of law, with
particular emphasis on policing. Afghanistan is also benefitting from thematic
lines of support in areas such as humans rights, civil society and food
security. Regional programmes are contributing to border management, counter-narcotics
and supporting uprooted people.

In Bangladesh, 2012 saw the approval of two major programmes, bringing the total
commitment of the 2011-13 Multiannual Indicative Programme to EUR 178 million (90 %
of the total). The food security programme aims to fund
further development of safety nets in line with the new Food Security Country
Investment Plan while the Poverty Reduction through Inclusive and Sustainable
Markets project aims to enhance the competitiveness of cottage industries and
small businesses to provide increased job opportunities for poor households in
targeted areas.

In Bhutan, EU
support continued in 2012 to facilitate the ongoing process of
decentralisation, democratisation and political change in the country. The
funding was provided as budget support and will contribute to the existing
multi-donor-supported Local Governance Support Programme which aims to
strengthen and empower local governance delivery.

In China, the EU continued to focus on strengthening the
mutually beneficial cooperation and policy dialogue on the environment, energy,
education, governance, trade and economic development. The EU supports China's
transition to a low carbon economy, and a partnership on sustainable urbanisation
was launched in 2012. The highly pertinent EU-China Low Carbon and Environment
Sustainability Programme aims to strengthen cooperation and dialogue on climate
change, water, waste management and heavy metal pollution as well as assisting
Chinese cities in adopting energy and resource-efficient ecological solutions. The EU-China Innovation Cooperation Dialogue was launched at the
EU-China Summit in September. A first preparatory seminar took place in
November with the view of organising the first High Level Dialogue in 2013.

EU
support to the Maldives contributed to remarkable progress made in the
fight against drugs in 2012. A EUR 1.5 million action, in partnership with
UNODC, provided key assistance in the establishment of the National Drugs
Agency in January. This body is effectively overseeing and coordinating the
design and the implementation of drug control activities with particular focus being
paid to reducing and preventing the negative impact of illegal drugs on youth.
Other substantial results include: the first ever drug survey in the Maldives; the
approval of a law introducing a non-repressive health focus into the drug
control policy and the establishment of drug courts – the only examples in
South Asia. Broad support for capacity building exists within the ministry of health
and NGOs across a number of islands to enable outreach of counsellors and peer
educators to reach those in need of drug treatment.

The EU is supporting the remarkable
political and economic transition taking place in Myanmar/Burma,
suspending restrictive measures in May 2012. The Commission has now fully
engaged with the government on development cooperation, which has more than
doubled in value and expanded in scope. Projects in the interim period have
focussed on areas such as health, education and food security. One EU co-funded
project (EUR 1.29 million) in the townships of Dala and Seikyi Khanaungdho aims
to help reproductive, maternal and child health, access to safe water and
improving the livelihoods of uprooted people. Another project focuses on food
security in North Rakhine State, one of the most densely populated and poorest
states in Myanmar/Burma, a state which also witnessed violence between the
Buddhist and Muslim communities in 2012. The EU funded project for EUR 8
million supports the livelihoods of the poorest people as well as improving
water and sanitation infrastructure in villages. It complements the
Commission’s humanitarian interventions. The 3rd ASEAN-EU dialogue meeting on
science and technology took place in Myanmar/Burma in the scope of the
‘ASEAN-EU Year of Science, Technology and Innovation 2012’. Under this
initiative, more than 50 events took place in thirteen different countries,
involving more than 40 different institutions from both regions.

In February 2012, Commissioner Piebalgs visited
Myanmar/Burma and announced a package of EUR 150 million in support
of the country's democratic reforms and ethnic peace, designed to bring about
inclusive sustainable growth and development for the whole population. This
package, of which EUR 100 million has already been committed at the end of 2012,
builds on existing support to health, education, and livelihoods, but also
supports government capacity building, the ethnic peace process and trade
measures.

In
2012, a programme for tackling climate change through sustainable forest
management and community development in the Malaysian state of
Sabah was approved. The programme is designed to enhance the institutional
capacity of the government in Sabah and to develop the systems and tools needed
to implement the "Reducing Emissions from Deforestation and Forest
Degradation" (REDD+) Strategy. In preparation, pilot projects strengthen
community engagement in forest protection and pro-poor sustainable forest
management.

In
Nepal, the EU continued its assistance to the education sector through SBS.
Assistance to stability, peace consolidation and governance was also continued
through the support to the electoral process via a programme financed through
UNDP. In addition, the EU financed a EUR 10 million project to enhance public finance
management at the central level through a multi-donor trust fund managed by the
World Bank, and at local level, through a project implemented by the Asian
Development Bank. In 2012, projects related to the EU food facility and renewable
energy were successfully completed. The Building Climate Resilience programme,
funded under the Global Climate Change Alliance (GCCA) with contributions from
Cyprus and DFID, launched activities in February.

Three
new projects were approved in Pakistan in 2012. A major sector budget
support programme will improve service delivery, economic growth and local
governance by promoting community-driven development in Khyber Pakhtunkhwa. A
second initiative will contribute to improving transparency and accountability by
supporting public financial management reforms at the federal and provincial
levels, while a third will strengthen parliamentary institutions and federal
and provincial authorities to promote democracy and human rights, with
particular attention paid to women, children and ethnic minorities.

A joint
declaration on research and innovation was signed at the EU-India Summit in
February, launching a new Indo-European Partnership with larger scale, scope
and impact and enhanced synergies between India, the EU and its Member States. It also
called for Indian and European stakeholders to define a shared strategic
research and innovation agenda. Coordinated calls in the field of water
research were completed in 2012 with a total budget of EUR 32 million co-funded
by the Commission and the Indian authorities.

In
the Philippines, the EU's support focuses on the health sector,
governance, trade and providing assistance to vulnerable populations,
specifically in Mindanao. In 2012 the Framework Peace Agreement, a landmark
document which sets a roadmap towards the final peace agreement in this conflict-affected
region, was signed. EU targeted and thematic assistance to Mindanao continued with
progress not only in peace building and conflict resolution, but also in
improving livelihoods, restoring community infrastructure and in the return and
recovery of internally displaced people.

In
Vietnam, a EUR 16 million project for trade and investment began in July
2012. The continuation of a successful aid programme concluded in June, this
project confirms the EU's intention to help Vietnam promote pro-poor economic
growth through greater integration into global and regional trading systems. Furthermore,
negotiations between the Commission and the Ministry of Health have started.
These are expected to lead to the approval, in 2013, of a major budget support
operation aimed at improving health services delivery to the poor, supporting
the provision of universal health coverage and ensuring an overall improvement to
health system management.

Irrigation scheme benefits 50 000 Afghans

EU
support for improved water resource management in Afghanistan has benefited
some 50 000 people thanks to the completion of the rehabilitated Khanabad
Irrigation Scheme. Modernisation of the Khanabad River's main barrage and its
secondary canals has led to the irrigation of 35 000 hectares for
agricultural land and greatly reduced the risks of damage caused by unregulated
flows.

Improved access to justice for disadvantaged in Bangladesh

The EUR 10 million Village Courts Support Programme has greatly
increased access to justice systems at the local level for disadvantaged groups
in Bangladesh, including women and the poor. A total of 20 966 cases had
been recorded in the village courts by July 2012, of which 14 891 were
resolved. The 338 fully functioning village courts issued a total of
11 176 rulings and awarded compensation amounting to EUR 352 280.

Dramatic increase in primary enrolment rates in Bangladesh

Total enrolment in formal primary education of children aged 6 to
10 years has increased by 2.32 million since 2010, with the primary completion
rate rising from 49.5 % in 2007 to 70 % in 2011, thanks to a EUR 54
million budget support programme to improve primary education in Bangladesh.
The programme, which boosts implementation of the national education policy,
also saw progress being made in most of the 14 key school performance and
quality indicators. The first fixed tranche of EUR 4.5 million was paid in
2012.

360 schools rebuilt in conflict-affected
areas of Pakistan

Around 360 schools in
conflict-affected areas of Khyber Pakhtunkhwa were rebuilt in 2012 in
fulfilment of an agreement between the government of Pakistan and the EU. The
distribution of free textbooks to all primary and secondary schools, as well as
improvements in the teacher/pupil ratio, led to the release of a tranche of EUR
11 million - the third of a EUR 35 million budget support programme. The
programme, approved in 2009, aims to improve the delivery of quality education
services in Khyber Pakhtunkhwa where 50 % of the population were
illiterate in 2011 and almost 3 million children miss out on basic education -
2 million of which are girls.

Rebuilding programme to
help 4 000 displaced families

In late 2012, the EU and
UN-Habitat signed an agreement to help 4 000 displaced families in North
and East Sri Lanka to rebuild permanent houses in their villages of
origin. Learning from past and ongoing housing projects, construction takes
place on the basis of the "Owner-Driven Housing Reconstruction"
strategy whereby owners are granted the funds and contribute their labour, time
and resources under the technical supervision of implementing agencies (ASB,
UN-Habitat and SDC). Priority will continue to be given to households most in
need.

Monitoring

The
2012 monitoring exercise covered a total of 236 projects of which 179 were in
Asia and 57 in Central Asia. The total value of projects monitored this year
amounts to EUR 894 million representing a decrease of 25 % compared with
2011 (EUR 1 207 million) and a decrease of 34 % compared with
2010 (EUR 1 371 million). The main reason for the lower number of projects
monitored in 2012 when compared to 2011, is the non-inclusion of Afghanistan
which is one of the countries with the most projects.

Compared
to 2011, the quality of ongoing national projects monitored in 2012 has
increased slightly. The highest rated criterion in 2012 was "impact prospects",
followed closely by "relevance" and "quality of design". "Efficiency"
and "potential sustainability" register the lowest scores. This performance
rating by criteria is largely consistent with last year's, when "relevance"
and "quality of design" were the highest scoring criteria, with "efficiency"
the lowest. However, it should be borne in mind that comparisons of this nature
can be misleading as the portfolios of monitored projects vary considerably
from year to year.

It
is also worth noting that in line with findings in previous years, projects
implemented by UN agencies generally underperform compared to other projects.
This is of particular concern as these projects normally account for a
significant amount of EU aid. Also of note is the particularly poor performance
of projects implemented by partner country administrations this year (a
specific study is being undertaken to identify the reasons behind their
relatively poor performance). Looking at the regional programmes, the overall
performance in 2012 is similar to that recorded in 2011.

Table 15: Global number and budget of projects monitored 2009-12

Number of projects monitored || 2009 || 2010 || 2011 || 2012

Asia || 197 || 200 || 229 || 179

Central Asia || 67 || 60 || 63 || 57

Total Region || 264 || 260 || 292 || 236

Total value of the projects monitored ||    1 072 978 875 ||   1 371 223 994 ||    1 207 106 854 ||           893 836 039

Of
the 236 projects monitored in 2012, 202 were ongoing and 36 were monitored
ex-post; 25 programmes had a regional coverage.

Table 16: ROM OUTPUTS 2012

Ongoing || Asia || Central Asia || Total Region

Target || Achieved || Target || Achieved || Target || Achieved

N° of countries visited || 16 || 18 || 5 || 5 || 21 || 23

N° of MR produced (excluding SPSPs) || 158 || 154 || 95 || 75 || 253 || 229

N° of national projects monitored || 144 || 137 || 36 || 42 || 180 || 179

N° of regional programmes monitored || 14 || 15 || 10 || 8 || 24 || 23

N° of SPSPs monitored || 0 || 0 || 0 || 0 || 0 || 0

Million EUR covered || 807.91 || 587.88 || 126.39 || 100.54 || 934.30 || 688.42

Table 17:

Table 18:

Outlook

There are several
common challenges confronting the countries in the region, notably: economic
development and climate change as well as demographic issues such as youth integration,
ageing populations and access to resources and education. The region still has a
very high proportion of poor people while eradicating absolute poverty remains a
pressing issue. Geographical challenges are difficult to overcome and tensions
generated by territorial/maritime claims resurface more intensely.

The EU must maintain
the momentum of its engagement while consolidating achievements. It should
continue to invest in Asian regional organisations, to better define and
publicise its positions on regional challenges and to keep a good pace in the
negotiation of key political and trade agreements.

Furthermore, the EU's
dialogue and cooperation with Asian partners should increasingly focus on sustainable
development and access to resources. Energy and water are important issues that
will need to be addressed and areas of cooperation such as good governance, the
rule of law, economic growth and integration will continue to require attention.

In Pakistan, the
opportunity exists for the government to complete a full term in
office. Parliamentary elections, likely to take place in the spring of
2013, are of particular importance as they should lead to Pakistan's first
ever transition from one democratically elected government to another. The
security situation is likely to remain challenging. Presidential elections are
expected to be held in Afghanistan in April 2014, while parliamentary elections
in Bangladesh will be held in late 2013 or early 2014. Presidential elections
are also expected in the Maldives in the second half of 2013.

The government of Myanmar/Burma
has shown a commitment to political and economic reforms. Concerning
development, priorities include: consolidating peace in ethnic areas while
broadening the provision and quality of health and education services,
improving livelihoods in rural areas and investing in infrastructure. The holding
of general elections in 2015 will be a key milestone in the democratic
transition.

Afghanistan will begin
the fourth stage in its transition at the beginning of 2013, with the final
stage expected in second quarter of this year. This will see Afghan forces take
the lead in combat operations across the whole country. Much of the
international focus will be on promoting peace and reconciliation in
Afghanistan. The opening of a Taliban office in Qatar marks an important
signpost in this process, as does the participation of Taliban representatives
in various talks. However, it is uncertain if and when this will have a
tangible effect on events inside the country. A critical area of international
attention will be the fulfilment of commitments made by the government of
Afghanistan under the Tokyo Framework, including the holding of elections in
2014 and 2015. An international conference is planned in June 2013 to
evaluate progress made in meeting these commitments.

2.4.2. 
Central Asia

Introduction

Central Asia is a strategic region for the EU which remains
fragile and highly vulnerable. The "EU and Central Asia: Strategy for a New
Partnership", adopted by the European Council in June 2007, has led to a
significant intensification of EU relations with the five Central Asian
countries, Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan and
Uzbekistan.

The review of the Strategy in 2012 evaluated implementation
and assessed the need for adjustments, in the light of the new trends and
challenges. On 25 June, the FAC approved the Progress Report. The Council
welcomed the strengthening of relations with Central Asian states and confirmed
that the Strategy has proven itself and remains effective, endorsing future
orientations and key actions for further strengthening cooperation.

All priority areas of the strategy, where a number of core
development issues were identified for enhancing mutual engagement and
effective cooperation, remain important. These are: human rights, the rule of
law, good governance and democratisation; youth and education; economic
development, trade and investment; energy and transport; environmental
sustainability and water as well as combating common threats and challenges. Among
the challenges faced, security issues are also coming to the forefront. The
area of human rights and rule of law will remain a key priority in future
cooperation. At the EU/Central Asia ministerial meeting chaired by HR/VP Ashton
in Bishkek on 27 November 2012, the EU and its Central Asian partners renewed
their commitment to the Strategy and discussed in detail the future
orientations and initiatives, with mobilisation of resources in 2012-13 aiming
to underpin crucial political and socio-economic reforms.

During 2012, the EU-Central Asia policy dialogue intensified
at various levels: ministerial conferences, regional technical groups and
national-level dialogue (notably under the Flagship Initiatives established for
the priority areas of the rule of law, education, environment and water)
enhancing further cooperation and promoting the effective implementation of
projects at regional and bilateral level.

Central Asian countries experience many challenges and
structural problems which the EU is uniquely placed to assist with. In the
course of 2012, the EU further consolidated its framework for cooperation with
Central Asian countries through their participation in the European
Neighbourhood Regional Programme (East). In this way it supported the
modernisation and reform of core sectors of these countries' development agendas
and where similar challenges are faced: education; energy; transport; the environment
and water; the fight against drugs as well as improving the business climate
and attracting EU investments. This process provided an important stimulus for
strengthening EU cooperation thus further advancing the development reform
agenda.

The human rights situation remains a key concern. While there
have been some positive developments - notably the peaceful and democratic
elections in the Kyrgyz Republic and recent reforms in several countries' criminal
justice codes - further effort to consolidate and implement the newly designed
legal frameworks will be needed in coming years.

To diversify economies and to promote regional cooperation,
structural reforms remain crucial; it is particularly important to strengthen
private sector development. As a land-locked region, Central Asia also faces
important challenges in terms of geography alone. In addition, it is highly
prone to natural disasters and extremely vulnerable to climate change. National
policies for environmental governance and sustainable energy development, which
would bring substantial benefits to the population and the wider regional
economy, have emerged at the top of the policy agenda in all countries.

Central Asian countries continued to participate in the
Tempus programme with funding of approximately EUR 2 million per country in
2012. While the overall budget remained similar to that of 2011, twice as many
projects were funded in 2012 (from 13 to 27).

Aid effectiveness and donor coordination

Donor coordination is improving across the region,
thanks in part to the EU-Central Asia Strategy and its implementation
mechanisms, and as a result of country-level efforts. The EU has also increased its cooperation with international financing
institutions, enhancing overall coordination and enabling a sharper focus on
priority areas to improve the impact of assistance.

During 2012, the Commission continued
to foster donor coordination and implement the EU Code of Conduct on the division
of labour in Central Asia. Results have notably been achieved in Tajikistan and Kyrgyzstan, where joint
cooperation strategies with other donors have been in place since 2008/09. In
Kyrgyzstan, the EU became co-chair of the broader donor group – the Development Partners Coordination Council
– which meets monthly. At the end of 2012, the
EU was the only donor mobilising funds, which will ensure the timely and well-prepared
organisation of a High Level Donor Conference in July 2013, a follow-up to the
High Level Conference that took place in July 2012. The EU cooperates with the
UN on issues including: elections, human rights, social protection, prison
reform, women’s rights and border management issues.

Cooperation between the EU and
international organisations in the focal sectors of the EU’s bi-lateral
cooperation with Tajikistan has continued through joint work in the areas of
governance, public finance management, health, social protection, agriculture
and private sector development. In preparation of the Development Forum
organised in December 2012, the EU Delegation and Donor Community (DCC) have
worked out a series of DCC proposed initiatives in various sectors and agreed
upon Shared Principles for Cooperation (2013-2015) in response to the
government's 2013-2015 Medium-term Strategy for Living Standards. These
initiatives will serve as EU and donors' commitment over the period. Donor
coordination in the Kyrgyz Republic and Tajikistan also focused on public
finance management issues. For the period 2011-2013, budget support assistance
is being consolidated by appropriate policy advice and close monitoring of
progress in public finance management, enabling the use of country systems in
accountable and transparent ways, thereby increasing ownership and effective
impact.

Working towards the
MDGs

EU aid under the DCI contributes to
the fight against poverty including assistance to human capacity development,
agricultural reform and pro­-SME investment, and business capacity programmes to
raise living standards. EU support also goes to improving health management
systems, enhancing social protection/pensions and improving education systems.
Governance and the rule of law are particularly important to the EU and are
targeted through assistance for judicial reforms,
strengthening public administration and PFM. Attention is also given to other
issues such as the environment and the illegal drugs trade.

Kazakhstan has achieved most of the indicators relating to
the first three MDGs on poverty reduction,
access to primary education and gender equality[58].
Consequently, it has adopted more ambitious targets for these areas (the MDG+
targets), which include halving poverty among the rural population, achieving
universal secondary education, and increasing women's representation in
legislative and executive bodies. According to the latest comparable data,
however, there are some troubling trends in the underweight children indicator (MDG 1)
and health indicators, particularly related to MDG 6.

The Kyrgyz Republic has shown
a serious commitment to achieving the MDGs and has already attained MDG1 and
MDG3 targets. However, there are serious concerns in relation to achieving the
goals in the health sector (MDGs 4, 5 and 6). As in the other Central Asian
countries progress in maternal and infant
mortality is slow i.e. the countries are expected to meet the target, but only after
2015.

Tajikistan has already attained MDGs 1 and 2, and the only
country in Central Asia that has also successfully reduced the prevalence of
HIV/AIDS (MDG 6). However, progress has been slow with some of the gender
equality indicators (MDG 3). Despite improvements in the Kyrgyz Republic
and Tajikistan, it should be noted that according to the Human Development
Index (HDI), these countries remain amongst the poorest in Asia.

Uzbekistan has already attained the MDG 1 target on
decreasing child malnutrition, and is the only country in Central Asia to have
achieved the CO2 emissions target. However, the latest estimates show some worrying
trends related to extreme poverty.

Implementation
& results

In 2012, EU development cooperation
commitments to Central Asia totalled EUR 117 million. There was an emphasis on
education, public financial management and the Investment Facility for Central
Asia (IFCA), as well as on private sector development and regional level cross-border
security.

In Kazakhstan, the EU
continued to support the accession of Kazakhstan to the WTO through advising ministries
on the necessary process of reforms for WTO membership. A new project focused
on public sector reform is being implemented. Considerable support was provided
to develop the VET system in the country. The economic diversification project
implemented by the OECD with EU funding continued to help Kazakhstan reduce its
over-dependence on the energy sector by creating new business opportunities and
increasing competitiveness. Lastly, a new major project implemented by the OECD
aims to promote economic development and investment in the regions of
Kazakhstan. As a result of several EU-funded projects, close collaboration
between OECD and the government of Kazakhstan has taken place.

In Kyrgyzstan, a EUR 40
million five-year programme which started in 2008 to improve social protection
and PFM, has resulted in more effective social protection and social insurance
systems and has reduced government delays in the payment of pensions and social
benefits. Specific actions have been taken to incorporate childcare, improve
the targeting of benefits and to establish effective de-centralised social
services to support vulnerable families and children. Progress has also been
made towards establishing the legislative and institutional framework for
reforms, and in putting in place the institutional and staff capacity to carry
them out.

The EU is also providing technical
assistance to Kyrgyzstan’s Ministry of Education to assist with the redesigning
of the education system, identified by the government as an urgent priority.
Another programme targets schools that teach specific professional skills, allowing
students to acquire new competences according to the needs of the local job
market. Moreover, the EU is the sole donor providing major assistance to the Kyrgyz
Prison Service since Kyrgyzstan was
established. The prison reform
programme implemented since 2009 supports the application of a more humane criminal
code, including the training of staff, the establishment of income-generating
activities and the refurbishment of designated prisons.

In Tajikistan, the
implementation of a EUR 26 million human development budget support programme
was initiated in 2012. Amounting to a continuation of earlier social protection
support programmes and a first major intervention in the health sector, the
programme is instrumental to both the Ministry of Labour and Social Protection
and the Ministry of Health's reform objectives. Furthermore, the programme
addresses overall PFM reform as a cross-cutting issue. New targeted social
benefits have been piloted in two districts of Tajikistan. By mid-2012 more
than 20 thousand requests for benefits had been processed and more than 8
thousand families had already received benefits. An independent evaluation
organised by the World Bank in the first half of 2012 showed significant
improvement of targeting under the new scheme. In view of the positive results,
a scaling up of the targeted social assistance to several districts is under
formulation.

In the area of social services development,
nine new centres providing specialised social services were created and the
quality of services in nursing homes run by the Ministry of Labour and Social Protection
improved through revised standards for food and medicines provision, revised
and increased staffing, and renovation of premises. As a result more than 2 600
vulnerable children and families, elderly people and people with disabilities
received high quality services in 2010-12. In the pension reform area,
government payments for more than 130 000 pensioners were done
electronically, transferred to individual bank accounts linked to individual
plastic cards. Due to the automation of this process, time for pension delivery
has decreased from 40 to 10 days and corruption risks have been reduced.

In Turkmenistan, the EU has
concluded a programme aimed to support the country to modernise the general
education system, with a focus on secondary education where new teaching
methodologies were successfully implemented in seven education institutions. In
vocational education and training, a programme has been launched with the
purpose to strengthen institutional and professional capacities and provide
skills and qualifications for the labour market needs. Through this, six job
profiles in the sectors of agriculture, tourism and construction have been
identified and new curricula and related teacher training activities developed
in 10 pilot schools. In the field of agriculture, there was a second phase of
the project on support to further sustainable agriculture and rural development.
The project has among other things upgraded the working knowledge on private
farming of specialists of agriculture and developed a ‘farmer account book’
tested in 103 locations. In relation to legal capacity building, the
development of a Turkmen interpretative legal dictionary and the identification
of the training resource facility with a focus on international law were taken
to their final phases.

In Uzbekistan, the EU
earmarked a new allocation for quality higher education and vocational training through the Tempus and Erasmus Mundus
programmes. The EU programme to support the reform of the criminal
justice sector in Uzbekistan began. Implemented by the specialised agencies of
EU Member States, the programme provides long-term capacity building at
strategic and operational levels within the Uzbekistan Supreme Court Research Centre,
the general prosecutor's office, the Ministry of Justice and the Ministry of Internal
Affairs, regarding implementation of new decrees on the rule of law and on the
death penalty. In the first six months, 38 seminars and
workshops on topics ranging from the flow of judicial information between
courts to practical problems in fighting corruption were
carried out.

The Investment Facility for
Central Asia (IFCA) continued to provide regional and bilateral assistance
by blending EU grants with loans from European financial institutions and banks to gain financial and qualitative leverage and thereby increase EU
development policy impact. IFCA is now active in the
areas of environment (renewable energies and energy efficiency), energy
(renewable energies and energy efficiency), and SMEs. In the future, a possible
extension to include social infrastructure investments and transport is
envisaged. In 2012, three projects have been selected and financed for a total
amount of EUR 21.2 million contributing to projects amounting to a total value
of EUR 189.6 million. These projects are the Sustainable Energy Efficiency
Financing Facility in Kyrgyzstan, the SME Facility in Central Asia and the
Microfinance Initiative for Asia Debt Fund supporting micro-borrowers and low income
households in South, East and Central Asia.

The regional EU-Central Asia Rule
of Law Platform commenced activities in 2012 in support of the
implementation of the political EU Rule of Law Initiative for Central Asia. The
project organised two regional seminars on administrative justice (in Astana)
and on judicial reform (in Brussels). It also supported the organisation of the
Third Conference of the Ministers of Justice of the European Union and Central
Asia which was hosted under the Cypriot Presidency and was held in Brussels on
6 and 7 December 2012. The agreed joint communiqué established a broad work
agenda for the Rule of Law Initiative, reconfirming the thematic priorities, namely:
constitutional law, administrative law and criminal justice and strengthening
judicial capacity building, including training activities for legal
professionals.

The EU-Central Asia Education
Platform also began its activities in 2012 in response to the need for a more
structured dialogue on education modernisation in the region and for
coordination of EU and Member States cooperation initiatives in this sector.
The EU also maintains a strong presence in the field of transboundary water
management, with several ongoing projects.

On the rule of law, the implementation
of the fifth phase of the EU’s regional programme Central Asia Drug Action
Programme (CADAP) which gives support to the drug demand reduction in Central
Asian countries is towards its completion in mid-2013. The implementation of
the programme by a consortium of EU Member States has yielded first tangible
results demonstrating institutionalisation of EU best practices in drug related
agencies of the region. Phase eight of the Border Management Programme in
Central Asia (BOMCA), supporting integrated border management and regional
security dialogue, continued in 2012. It gave strong focus to sustaining border
management reforms on the lines of the Integrated Border Management concept
widely applied in Europe. The tenth annual Central Asia Border Security
Initiative (CABSI) meeting was held at interior minister level in April 2012 in
order to take stock of the implementation of security programmes in the region
in the last ten years. The five Central Asian participants and the 56 OSCE
members expressed their commitment to improving the security issues along
Central Asian borders by promoting integrated border management.

In the area of economic and private
sector development at regional level, the EU has been promoting job creation by
the growing business and SME sector. The SME sector is supported since 2010 by
the Central Asia Invest programme, which assists capacity-building through
business intermediary organisations. The EU also continued with the implementation
of bilateral projects supporting private sector development, particularly in
Kazakhstan.

Support to families with disabled children in
Tajikistan

People with mental and physical disabilities and their families are
one of the most vulnerable groups in Tajikistan, particularly in rural areas. In a project designed to increase their access to
the labour market and reduce social isolation, the EU has provided financial
support for the development and diversification of agricultural production to
rural families with disabled children. Local authorities ceded some 40 hectares of land to such families and supplied the means
of production such as seeds and fertilizers.

In addition, a day care centre service was set
up for 37 children under seven years old who suffer from disabilities. Guidance
and support was provided to an additional 200 families,
creating an opportunity for parents of disabled children to actively
participate in care and rehabilitation as an alternative to residential
institutions.

The project also focused on the development of private businesses for women
through the provision of training, business grants and guidance on good
business practice.

Helping hand to vulnerable
children in the Kyrgyz Republic

Some 9 069 vulnerable
children have benefited from case management thanks to a new social and child
protection system in Kyrgyzstan set up with EU support which has led to modern
child protection units being established in each district. These aim to
identify children at risk and to provide support to poor families and have provided
family-based care to 89 % of children deprived of parental care. Of these
only 11 % were put in institutions, once considered the only response to
such cases.

The sector policy support programme
in Social Protection and PFM is the starting point of a new approach to social
protection in Kyrgyzstan and is adapted to the needs of the population and
constraints on the ground. It aims to provide the social protection to those
most in need which has been lacking since the collapse of the Soviet Union.

Disease prevention in
women's prisons in Kazakhstan

A particularly successful
EU-supported programme to improve HIV/AIDS and TB prevention systems in women's
prisons in Kazakhstan aims to enhance the detection, cure and treatment of
these diseases among inmates and staff. For the first time, local professionals
were given access to new informational tools, lessons, individual counselling sessions
and films. There were no new cases of HIV transmission
in a women's prison in the region of Karaganda where such cases had previously been
high.

Monitoring

42 national projects and eight regional programmes were monitored in
Central Asia in 2012. These represented a total budget of slightly more than EUR 100 million. In
general, the performance of most projects in Central Asia was satisfactory,
with 86% of projects classified as good or very good, a higher result compared
to the 83 % achieved in 2011. Also categories such as efficiency,
effectiveness, impact and sustainability scored better than the previous year,
while the value for relevance remained the same as 2011.

The combined monitoring
figures for Asia and Central Asia can be found in section 2.4.1.

Outlook

The EU’s Multiannual Indicative
Programme allocation for Central Asia for 2011-13 is EUR 321 million and covers both regional and bilateral cooperation.
It focuses on education and higher education, health and social protection and
good governance, the environment, energy and climate change issues.

The
EU’s commitment to poverty alleviation in the region will continue to focus on
the two poorest countries: Kyrgyzstan and Tajikistan. In Kyrgyzstan the new
priorities for cooperation in 2013 will be education and the rule of law. In
Tajikistan the focus will be on social and private sector development in agriculture.
In Kazakhstan, EU cooperation will emphasise local development and judicial
reform, in Turkmenistan it will focus on education and economic development,
and in Uzbekistan, rural development and good governance.

2.4.3. 
Pacific

Introduction

There was sustained engagement with the Pacific region in 2012, including
the adoption of the joint communication ‘Towards a
renewed EU-Pacific development Partnership’[59].
This culminated in the EU's
participation at the 43rd Pacific Island Forum in August in the Cook Islands. The
region's key annual political and economic policy meeting, it gathers together
the region's state leaders to identify priorities as well as to provide
valuable input for more efficient development assistance. The 2nd EU-Pacific
Island Forum ministerial meeting took place in Auckland 12 June 2012 (the first
being held in Brussels in 2008) and covered security, governance, human rights,
gender, development, climate change, and sustainable management of oceanic
resources. In June 2012, Vanuatu hosted the 37th session of the ACP-EU Council
of Ministers.

The EU continues to encourage the region to ratify and
implement UN conventions on human rights as well as the Rome Statute on the
International Criminal Court (ICC). Indicators show that the Pacific suffers
from the lowest level worldwide of female political representation and an
unacceptable level of gender-based violence. The EU is ready to further support
the region to tackle gender issues as a key constraint to achieving sustainable
development.

Project assistance tends to overstretch small
administrations. Therefore the EU, in close cooperation with the Asian
Development Bank, the World Bank, the IMF and regional partners, wishes to strengthen
PFM and accountability mechanisms in order to be able to deliver aid through
budget support. So far, Samoa, the Solomon Islands, Tonga, Vanuatu and the Cook
Islands have qualified.

The end-of-term review of the 10th EDF national strategies,
carried out in 2012, confirmed their relevance to all Pacific-ACP countries and
led to the creation of an additional sub-sector in support of electoral reform
in the Solomon Islands.

As the fisheries sector continues to grow, sustainable
management of fishing resources receives close attention and support from the
EU, which also takes great care with policy coherence in this sector. The
Fisheries Partnership Agreement (FPA) with Kiribati was extended in 2012 for a further
period of three years. The Solomon Islands decided not to continue the protocol
due to a disagreement with the EU over the catch reference.

In Fiji, some progress towards a return to democracy was
noted during the first part of the year when the Public Emergency Regulations
were lifted and a consultation process leading to a new constitution was announced.
On 21 December 2012, a Constitutional Commission was appointed which presented
a comprehensive draft constitution for review by a Constituent Assembly, based
on consultations with more than 7 000 Fijians. The EU is following
developments closely and has provided support for the democratisation process.
In accordance with the appropriate measures agreed under Article 96 of the
Cotonou Agreement, assistance has continued to be channelled through civil
society and not the government.

Pacific regional cooperation supports the integration
efforts of Pacific countries in areas such as trade as well as helping them negotiate
an Economic Partnership Agreement with the EU. Financial support went into economic
development and compliance with international requirements and standards.
Further integration of the OCTs into the region was also addressed.

The implementation of Pacific regional programmes is
successful both in terms of results achieved and level of execution. Support
for economic integration of Pacific island countries was delayed to allow for a
more comprehensive approach in line with the on-going preparation and
subsequent implementation of the Economic Partnership Agreement, to be
concluded in early 2013.

Aid effectiveness and donor coordination

The EU supports the 2009 Cairns Compact which seeks to
enhance aid effectiveness in the Pacific by encouraging development partners - states
and regional organisations - to lead donor coordination. As of 2011, delegated
cooperation and transfer agreements had become possible with Australia,
allowing the EU and Australia to use one another's experience and implement programmes
on each other's behalf. Discussions on delegated cooperation have progressed
well. Australia has already decided to provide funding to an EU intervention in
the food security sector in South Sudan. On its side, the EU has agreed in
principle to fund an AusAID technical and vocational training programme to
sugar industry dependants in Fiji.

In 2012
the new Investment Facility for the Pacific was approved, providing a platform from
which Australia, New Zealand, The Asian Development Bank, the World Bank, the
Commission, European bilateral Investment Banks and the EIB can coordinate
infrastructure projects. This facility will start being implemented in 2013.

Working towards the MDGs

Despite continued and coordinated efforts, the Pacific is
falling behind in the global fight against poverty[60]. Regional figures
are dominated by Papua New Guinea which regroups 70 % of the population of
the region and which remains off track for all the goals. In this country EU
assistance focuses on education as well as on rural development. The Solomon
Islands and Kiribati are likewise not on track for any of the goals. Cook
Islands and Niue, as high middle income countries, are the only countries on
track to achieve all the MDGs.

Most countries are off track on poverty reduction (MDG 1).
Almost one third of the population of the Pacific lives in poverty, with Papua
New Guinea, Vanuatu and the Solomon Islands ranked as extremely poor. As hunger
is relatively rare in the region, the Pacific definition of poverty refers to
poverty of opportunity as measured by the percentage of people lacking: access
to basic services; opportunities to participate fully in the socio-economic
life of the community; the ability to meet the challenges of increasing
monetisation as well as resources to meet the basic needs of the household or
its customary obligations.[61]
While tracking poverty in the Pacific is made problematic because of poor
statistics, it appears that the number of people living in such poverty is
rising.

Better progress is being made towards achieving universal
primary education, although quality remains a concern. Similarly, while there
is very low gender disparity in education, progress in empowering women is much
slower. Most countries in the Pacific are on track to reduce child mortality.
Several are also on track to achieve maternal health goals, but a more
concerted effort is still needed to ensure universal access to reproductive
health.

Progress is slow in stopping the spread of infectious and
non-communicable diseases. However, with the exception of Papua New Guinea,
Kiribati and the Marshall Islands, most Pacific island countries are likely to
achieve the MDG targets on HIV/AIDS, malaria and other diseases by 2015
(MDG 6).

Concerning environmental sustainability, energy security
remains a key priority in the region, as most countries are highly dependent on
imported fossil fuels. In Micronesia, access to safe drinking water and basic
sanitation is a major concern. With the exception of Papua New Guinea, the
Solomon Islands, Vanuatu, Kiribati and Nauru, most Pacific island countries are
making progress towards environmental sustainability. However, the prospect of
achieving environmental sustainability (MDG 7) is uncertain as global
warming and climate change pose significant threats to the region and most
Pacific island nations are highly vulnerable to rising sea levels.

Timor-Leste is also falling short on most MDGs. While
the proportion of people living on less than USD 1 a day has been decreasing
since 2007, the country is not close to meeting the 2015 goal. Underweight
children, maternal mortality and sanitation targets also remain challenging or off
track.

Implementation & results

The End-of-Term Review of the 10th
EDF national strategies in 2012 confirmed their relevance. Implementation showed good progress, particularly in countries where
budget support is in place or programmed (Samoa, the Solomon Islands, Tonga,
Vanuatu and the Cook Islands) in support of sectors such as water and
sanitation, energy and health.

Two new climate change actions have been approved for Papua
New Guinea and Timor-Leste in 2012 for a total of EUR 9 million, thereby
completing EU interventions under "Global Climate Change Action"
which now covers the entire region. The EU is now funding climate change and
environment programmes in each and every Pacific country.

A military coup in Fiji in December 2006 led to the
suspension of most of the EU's cooperation with the country. Since 2007, the
only source of EU funding to Fiji has therefore come from the Accompanying
Measures for Former Sugar Protocol Countries, aimed at maintaining key services
for Fiji's agriculture. This funding is channelled through CSOs so that it benefits
the population directly. A new EUR 9 million programme aimed at sustaining
alternative livelihoods has been committed in 2012.

In Timor-Leste, the lack of maintenance of
roads has led to a deteriorating network, creating serious socio-economic
problems for remote rural areas. Recognising the importance of roads in the
development of the country, the EU approved a EUR 20.5 million "District
Roads Rehabilitation and Maintenance" project in 2012.

Lastly, in 2012 several projects have been approved in
Pacific ACP countries to support the attainment of MDGs. In Timor-Leste,
EUR 10.23 million was reserved under the MDG initiative to accelerate progress
on MDG 1c on the fight against hunger. In Kiribati,
the EU is assisting the government to secure safe
and sustainable drinking water supply to Kiribati island communities (EUR 4.8
million). In Vanuatu a new renewable energy project supplying electricity to a
poor suburb of Port Vila and funded from the EDF energy facility (EUR 2.5
million out of a total cost of EUR 4 million) was decided. The related
financing agreement was signed by Commissioner Piebalgs during his visit to
Vanuatu in June 2012.

The EU's programmes for regional cooperation complement
national assistance programmes and aim at tackling challenges with a regional
dimension. Following a successful mid-term review, the regional programme allocation
under the 10th EDF
was increased by EUR 19 million to reach a total of EUR
114 million, with the top-up
particularly intended for support of Climate Change Action in the Pacific. Agreements for regional cooperation
projects adopted in 2012 include support to the management of hazardous waste (EUR
8 million) and support to improve economic governance and PFM in Pacific ACP
countries (EUR 3.6 million). Two regional fisheries projects already in place
in 2012 continued to yield good results and contributed to the establishment of
tracking and surveillance systems that help the proper
and sustainable management of highly migrating fish stocks such as tuna and the
determent of illegal fishing. Another project, aimed at strengthening Pacific
economic integration through trade led to, among other things, the conduction
of trade legislation reviews being carried out in Palau, the Federated States
of Micronesia and Tuvalu, and to technical support for WTO engagement and trade
negotiations.

Renewable
energy generates host of benefits for Pacific islanders

A EUR 14.4
million EU programme to extend renewable energy provision in the remote areas
of the Northern Pacific means children spend more time studying and women have
greater income-generating opportunities. The programme has connected all
communities in the outer islands of the Marshall Islands to an electricity
supply as well as homes, schools and health centres in Micronesia. It has
reduced costly imports of imported petroleum – and Palau’s energy bill. Early
warning systems in this region prone to natural disasters have also improved
and reliable electricity supplies mean that schools can now participate in the
'one laptop per child' scheme run by a non-governmental organisation – a
teaching programme which makes full use of computers.

Fiji dumpsite rehabilitation benefits
environment and public health

Rehabilitation of the Lami dumpsite – an area of
75,000 m 2 on the outskirts of Fiji’s capital, Suva – has improved the local
environment and has prevented the occurrence of potential public health
problems. The spillage of waste from the site – redundant since 2005 – into the
nearby river and beach, and frequent fires, had been of great concern to
communities. Work on the EUR 2.7 million EU project was completed in May 2012.

Safe drinking water for more Samoans

Many more Samoans now have access to safe drinking
water as a result of the EU’s EUR 24.8 million 2009-2013 budget support funding
to the sector (2009-13) under the 10th EDF. Channelled directly to
the government to assist implementation of its ‘water for life 2008-2012’ plan,
the EU’s programme is also helping the country achieve MDG 7.C on increased
access to safe drinking water. Between May 2008 and March 2009, only 54% of
sample tests met national drinking water standards (WHO compliant). Of sample
tests taken between July 2010 and June 2011, 72% were compliant.

Monitoring

In
2012, 52 ongoing national, 32 ongoing regional, one SPSP and four closed
projects (representing EU commitments of nearly EUR 290 million in 16 ACP countries and overseas
territories in the Pacific), were reviewed by independent evaluators.

The following table shows the evolution of overall
performance of the Pacific portfolio from 2009. Notably, the year 2012 shows an
increase in the number of projects with problems and a decrease of those showing
good performance.

Of the total ongoing national projects monitored in the
Pacific region, only 40.4 % now show "good" and "very good"
performance. Compared to 2011, the number of ongoing projects with problems/serious
difficulties has increased considerably to 38.4 % and 21.2 %
respectively. This shows that while most programmes are considered relevant and
show good quality of design, there are strong concerns with regard to
efficiency, effectiveness and sustainability.

The overall performance of regional programmes in the Pacific
is significantly higher than national projects, especially when it comes to
relevance and sustainability.

Although the root causes of the recent increase in the
number of national projects performing with problems or with serious
difficulties have not been investigated, it seems that the specific geographic
conditions in the Pacific continue to have a systematic effect on the implementation
of country projects. Typical problems include the great distances involved, an absence
of reliable statistics and indicators, political changes and changes of
political or administrative projects support as well as lack of trained project
management staff.

Table 19:

Table 20:

Outlook

The year 2013 will be the final year for
commitments under the 10th EDF. Preparatory work for full commitment
of the remaining available funds (up to EUR 160 million to be committed in 2013
excluding OCTs) in the Pacific ACP countries and region is well advanced.

In parallel, discussions on programming
priorities for the 11th EDF have started to define cooperation
activities in the region from 2014 to 2020.

Donor coordination will remain high on the agenda in the
region. A key year, 2013 will see the start of implementation of the EU Pacific
Investment Facility, which will blend grants and loans and facilitate donor
coordination. As regards budget support, Pacific countries will use the new budget
support guidelines for Small Island Developing States, developed over the
second semester of 2012 which focus on clear, few, visible and simple
indicators.

2.5. 
OCTs

Overseas
Countries and Territories (OCTs)

Introduction

In accordance
with part four of the EU Treaty, the OCTs are closely associated with the EU.
The purpose of this association is "to promote the economic and social
development of the countries and territories and to establish close economic
relations between them and the Union as a whole".

The Overseas
Association Decision (OAD)[62]
lays down the rules and procedures governing political, commercial and financial
relations between the EU and the OCTs. The current OAD is in force until 31
December 2013.

In 2011, the Commission
adopted its proposals for the 2014-20 period in favour of the OCTs which
foresee EUR 217.8 million under the General Budget for the Partnership with
Greenland and EUR 343.4 million under the 11th EDF for the other OCTs[63].

Legislative proposals

During the first quarter of 2012, the
Commission made a proposal to amend the 2001 OAD in order to include
Saint-Barthélemy as an OCT. The Council adopted the amending decision on 24
September 2012[64].

In the course of the first semester of
2012, the Commission initiated negotiations with the Council and the European
Parliament on the legislative proposal for a new EU-Greenland Partnership, for
the period 2014-20.

In July the Commission approved a draft
legislative proposal for a Council decision on the association of the OCTs with
the EU (the OAD proposal)[65],
which was then transmitted to the EU Institutions and the national Parliaments[66]. The proposal was accompanied
by an Impact Assessment, conducted in 2012.

Policy dialogue and the OCT-EU Forum

The 10th OCT-EU Forum took place in Brussels in January 2012 with
the participation of representatives of the OCTs and the four Member States to
which they are linked (Denmark, France, United Kingdom and The Netherlands).
The Forum discussed the renewal of the association as well as programming and
implementation of EDF resources.

At the 11th OCT-EU Forum, which took place in Ilulissat, Greenland
in September 2012, the Commission presented its proposal for a new OAD in
detail.

In September 2012, the Commission organised a raw materials workshop
focusing on Greenland's potential as a provider of critical raw materials to
the EU and the development of mining activities in Greenland.

In the course of 2012, the Commission
organised and chaired several tripartite or ad hoc meetings with OCTs
and Member States representatives.

Implementation
and results

Atlantic
and/or isolated OCTs

During 2012, EU
cooperation with Greenland continued to provide support to the education
sector with a new EUR 28.4 million financing decision bringing total EU support
to Greenland (in terms of commitment appropriations) to EUR 165.2 million,
since 2007. The Greenland Education Programme has helped increase student
intake in post-elementary education. It has also provided vocational training
for unskilled workers and supported the government's education sector reforms. Total
disbursements since 2007 reached EUR 154.9 million, of which EUR 26.7 million
was disbursed in 2012.

The Greenland
Education Programme attained most of the targets set out in the territory's annual
work plans. Implementation reports submitted on an annual basis to the
Commission reflect the progress made in terms of students attending VET; high
schools and higher (tertiary) education and students obtaining a job within one
year of graduation.

For the
Atlantic OCTs of St. Pierre and Miquelon and Saint Helena, Ascension and
Tristan da Cunha the implementation of budget support programmes continued
in 2012 with the disbursement of fixed and variable tranches of EUR 7 million.
In Saint Pierre et Miquelon, the programme aims at enhancing economic
development and promoting the diversification of the economy through an EU
general budget support programme of EUR 20.7 million. In the case of Saint
Helena, Ascension and Tristan da Cunha EU assistance supports transport
infrastructure through a EUR 16.6 million sectoral budget programme. Programming
for EU support to the Falkland Islands continued in 2012. A financing
decision of EUR 4.13 million is expected to be adopted in the first half of
2013.

Pacific
& Indian Ocean OCTs

Late in 2012
the Commission approved the single programming document (SPD) and adopted the
financing decision for the 10th EDF allocation in favour of Mayotte.
The EU assistance amounts to EUR 22.9 million and will be provided as budget
support to assist Mayotte to implement its territorial development plan. EU
support will also focus on the improvement of PFM in the territory.

In the Pacific
OCTs, the Commission finalised the SPD for French Polynesia with a view
of launching a project for EUR 19.8 million in support of the water and
sanitation sector in Papeete in early 2013.

Programmes in
support for the rehabilitation of Leava port in Wallis and Futuna (EUR 16.5
million) and for tourism development in Pitcairn (EUR 2.4 million) have
been formulated in close collaboration with the two territorial authorities and
will be committed in 2013.

Implementation
of the EUR 19.8 million EU programme in New Caledonia in support of vocational
training is on track, with the first tranche (EUR 6. 5 million) disbursed in
2012.

Caribbean
OCTs

In 2012, three
SPDs were approved and financing decisions were adopted by the Commission for a
total amount of EUR 51.36 million: Anguilla EUR 11.7 million; Montserrat EUR 15.66 million; and
the former Netherlands Antilles EUR
24 million (Curacao EUR 11.25 million; St. Maarten EUR 4.75
million; Bonaire EUR 3 million; St. Eustatius EUR 2 million; and Saba EUR 3 million).

In Anguilla,
EU assistance aims at supporting the implementation of the Medium Term Economic
Strategy 2010-14 (MTES) of the government. In 2012, a first fixed tranche of EUR 3.6 million relating
to this programme was disbursed.

For Montserrat
the SPD is targeted on support for the implementation of the territory's
Sustainable Development Plan and Sustainability Roadmap. A first fixed tranche
of EUR 5.13
million was disbursed in 2012.

In the case of
the former Netherlands Antilles, the SPD is targeted at urban
infrastructures in socially deprived areas in Curacao and Saba; sewerage in St.
Maarten and Bonaire; and port development in St. Eustatius.

With regard to Turks
and Caicos Islands, the Commission agreed to resume EU support under the 9th
EDF. EU support was earmarked for infrastructure and macro-economic reforms.
The disbursement of the last fixed and variable tranches (EUR 3.88 million)
took place in December 2012. The government of Turks and Caicos Islands started
programming of its 10th EDF allocation (EUR 11.8 million) at the end of 2012,
with support from a technical assistance team financed by the Commission. The
SPD and the accompanying financing decision are expected to be adopted by the
Commission in 2013.

Regional programme
and provision of experts for capacity building purposes

Following the
approval in 2011 of the SPD on the regional cooperation strategy for the OCTs (EUR
40 million), the Commission proceeded with the implementation of the regional
strategy in close cooperation with the relevant OCTs.

Regional
Programme

The financing agreement
for the Technical Assistance to the OCT Association project (EUR 5 million) was
signed in May 2012 and the relevant service contract was signed in December
2012. This project provides long and short-term technical assistance to the OCT
Association and allows for the organisation of the annual OCT-EU Forum from
2013 to 2015.

The Financing
Agreement for the 10th EDF "Caribbean OCTs Small and Medium Enterprises Development
Programme" (EUR 15 million) was signed in September 2012. This project
contributes to economic diversification and growth in Caribbean OCTs by
improving the competitiveness of their SMEs.

A programme in
support of regional management of the environment (INTEGRE), and, more
specifically, the conservation and management of natural resources and
ecosystems in the four Pacific OCTs (EUR 12 million) was finalised in
2012.

The regional
project "Gestion durable du patrimoine naturel régional de Mayotte et des
Iles Eparses (Terres Australes et Antarctiques Françaises)" (EUR 3
million) was approved by the Commission and the respective financial agreement will
be signed in January 2013.

Provision of
experts

Seventeen
short-term service contracts for studies and/or seminars were concluded under
Technical Cooperation Facility II (total value of contracts EUR 1.6 million).
These contracts enabled, inter alia, the organisation of the OCT-EU
FORUM in Greenland in 2012; a seminar on green energies in Aruba; the
evaluation of public finance management in New Caledonia and Pitcairn; and
programming assistance to the Falkland Islands and the Turks and Caicos Islands.

3. 
Chapter 3 Implementation: thematic overview

3.1. 
The thematic programmes
3.1.1. 
Investing in
people

Investing in People

The "Investing in People"
programme supports thematic activities in health, education, knowledge and
skills, gender equality, and other aspects of human and social development such
as employment and social cohesion, children and youth, and culture. Following
the mid–term review undertaken in 2010, the programme moved away from annually
supporting actions in all areas to supporting each area in turn over a longer
time frame. In line with this approach, the 2012 programme covered thematic
action in the areas of health, social protection, children and culture.

Health

In 2012, the programme continued to support
health systems strengthening and universal access to basic health care as well
as to address urgent gaps in achieving the health MDGs.

The Global Alliance on Vaccines and
Immunisation (GAVI) received support for Phase II of their global programme to
make pneumococcal vaccines more available and accessible in least developed ACP
countries (EUR 10 million).

Building on an existing programme,
additional support was provided to set up a comprehensive EU-WHO Universal
Health Coverage Partnership, supporting policy dialogue on national health
policies, strategies and plans and universal coverage in selected countries (EUR
23.2 million in total).

Additional funding was also channelled
through the United Nations Population Fund (UNFPA) to support the Global
Programme to Enhance Reproductive Health Commodity Security, increasing the EU
contribution to a total of EUR 32.7 million.

Finally, the programme continued to support
efforts to reduce mortality and morbidity rates and mitigate the impact of
AIDS, tuberculosis and malaria with a EUR 50 million contribution to the Global
Fund to Fight AIDS, Tuberculosis and Malaria (GFATM).

Social protection

In 2012, the programme funded an Expert
Facility on Social Protection (EUR 4 million) to enhance the capacities of
partner countries to better design, manage and monitor inclusive, efficient and
sustainable social protection systems. The Facility is based on short-term peer-to-peer
technical assistance. It will be managed by a consortium of EU Member States
and is intended to be an instrument that allows the wealth of European
knowledge and experience to be easily accessed by partner countries.

Culture

The programme continued to support culture
for human and social development, in particular as a vector of democratisation
and economic growth. Focusing on these two priorities, a call for proposals was
launched in October 2012 (EUR 22.2 million) supporting initiatives which
encourage cultural expressions and which promote: diversity; intercultural
dialogue and human and cultural rights, in the context of reconciliation;
conflict resolution and democratisation, and which strengthen the capacities of
cultural actors for the development of a dynamic cultural sector that contributes
to economic growth and sustainable development.

Children

In 2012, the programme continued
contributing to the implementation of the Convention on the Rights of the Child
(CRC) in line with the EU Action Plan on Children in External Action. Support
will be provided to actions for child protection and combating violence against
children through a call for proposals launched in October 2012 (EUR 41
million). A contribution agreement was signed with UNICEF (EUR 5.4 million) to
support birth registration, given that the lack of registered births critically
undermines efforts to prevent, track and counter violation of children's
rights.

For the first time, online training on how
to integrate child rights into development cooperation activities and policies
has been proposed to EU staff at headquarters and Delegations.

Gender equality

The EU Plan of Action on Gender Equality
and Women's Empowerment in Development (GAP) was implemented during 2012. The implementation
report, which  is available online, suggests that  further progress has been
realised towards achieving the objectives of the GAP[67]. Concerning the response
rate, reports were received from 93 Delegations and 16 Member States. The
number of EU Delegations which submitted reports increased from 80 in 2011 to
93 in 2012.

The call for proposals "Strengthening
protection and promotion of women's rights and women's social and economic
empowerment" was launched in 2012, with the overall objective of promoting
women’s rights. At the end of the selection procedure, 42 projects were funded
(out of over 1 800 concept notes submitted) for a total budget of EUR 30
million.

In April 2012, a memorandum of understanding
was signed between the EU and UN Women in order to strengthen their
cooperation. This reaffirms the partnership between the two organisations
to support gender equality and women's empowerment around the world.

In 2012 a joint UNICEF and EU project was
completed, focusing on the reduction of harmful practices in several African
countries such as female genital mutilation/cutting. As a consequence, this
practice is being banned in countries such as Senegal.

A specific discussion panel on the role of
regional mechanisms in promoting universal women’s rights and gender equality
was organised during the 14th EU-NGO Forum on Human Rights in December 2012.

A comprehensive approach to democracy
support

The ENPI spring package (May 2011), the
Agenda for Change and budget support communications (October 2011) announced a
strategic shift in EU development policy towards stronger conditionality on
human rights, democracy and the rule of law, the role of civil society and
other elements of good governance. Throughout 2012 the EU has continued to
develop its comprehensive approach to democracy support, including democratic
institution building, electoral assistance and observation follow-up, media and
parliamentary support and civil society programmes.

The Commission's communications and the
Council Conclusions on the Agenda for Change and on budget support of 2011 have
clearly expressed that good governance is vital for sustainable and inclusive
growth, and that EU support to governance should feature prominently in all
partnerships. The EU is in the process of developing approaches to country
allocations that take into account partner countries' commitment to good
governance. The mix and level of aid provided will depend on an assessment of
the country, taking into account  its commitment, ability to conduct reforms
and will meet its people's demands and needs.

The joint report on "Implementation of
the Agenda for Action on Democracy Support in the EU's External Relations[68]" in 2012 developed this
focus further with an update on democracy support initiatives in the countries
that take part in the pilot exercise. It also proposed initiating a second
generation of pilot countries for democracy support as well as a further
fine-tuning of the methodology through the drafting of democracy profiles and
democracy action plans in those countries.

Electoral assistance and election
observation follow-up

Genuine elections are the basis of a
functioning democracy and play a key role on the path to sustainable
development. In 2012, the EU continued its worldwide electoral assistance for example,
by providing technical and material support to electoral processes, normally in
the form of expertise and advisory services to Electoral Management Bodies
(EMBs), as well as providing material support to voting and registration
operations. To promote inclusiveness and acceptance of the democratic process,
electoral assistance increasingly supports key electoral stakeholders other
than EMBs. This includes: accompanying CSOs in areas such as voter/civic
education and domestic observation; promoting an impartial and professional
media sector, including training of journalists; providing training to members
of political parties and electoral candidates, including intra-party dialogue
and gender issues; promoting the adoption of sound electoral dispute resolution
mechanisms and strengthening the judiciary as well as supporting the security
agencies.

In 2012, the EU supported electoral
processes in a number of countries including El Salvador, Nigeria and Togo. The
EU has strengthened its support for the spread of democracy in the southern
Mediterranean and the Middle East, providing support to the democratic reform
processes in Jordan and Libya. Assistance for countries in the process of
consolidating their democratic institutions, such as Nepal and Tanzania, is
being prepared. Support is also in preparation for countries that have undergone
crisis situations and where transitional institutions are to be replaced by
democratically elected institutions, such as in Madagascar. The EU has also
initiated election observation follow-up missions, with Malawi as the first
test case in November 2012.

3.1.2. 
Non-state
actors and local authorities in development

EU support to non-state actors (NSAs) is carried
out through several instruments and programmes. The total amount allocated to
civil society is around EUR 1 billion per year. In this context a thematic
programme has been fully dedicated to NSAs and local authorities (LAs).

In 2012, the EU continued to support
small-scale development initiatives either proposed and/or carried out by NSAs
and LAs from the EU and partner countries. For in-country interventions
implemented locally, EU Delegations have continued a strategic and focused
approach and have launched calls for proposals for NSAs and/or LAs, ensuring
complementarity and consistency with the EU development cooperation thematic programme.
For multi-country interventions, as well as development education,
awareness–raising and coordination, global calls were successfully launched at
Commission head­quarters level.

The share of the programme devoted to
multi-country activities was reduced in favour of actions in a single country.
The 2012 Annual Action Programme allocated a total of EUR 231.8 million: EUR 199.2
million for NSAs and EUR 32.6 million for LAs. For in-country operations, EUR 165.1
million was set aside for NSAs and EUR 27.7 million for LAs. With these funds,
actions were launched for 88 countries for NSAs and 41 countries for LAs.

A total of 224 proposals were received following
the new global call for proposals addressed to LAs in November 2011, of which 17
were selected and proposed for contracting. These projects will strengthen the
institutional capacity of LA associations at regional, continental or
international level or provide support to LAs in partner countries.
Awareness-raising activities by LAs within the EU and acceding countries will
also be supported.

In addition, the online portal of
de-centralised cooperation hosted by the Committee of the Regions, has been
live since the end of 2011. It is a tool for European LAs involved in
development cooperation projects. Among other things, this site will enable LAs
from the EU and their partners in developing countries to interact on future
projects. This portal also makes the Commission-financed ‘Atlas of
decentralised Cooperation’, available online since 2010, more accessible.

The Commission also conducted a study on
decentralised cooperation as a mechanism for EU LAs to support those in partner
countries, analysing and comparing its different modalities both at Member State
level and within Commission programmes, notably the NSA-LA programme.

A positive discussion has continued between
the members of PLATFORMA - a platform for dialogue between European LAs working
in the area of development cooperation - and Commission services. PLATFORMA
will continue to receive funding from the NSA-LA thematic programme for
coordination activities at European level until 2013, and for cooperation
activities with LAs in partner countries until 2015. This Commission support
has been highly effective, for instance in facilitating consultation in the EU
and partner countries on the Issue Paper on Local Authorities in Development
prepared by the Commission services.

3.1.3. 
Migration and
asylum

The strong links between migration
and development are acknowledged in the dual framework of EU's development
policy, namely the Agenda for Change and the Global Approach to Migration and
Mobility - the EU's external migration policy. Maximising the positive impacts
of migration on the social and economic development of partner countries has
become a key priority. In particular, the Agenda for Change clearly spells out
the nexus between development and migration, and on the necessary assistance to
“developing countries in strengthening their policies, capacities and
activities in the area of migration and mobility, with a view to maximising the
development impact of the increased regional and global mobility of people.”

The thematic programme for migration and asylum
is designed to address migration issues from a development perspective, but
increasingly the geographic instruments also include migration-related
programmes. The thematic programme includes five main areas of intervention,
namely: fostering the links between migration and development; promoting
well-managed labour migration; fighting illegal immigration, smuggling and human
trafficking; protecting migrants against exploitation and exclusion and
promoting asylum and international protection.

In 2012, the EU continued to support
partner countries in all migration-related areas. The Annual Action Programme
2012, with a total budget of 58 million, included contracting 29 projects under
the 2011-12 call for proposals and five targeted projects.

Through the thematic programme, the EU has
continued to play an active role, supporting the main regional and sub-regional
migration policy dialogues between the EU and partner countries. These
include: the Rabat Process on Migration and Development; the EU-Africa
Migration Mobility and Employment Partnership; the Prague Process and the EU-CELAC
migration dialogue.

On migration and development, the EU
continued to promote the involvement of small scale actors and diaspora
organisations to contribute to the development of their countries of origin. In
the area of remittances, where the EU has adopted significant commitments,
support has included the provision of capacity building to partner countries,
to individual remittance senders and recipients as well as other stakeholders with
a view to developing and implementing concrete strategies and operational
instruments to use remittances as development tools for poverty reduction.

EU support has significantly contributed to
the reinforcement of the labour migration management of partner countries
and support to circular migration schemes has contributed to meeting demand for
labour, particularly concerning seasonal workers.

Regarding human trafficking, the EU has
supported comprehensive interventions covering prevention, protection and
prosecution, with a victim-centred and human rights-based approach. Awareness
raising campaigns, improved protection and assistance of trafficked victims and
enhanced cooperation between civil-society and criminal justice actors have
resulted in an improved awareness of the risks posed by trafficking.

As regards preventing and combating
irregular migration, the EU has decided to support the establishment of the
Seahorse Mediterranean network, which should increase the capacity of the
authorities of North African countries to cooperate with the EU on border
surveillance and respond to emergencies requiring search and rescue of stranded
migrants or asylum seekers.

Finally, the support to so called Regional
Protection Programmes have succeeded in establishing the conditions for long
term and sustainable solutions for asylum and international protection
related issues; this approach was particularly successful under the framework
of the Regional Protection Programme in Eastern Europe implemented in
cooperation with the UN Refugee Agency (UNHCR).

3.1.4. 
Environment and
sustainable management of natural resources including energy

Environmental
protection, climate change and sustainable development remained key topics for
the Commission in 2012. It sought to address these issues through geographic
support, utilising funds from the thematic programme for environment and the
sustainable man­agement of natural resources including energy (ENRTP) and
innovative initiatives such as the GCCA, FLEGT and EU Water Facility.

The
Commission measures aid that contributes to meeting the objectives of the three
Rio Conventions' objectives on
biodiversity, climate change and desertification using the ‘Rio marker’ system. This system relates to
the reporting to the Organisation for Economic Cooperation and Development’s
Development Assistance Committee (OECD DAC) through its Creditor Reporting System database. Based on this tracking it is
estimated that EUR 500 to EUR 600 million were committed to climate change and
environment-related activities in 2012. This includes part of the new and
additional funds made available by the Commission (EUR 55 million) and EU
Member States (EUR 8.6 million) to provide "fast start financing" for
climate change actions.

In
addition, there are many geographical projects and programmes that address
these themes indirectly: environment and climate change issues are increasingly
integrated and mainstreamed in project preparation and appraisal. The total
amount of the portfolio allocated for sustainable development is thus
considerably higher.

In
line with the orientations of the Agenda for Change, the ongoing programming
for 2014-20, and the Rio+20 and related processes, policy development in the
water sector has shifted focus from access to water and sanitation to a more
integrated approach that takes into account economic aspects of water (energy
and agriculture). The nexus between water, energy and agriculture was
highlighted in the European Report on Development published in 2012.

A
number of initiatives took place in the area of sustainable energy development. High quality geographical information on renewable energy sources
in Africa was systematically collected by the Commission's Joint Research
Centre (JRC) in support of the UN "Sustainable Energy for All"
(SE4ALL) initiative. With over 600 members, the web-based African and Renewable
Energy Platform (AFRETEP) was developed to help set up a broad network of
African research institutions on renewable energy. Three capacity-building
workshops were carried out in cooperation with universities in Uganda, Burkina
Faso and South Africa to accelerate continent-wide knowledge development in
this field through the training of trainers. The project "Scientific and
Technical Support to Sustainable Energy Development in Africa: Rural
Electrification, Renewable Energy and Communication" (RENAF), implemented
by the JRC and EuropeAid, developed a consolidated technical and socio-economic
base to assess rural electrification projects and define the criteria needed to
choose between grid extension and off-grid solutions. The findings were
presented at the High Level Energy Forum "Towards Sustainable Energy For
All in West Africa" in October 2012 in Accra, Ghana.

Major highlights of
2012

More countries seek FLEGT, accord for timber exports

In 2012, four countries – Laos, Guyana, Côte d’Ivoire and
Honduras – sought to open negotiations on a Forest Law Enforcement Governance
and Trade Action Plan (FLEGT) with the EU. Each FLEGT voluntary partnership
agreement with a country involves the conclusion of a legal framework for the
forestry sector and timber exports. Guarantees relate to access to resources,
processing, transport taxes and fees, and respect for the rights and welfare of
indigenous communities. The FLEGT programme seeks to exclude illegal timber
from the global market and ensure that the forestry sector contributes to a
country’s overall development.

Ghana, Cameroon, Congo, Liberia, Central African Republic
and Indonesia all currently implement FLEGT agreements. Negotiations are
ongoing with: Gabon, Democratic Republic of Congo, Malaysia and Vietnam.

Global Climate Change Alliance expands
initiatives

In 2012, the EU pledged EUR 36.6 million – mostly
fast-start funding provided by the EU, Ireland and Cyprus – for six new initiatives
in Burkina Faso, the Central African Republic, Lesotho, Papua New Guinea, Timor
Leste and the Eastern Caribbean under the Global Climate Change Alliance
(GCCA). Projects will reduce emissions – caused by deforestation and forest
degradation – by improving forest land and natural resource management, and
bringing in changes to agricultural practices and energy use.

An EU initiative launched in 2007, the GCCA
is a platform for dialogue and exchange of experience between the EU and
developing countries on the integration of climate into policy-making. It is
notably a forum for LDCs and Small Island Developing states (SIDs) – the most
affected by climate change but least responsible for creating greenhouses
emissions. The GCCA also provides technical and financial support to integrate
climate change into policies and budgets and promote development which takes
climate change account.

One of the benefits of the initiative is
that lessons learnt and best practices in one part of the world can be shared
and replicated elsewhere. For example, the pledging of budget support to Bhutan
and the Solomon Islands helped design a plan for Lesotho. A meeting of the GCCA
held in Brussels in September 2012 gathered 160 delegates from beneficiary
countries and organisations with development partners and EU Member States.

Protecting biodiversity hotspots

In 2012, the Commission launched a call for proposals to develop
frameworks for the sustainable financing of protected areas in LDCs. In 2012,
the EU also joined the Critical Ecosystem Partnership Fund, a multi-donor fund
providing small grants for non-governmental organisations and private sector
organisations to help protect biodiversity hotspots in developing countries.

EU water support in spotlight

The Commission was closely
involved in the preparation of the 6th World Water Forum in Marseille in March
2012, as coordinator for the session on international cooperation within the
European regional process. EU Commissioner Andris Piebalgs attended the opening
day of the forum, chairing a session which highlighted the achievements of the
activities of the EU Water Initiative (EUWI), launched ten years ago. A new
China-EU Water Platform was inaugurated in Marseille where the EU also
showcased the ACP-EU Water Facility. The 10th Anniversary of EUWI was also the
object of a multi-stakeholder event during World Water Week 2012 held in August
in Stockholm.

Joint Research Centre improves aid
effectiveness in water sector

The European Commission’s Joint Research Centre (JRC) developed two
web-based tools to improve the effectiveness of projects financed in the water
sector. The Water and Energy Facilities Information System (WEIRS) is providing
support for the overall evaluation of projects calls launched under the
respective Water and Energy Facilities. It will also enhance analysis and
information under upcoming calls for proposals.  The Water Knowledge
Management System (AQUAKNOW) – has been designed to improve exchange of
information on water issues in developing countries among the international
community. Customised and online Geographic Information System (GIS) modules
facilitate geographic data-sharing, provide a database with geo-referenced
layers, and allow non-GIS users to perform joint spatial operations for data analysis,
upload technical project data and customise their own maps and graphs.

JRC/FAO capture data on shrinking global forests The report, 'Global forest land-use change 1990-2005', published in 2012 by the UN Food and Agriculture Organisation (FAO), has resulted from the Rome-based body’s long-term cooperation with the JRC. Data compiled from more than 200 forest remote sensing and land-use experts from 100 countries, reveals a net decrease in global forest area between 1990 and 2005, with the highest net loss in South America.

EU contributes to the Great
Green Wall for the Sahara and Sahel

EU support of EUR 1.4 million is
helping to implement the Great Green Wall for the
Sahara and Sahel Initiative[69]
(GGWSSI) – an African flagship
programme to combat desertification, adapt to climate change and alleviate
poverty. It is one of the priority activities under
partnership 6 of the Africa-EU strategy. The funding from the Environment and
Natural Resources Thematic Programme (ENRTP) has supported the initial
implementation phase of the project. Activities in 2012 included:

-           the preparation and
adoption by the African Ministerial Conference on the Environment             (AMCEN)
in September 2012 of a regional harmonised strategy for the implementation of
the GGWSSI;

-           the drawing up and
adoption of national action plans in eight

countries (several of them
already adopted);

-           the formulation of
cross-border initiatives for sustainable land management, with three of them
already formulated and their investment plans prepared; and

-           the preparation of
comprehensive capacity building and resource mobilisation strategies in support
of the GGWSSI.

3.1.5. 
Food security

The EU's Food Security Thematic
Programme (FSTP) seeks to improve the food security of the poorest and most
vulnerable by mainly addressing the global, continental and regional dimensions
associated with hunger and under-nutrition. It does this by focusing on global
public goods and challenges, by: supporting research, technology transfer and
innovation; strengthening governance at various levels and by addressing food
insecurity in fragile situations by ensuring transition from relief to
development. The programme's efforts go hand in hand with direct bilateral
cooperation with partner countries.

Agricultural research,
technology transfer and innovation: 2012 progress

The FSTP supports agricultural
research, extension and innovation to create public goods, in the form of
knowledge, technologies and capacity and to make them accessible to the rural
poor so that they impact positively on food security, nutrition and poverty
reduction. The EU works with international research centres, continental and
sub-regional research organisations associated with the Comprehensive Africa
Agriculture Development Programme (CAADP) in Africa, and successful consortia
under competitive calls for proposal.

New programmes with a total value of EUR 50 million were contracted
in 2012. Noting the wastage of crops that commonly occurs prior to harvest, focus
was put on extending research and training available to farmers and reducing pre-harvest
crop losses. Support was given to the African Forum for Agricultural Advisory
Services (AFAAS) to develop and test innovative approaches to extension and to
CABI (Centre for Agricultural Bioscience International)
to roll out its well established model of plant health
clinics to seven African countries. There is also increasing concern over the
health of bees which are vital for the pollination of important crops. The
Commission took the lead in an initiative to address diseases of pollinator
bees with the International Centre for Insect Physiology and Ecology (icipe)
and the African Union (AU).

The Commission regularly
monitors the performance of programmes on agricultural research for development
and is keen to learn lessons and identify evidence of impact. Some existing
long-term programmes now directly impact the food security and livelihoods of
farmers. These include the Sub-Saharan Africa Challenge Programme, led by the Forum
on Agricultural Research in Africa (FARA) which connects farmers and
researchers to markets through innovation platforms. The breeding programmes of
the World Fish Centre (part of the Consultative Group on International
Agricultural Research, CGIAR) such as the International Rice Research Institute (IRRI) in the Philippines, have created
new varieties that combine stress tolerance or nutrient enrichment with higher
yields of rice, and made these available to a large number of farmers. Other high
impact programmes include aquaculture, led by CGIAR and aimed at very poor and
marginalised groups in Bangladesh, and the introduction of a tsetse resistant
collar for livestock which is raising the incomes of pastoralists in the
semi-arid regions of Kenya.

Dialogue at policy level is
essential to achieve widespread impact and the Commission is active in
international discussions on agricultural research systems to ensure that it is
demand-driven and better aligned to the needs of poor smallholders. The
Commission, which currently sits on the fund council of CGIAR and FARA's
executive boards, is a strong supporter of the Global Forum for Agricultural
Research (GFAR) which brings a multi-stakeholder perspective and emphasises
partnerships and capacity building. In 2012 the EU contributed to the
technology platform of the G8 New Alliance for Food Security and Nutrition. At
the European level, the Commission supports coordination of policy and
programming on agricultural research for development through the European
Initiative on Agricultural Research for Development (EIARD).

Strengthened
governance approaches for food security: progress 2012

A highlight of 2012 was the
start of a EUR 40 million programme managed by the Food and Agriculture
Organisation (FAO) with support from the International Fund for Agricultural
Development (IFAD) and the United Nations World Food Programme (WFP). The
programme aims to improve coordination and inform food security and nutrition
governance at the global, regional and national levels. The reinforcement of
the Committee on World Food Security (CFS) as the central body on food
security, and in particular the High Level Panel of Experts and the Civil
Society Mechanism, are important outcomes. In order to help prevent food
crises, and to reduce their effects if they occur, the Food Security
Information Network (FSIN) aims to provide better information and common
standards and methodologies. Launched in October 2012, it has developed new
e-learning materials, provided on-site training as well as a series of
successful online forums.

Assisted by the FSTP, the JRC
provided technical and scientific support to improve food security information
in Sub-Saharan Africa, supported the Integrated Food Security Phase
Classification (IPC) tool and participated in food security assessment missions
in many Sub-Saharan African countries. In addition, it analysed the policy
impact at farm-household and regional level in Sierra Leone and the Ivory Coast
and provided satellite remote sensing technologies to UN Agencies in Somalia to
help implement and monitor EU-funded rural projects in the aftermath of the
2011 food crisis.

The pressure on agricultural
land and the increase in large-scale agricultural investments in developing
countries highlights the need to secure smallholders' and rural communities'
access to land and to improve agricultural investment regulations. In the
context of food security, the "Voluntary Guidelines on the Responsible
Governance of Tenure of Land, Fisheries and Forests in the Context of National
Food Security" (VGGT) were adopted in May. With the active support of the
Commission, these were the product of negotiation between governments,
international organisations, civil society and the private sector. EU
partnerships with specialised institutions, such as the FAO, the International
Land Coalition and, at AU level, the Land Policy Initiative, are improving land
governance. An ambitious programme is now under preparation to support the
implementation of the Voluntary Guidelines in a number of African countries,
following the EU's commitment to the New Alliance launched at the G8.

Moreover the FSTP provided EUR 5
million to the secretariat of the Scaling Up Nutrition (SUN) movement which
supports national efforts to accelerate actions and ensure that adequate nutrition
is provided for the 1 000 days from pregnancy to the child’s second
birthday. By the end of 2012, 33 developing countries had joined SUN accounting
for 59 million of the world's 165 million stunted children. EU Development
Commissioner, Andris
Piebalgs, is part of the
Lead Group which governs SUN.

Addressing
food security for the poor and vulnerable in fragile situations: progress in 2012

The FSTP plays a major role in developing
coherence and forming synergies between emergency and development operations.
In 2012 the FSTP provided significant funds to address the food crisis in West
Africa (Burkina Faso, Chad and Mauritania) by supporting farmers to restore
their productive assets.

LIFT raises food availability and incomes in Myanmar/Burma

The
Livelihoods and Food Security Trust Fund (LIFT) for Myanmar/Burma is aiming to
improve both food availability and the incomes of two million poor and
vulnerable people. To increase agricultural productivity, the programme is
providing better access to inputs such as access to seeds and fertilisers and
markets, as well as encouraging farmers to use technologies and rehabilitate
the environment. The provision of clean water for villages in dry areas,
support for non-agricultural job activities and vocational training are among
the programme’s other initiatives.

Underway
since 2010, as of June 2011, LIFT had provided assistance to an estimated 170
000 households; mainly in the Irrawaddy Delta. This includes training support
to 50 000 farmers which resulted in an increase of 20-60% in the area of land
cultivated and a 40-60% increase in yields. Incomes also rose due to reduced
farming costs and assistance to 60 000 small producers in livestock-farming and
fisheries.

3.2. 
Democracy and human rights

EIDHR and democracy support

The EU is increasingly applying a comprehensive
approach to democracy support, including through the European Instrument for
Democracy and Human Rights (EIDHR).

For over a decade, the EU has supported
human rights and democracy education with the European Inter-University Centre
(EIUC) in Venice. In January 2012, the EIUC and five similar Regional Master’s
Programmes (RMPs) signed a Memorandum of Understanding establishing the Global
Campus - a network of human rights and democracy education in Europe, the
Balkans, Africa, Asia-Pacific, Latin-America, and the Caucasus - with funding
from EIDHR thus increasing access to and strengthening high quality democracy
and human rights education in areas of the world where such education remains
limited.

Freedom of expression and media support

Freedom of expression and opinion as well
as a free, independent and plural media are important pillars of the Commission’s
democracy support around the world. The EU has a long track record of providing
support to independent media as well as capacity building for journalists which
to a large extent has been financed by the EIDHR. The EIDHR 2012 global call
for proposals focuses on projects fighting cyber-censorship and protecting the
confidentiality of activists. The EIDHR had already invested in internet access
before the Arab Spring, and is currently financing a project protecting
independent bloggers, writers and journalists in Syria, as well as freedom of
expression projects focusing on legislation regarding the media and the
Internet in Yemen.

Conferences and studies

On International Democracy Day in September
2012, the EEAS and Commission organised an event in Brussels on the EU's
contribution to democracy support and on strengthening the EU's political party
support. The aim was to put a stronger focus on political party support as a
stand-alone item in the EU's comprehensive democracy support agenda.

"Elections and ICT (Information and
communication technologies)", a thematic workshop attended by over 200
participants, involving representatives of electoral commissions from many
developing countries, was held in Mombasa, Kenya in March 2012. The workshop,
organised in collaboration with UNDP, focused on knowledge and policy development,
as well as on collaboration with the main players in the field of electoral
assistance.

To meet the challenges and grasp the
opportunities in the current media landscape a study was carried out to provide
recommendations for future strategies on freedom of expression assistance as a
part of international development cooperation. Based on lessons learned, the
study proposes practical tools for programme and project management.

The increased importance of democracy in
the EU's agenda for external action has brought about a major interest in
democracy indicators. The study conducted by Varieties of Democracies (V-Dem)
developed by Gothenburg University in September 2012, is a unique tool for the
assessment of democracy, consisting of a comprehensive database of 400
indicators per country, with a worldwide coverage that spans from 1900 until
the present.

Finally, a "Study on Performance
Indicators for EU Parliamentary Support" carried out by AETS in September
2012, provides practical advice on how to design and implement parliamentary
support projects in new and emerging democratic parliaments, identifying seven
themes, namely: legislation, oversight, budget, representation, administration,
inclusivity and institution building.

3.3. 
Stability
3.3.1. 
Crisis response
and preparedness

In 2012, the EU addressed several major crises, including the
protracted Arab Spring upheavals across North Africa and the Middle East. The
EU also responded to pressing situations of fragility and post-crisis in Niger,
Mali, Chad, Pakistan and other parts of the world, all of which required
effective and timely interventions. Actions have aimed to help stabilise
countries and enhance their resilience. Both at political and operational
levels, the EU has been very active in bringing quick and appropriate responses
to people's needs.

Building resilience, assuring flexibility and
focusing on state building

The year 2012 saw intensified cooperation between the EU services
responsible for development aid, humanitarian aid and external action to
provide a more efficient and coordinated approach to crises. When responding to
the needs of vulnerable people and countries, donors need to ensure a smooth
phasing out of emergency situations to longer term stability and development.

While humanitarian action cannot, and should not, be a long lasting
form of intervention, development aid should address fragile situations through
structured long-term interventions which are informed by the results of previous
humanitarian actions. Hence "Linking Relief, Rehabilitation and
Development" (LRRD) both avoids a fall back into crisis as the initial relief
effort is scaled down and increases the chances of success of development
policies when implemented in a crisis-prone country. Against this background,
the new policy framework for LRRD has been spelled out in the new communication
"The EU Approach to Resilience: Learning from Food Crises" adopted in
2012. The policy builds on the promising results of the SHARE and AGIR EU resilience
building initiatives as part of its response to the drought crises in Africa (for
more details see chapter 2 part 2.1).

Thus, in 2012, the EU started implementing the resilience policy
principles on the ground by reviewing best practice in a series of partner
countries, systematising them and working on methodologies for a better
articulation of humanitarian and development aid.

In disaster-affected countries, people face urgent and
basic needs in order to survive. A flexible response to meeting these requirements
is essential. The Commission has proposed instruments and rules in the 2014-20 MFF which would make EU assistance even more responsive to
such needs. The EU wishes to be able to rapidly source and reallocate development money in support of the
recovery and transition of countries coming out of crisis. These proposals have
been the subject of constructive discussions between the various EU
institutions with a view to their adoption in 2013.

In parallel to these discussions, the EU included
fragility as a core issue in its external assistance programming as well as in
the training given to its staff deployed in developing countries and at headquarters.

Adopted by the international community of donors and
fragile countries in 2011 the New Deal stresses the importance of the Peacebuilding
and Statebuilding Goals, including: inclusive politics, security, justice,
economic foundations, revenues and services. With this new approach to
fragility, state-building is at the core of EU support to countries in fragile situations and is emphasised in the Agenda for Change. In 2012, the
EU participated in the operationalisation of the New Deal principles. A preliminary
result was that in 2012 the EU and France decided to work in partnership in the
Central African Republic to pilot the implementation of the New Deal on the
ground.

The Instrument for Stability

The EU can respond to crises by using the Instrument for Stability
(IfS). Working in close cooperation with the EEAS, as well as EU Delegations
and relevant Commission Services, the IfS was regularly deployed to complement
geographic external assistance programmes and,
when windows of opportunity arose, to prevent, mitigate or resolve crises
requiring rapid reaction. In 2012, the Commission’s Service for
Foreign Policy Instruments committed EUR 203.9 million via some 40 short-term
crisis response measures. This enabled the EU to act quickly to help
prevent, stabilise and respond to emerging or actual crisis situations linked
to serious political conflicts (as well as some man-made and major natural
disasters).

EU crisis response actions under the IfS have a wide geographic and
thematic scope. The examples that follow illustrate a range of IfS areas of
intervention:

Elections are often key elements on the path to recovery from crises
and IfS election support was evident in 2012 in conflict-prone areas in various
regions. Projects were launched in Guinea Bissau, Togo, Burkina Faso, Zimbabwe,
Madagascar, Kenya, Pakistan, Afghanistan and Haiti. Crucially, these election
support measures provide assistance outside the realm of previously foreseen
election cycles.

Another example of IfS measures in 2012 was
peace-building support in Asian countries. The IfS has accompanied the peace
process in the Philippines and has been present in the Myanmar/Burma
transition, promoting reform, local peace processes and resettlement through
support for mine clearance projects.

Building on initial responses to the Arab Spring in 2011, the IfS
quickly put in place other interventions across the Middle East and North
Africa (MENA). There was a significant package of assistance in response to the
conflict in Syria and the affected populations in the region. In Libya, further
IfS support was given to help build national capacity to respond to crisis
situations, to protect vulnerable groups and to help with the clearance of
unexploded ordnance. Assistance was also provided for a needs assessment for integrated
border management in Libya, paving the way for a subsequent Common Security and
Defence Policy (CSDP) exploratory mission.

In Sub-Saharan Africa, the IfS supported stabilisation and pilot
projects to promote early recovery in Somalia as well as the demobilisation of
forces in the Central African Republic and Chad as well as peace-building
efforts in Nigeria and Burundi.

Following the earthquake in Haiti in 2010, the EU focused on
reinforcing the crisis preparedness capacities of the Haitian administration
through setting up a situation room and training its Haitian staff. This
situation room permits continuous situational awareness of natural disasters
and intervention planning and coordination.

The IfS also launched actions to build on its earlier assistance with
respect to: efforts to secure a peaceful settlement of the conflict in
Nagorno-Karabakh; the stabilisation of Georgia's breakaway regions and the
Special Tribunal for Lebanon.

In addition to the crisis response actions mentioned above, the EU
also committed a further EUR 22 million of IfS programmable funds for pre- and
post-crisis preparedness and related capacity-building, in the framework of the
"IfS Peace-building Partnership". In doing this the EU worked with a
wide range of stakeholders, including: the UN, and other international bodies;
EU Member State agencies; NGOs and other civil society actors. The measures
approved in 2012 were as follows:

· 
improving the capacity of Non-State Actors: EUR 8.5
million was allocated to conflict prevention and peace-building, leading to
projects through the EU Delegations to Brazil, El Salvador, Nicaragua, Haiti,
the Democratic Republic of Congo, India and Kyrgyzstan targeting the themes of:
women, peace and security, children, youth, mediation, dialogue and
transitional justice, climate change, natural resources and conflict.

· 
promoting early
warning capabilities: a global call for proposals for early warning with
non-state actors (EUR 5 million) was prepared by the Commission working in
close cooperation with the EEAS. An open call for tender targeting civil
society actors was launched in 2012 and should lead to contracting in early
2013. A capacity building proposal for regional and sub-regional partner
organisations active in the field of crisis response and early-warning was
adopted (EUR 3 million). Following an EU scoping mission in June 2012, an
action promoting crisis response within ASEAN and its member states was defined.
This is expected to be implemented in 2013 by a consortium of EU Member State
agencies. The second phase of the EU's
technical cooperation with the AU’s Situation Room on its Continental Early
Warning System (CEWS) concluded successfully in 2012. Thanks to regular
technical training of AU and Regional Economic Communities staff, the Situation
Room operates state-of-the-art information mining and analysis systems which
underpin its CEWS.

· 
climate change, natural
resources and international security: a EUR 1.5 million action on climate
change and security in Eastern Europe and Central Asia was contracted, while a
Memorandum of Understanding was signed with USAID, paving the way for the contracting
of a EUR 1 million Property Rights and Artisanal Diamond Development action.

· 
reinforced EU
cooperation to build expert capacities for international crisis response: the
IfS supported 'Europe's New Training Initiative for Civilian Crisis Management'
(ENTRi). This is a unique capacity building programme focusing on the
preparation and training of civilians who will either commence, or are already involved
in, crisis management missions worldwide. Such missions include those of the
EU, the UN, the Organisation for Security and Cooperation in Europe (OSCE) and
the African Union (AU). Deployment of ENTRi-trained civilian experts were made
to key locations such as the HoA, South Sudan, the Sahel and Afghanistan. A
proposal for a follow up programme (ENTRi II), appraised in 2012, is scheduled
to begin in April 2013.

3.3.2. 
Global and
regional trans-border challenges

Actions to address global and regional trans-border
challenges are funded under the long-term component of the IfS. These cover
trans-regional security threats, as well as chemical, biological, radiological
and nuclear (CBRN) risks.

The CBRN Centres of Excellence initiative, which aims to
build institutional capacities to mitigate the risk of CBRN and threats to
third partner countries, was further implemented in 2012 and most of the eight
secretariats will be fully operational by the end of 2013.

A total of EUR 21.5 million was recently earmarked for
four regional Centres of Excellence located in the Middle East, the
Mediterranean basin, the southern Caucasus and Central Asia and in cooperation
with the UN and other major donors. The JRC provided technical support and
undertook technical projects in several regions in the field of nuclear
detection by providing equipment, technical assistance and training to front
line officers. Support is also being provided to countries to help develop
their nuclear forensics and response capacities and capabilities.

The second long-term priority of the IfS regulation is to
support capacity building in the fight against terrorism, organised crime and
threats to critical infrastructure.

There are several projects aiming at preventing and
combating terrorism and contributing to global counter-terrorism efforts. In
2012, implementation of the Contre Terrorisme Sahel project continued with a
number of capacity building interventions targeting Niger and Mauritania, as
well as efforts to strengthen regional cooperation in this area. A study was
launched on the Nigeria-based Boko Haram group, while support to a new Counter
Terrorism Associated Prosecution Reform Initiative in Pakistan aims to improve
the ability of Punjabi agencies to successfully investigate, prosecute, convict
and detain terrorists. New actions on countering the financing of terrorism in
the HoA region and countering violent extremism in Pakistan and the HoA were
also in preparation in 2012.

In the area of organised crime, work continued in ten
countries on the Heroin Route (including Iran, Pakistan and Afghanistan) and a
number of new actions contracted, including a new project on human trafficking
This also supports the new 2012-16 EU Strategy for the Eradication of
Trafficking in Human Beings.

Under the Cocaine Route Programme, three joint airport interdiction
task forces are now operational in Cape Verde, Senegal and Togo, to support the
fight against organised crime on the cocaine route (36 countries are covered in
West Africa, Latin America and the Caribbean). A new project was also launched
for the setting up of a regional police information system in West Africa with
Interpol and there was a new commitment to prevent the diversion of drug
precursors in Latin America.

Cyber crime and the fight against the illicit market of
falsified medicines are relatively new aspects of global threats to public
health and safety. In 2012, two new EUR 8 million operations were identified to
strengthen relevant legal frameworks and the capacity of law enforcement and
judiciary authorities in key countries.

In order to fight the illicit accumulation and trafficking of
firearms, new projects were signed with the African Regional Centre for Small
Arms, (RECSA, valued at EUR 2.7 million), the Security Commission of the
Central American Integration System (SICA, EUR 2.3 million) and INTERPOL (EUR 1.5
million). These actions are complementary to ongoing work on illicit
firearms in Sub-Saharan Africa and South America. Moreover, the
EU promoted the full and effective implementation of the UN Programme of
Action on the Illicit Trade in Small Arms and Light Weapons (SALW) at its 2012
Review Conference. This is to combat and eradicate the illicit manufacture,
transfer and circulation of SALW, including firearms, and to reduce and prevent
their negative humanitarian and development impact.

The EUR 16.5 million Critical Maritime Routes programme
covers 17 coastal countries of the West Indian Ocean, South East Asia and the
Gulf of Guinea. It enhances the information-sharing capacities and enforcement
functions of coastal states when trying to achieve safer and more secure
maritime traffic by inter alia countering piracy and armed robbery at
sea. A number of new actions were contracted in 2012, including the training of
coastguards in the Gulf of Guinea in a bid to curb pirate attacks off the west
coast of Africa.

As a contribution to maritime surveillance and the fight
against piracy in the HoA and the Gulf of Guinea, the EU carried out two
capacity building projects on automated data analysis for regional authorities.
Methods were developed and tested by the JRC allowing countries to access
state-of-the-art and cost-effective maritime surveillance monitoring tools to
secure their maritime routes.

3.4. 
Nuclear safety

The new Instrument for Nuclear Safety
Cooperation (INSC 2007-13) has as its main objectives the promotion of a high
level of nuclear safety, radiation protection and the application of efficient
and effective safeguards of nuclear materials in non-EU countries. In recent
years it has substantially extended its geographical coverage. Meanwhile, the
EU continued its support for finalising the nuclear safety projects  of  the Technical
Assistance to the Commonwealth of Independent States (TACIS) programme. An
important step under the nuclear safety programme was the installation of a one
thousand ton compression force super-compactor in the new radioactive waste
treatment facility at the Smolensk nuclear power plant (EUR 10.3 million).

The INSC trend in 2012 has been to reduce
support to the operators and design safety issues. All projects in Russia have
been finished while projects in Armenia and Ukraine continue. Support to
the Ukrainian operator continues to improve the culture of nuclear safety and
the quality of human performance. The construction of a
radioactive waste management infrastructure in line with European
Union best practice is another priority. Support to nuclear regulatory
authorities and technical support organisations has been expanding,
particularly in Southeast Asia. Radioactive waste management activities
increased in Central Asia, particularly with respect to the remediation of
contaminated former nuclear mining sites. In the field of nuclear
safeguards, the JRC is providing safeguards equipment and training to the
Brazilian-Argentine Agency for Accounting and Control of Nuclear Materials.

Following the Fukushima-Daiichi accident in
March 2011, the EU participated in extending a comprehensive safety assessment
of operating nuclear power plants including a peer review of national reports -
the "stress tests" - to EU neighbourhood countries. Armenia will
benefit from support to carry them out in the framework of the INSC (see
below).

In Ukraine, which is the principal
beneficiary of INSC support, the EU has continued to cooperate with the
regulator and the operator in improving nuclear safety, radioactive waste
management and nuclear safeguards, providing EUR 14 million in know-how and
equipment to complete the National Training Centre for Maintenance and
Management Personnel of NNEGC Energoatom. Financial support of EUR 35 million
was again provided for the Chernobyl projects through the Chernobyl Shelter
Fund (CSF) and the Nuclear Safety Account (NSA), managed by the EBRD
on behalf of donor countries. Following completion in 2011 of the stabilisation
works on the existing shelter of the Chernobyl Unit 4, assembly of the new safe
confinement arch started in 2012. The completion of the project is foreseen in 2015.

In Armenia, the EU has continued to
cooperate with the regulator and the operator in improving nuclear safety. A
final series of important projects were launched to address a wide range of
topics at Medzamor Nuclear Power Plant (NPP), including the transfer of the
Full Scope Simulator from Bohunice NPP and the supply of a remote system for
underwater visualisation of nuclear fuel. The project also helped Medzamor NPP
carry out the stress test self-assessment and the update of the safety analysis
report has started. These projects tackle urgent safety issues and are being
implemented while the plant is operating, although the EU maintains that the
plant should be shut down as soon as possible to install replacement generation
capacity.

In Belarus and Georgia
cooperation continued for projects supporting the regulatory authorities as
well as the safety assessment of a disposal site and an interim storage
facility respectively. In Central Asia, four major projects were signed in
Kyrgyzstan and Tajikistan to address uranium mining legacy sites
and, in Mongolia, to establish a regulatory framework for uranium
mining. In 2012, the INSC also continued to support the capacity building of
nuclear regulators in Egypt, Jordan and Morocco. A
training project is underway in Iraq to be followed by a project for the
safe disposal of radioactive waste from closed-down nuclear installations.
Projects also continued in Brazil, while in Mexico, an extensive waste
management project was started. In China, cooperation started with the
regulator, its technical support organisation and with the Chinese Atomic
Energy Authority. The cooperation is mainly aimed at enhancing the nuclear
safety regulatory regime, as well as China's serious accident preparedness,
emergency management and the management of nuclear waste.

3.5. 
Humanitarian assistance

The EU (the 27 Member States and the Commission) is the world's
leading humanitarian donor. The Commission also
facilitates coordination with, and among, Member States.

The overall priority is to ensure that humanitarian aid is managed
in the most effective and efficient way possible so that it has the maximum impact,
while respecting the principles of international humanitarian law and the
principles of impartiality, neutrality, humanity and independence.

With regard to its civil protection mandate, the Commission
facilitates cooperation between the 32 States participating in the Civil
Protection Mechanism and Financial Instrument (the 27 EU Member States plus
Norway, Iceland, Lichtenstein, Croatia and the former Yugoslav Republic of
Macedonia) with a view to improving the effectiveness of systems and to prevent
and protect against natural, technological or man-made disasters both inside
and outside Europe.

Implementation of humanitarian aid and civil protection

In 2012, the global humanitarian context remained challenging with
identified humanitarian needs outstripping available resources.

The
Commission intervenes when and where crises or natural disasters occur, helping
millions of affected people in third countries and inside the EU. In 2012, the
Commission's response to new or protracted crises outside the EU totalled EUR 1.3 billion and
consisted of:

· 
providing humanitarian assistance in 92
third countries out of which 52 highly vulnerable countries/territories.

· 
activating the EU Civil
Protection Mechanism 38 times[70]

Table
39:

In 2012,
humanitarian and civil protection assistance was provided to the following
regions (rounded figures, in EUR million)[71]

Region/country || || Amount || || %

|| || || ||

Africa || || 681 || || 52%

|| || || ||

Sudan & Chad || || 207 || ||

|| || || ||

Central Africa || || 92 || ||

|| || || ||

Horn of Africa || || 162 || ||

|| || || ||

Southern Africa, Indian Ocean || || 32 || ||

|| || || ||

West Africa || || 188 || ||

|| || || ||

Middle East, Mediterranean || || 265 || || 20%

|| || || ||

Middle East || || 255 || ||

|| || || ||

Mediterranean || || 10 || ||

|| || || ||

Asia, Pacific || || 198 || || 15%

|| || || ||

Central and South West Asia || || 110 || ||

|| || || ||

Central South Asia || || 32 || ||

|| || || ||

South East Asia and Pacific || || 56 || ||

|| || || ||

Latin America, Caribbean || || 68 || || 5%

|| || || ||

Latin America || || 30 || ||

|| || || ||

Caribbean || || 38 || ||

|| || || ||

Worldwide disasters || || 19 || || 1%

|| || || ||

|| || || ||

Civil || || || ||

Civil protection outside EU || || 6 || || 1%

|| || || ||

Worldwide assistance and support || || 86 || || 6%

|| || || ||

TOTAL || || 1 323 || || 100%

The initial humanitarian aid budget of EUR 852 million (EUR
856 million including the external strand of civil protection) was increased several
times in 2012 in order to respond to new crises and natural disasters.

Increases in the budget were obtained by transfers of
funds from the Emergency Aid Reserve, through the use of the 10th
European Development Fund (EDF) reserved for humanitarian aid in African,
Caribbean and Pacific countries, by EFTA contributions and by transfers from
other budget lines within the external aid heading 4. The budget for
humanitarian action was implemented via a wide range of implementing partners for
example at 47% by NGOs (118 partners), 44% by UN agencies (15 partners) and 9%
by International Organisations (three partners).

As in previous years, the majority of funding went to
Africa (52 %). Substantial assistance was also provided to the Middle East
(Syria and neighbouring countries), to Myanmar/Burma in response to the crisis
there, and in response to natural disasters in South East Asia and the
Caribbean.

The
Commission undertook disaster preparedness actions in regions outside the EU
known to be prone to natural disasters, in order to help local communities to
react rapidly and efficiently when disaster occurs, so that many lives can be
saved. In 2012, the Commission continued to support to Dipecho disaster
preparedness programmes in Southern Africa, the Caucasus, Central Asia, South
East Asia and Central America.

The response to crises remained varied and multi-sectoral, addressing
health (including psychological support, financing of clinics), protection (such
as addressing sexual violence), food and non-food supplies, shelter,
water/sanitation, reconstruction and rehabilitation.

Humanitarian assistance and civil protection priorities

At
policy level, the Commission focused on the following strategic initiatives in
2012:

· 
continued negotiation
on the proposal for a Union Civil Protection Mechanism (UCPM)[72], The new UCPM aims at supporting,
coordinating and supplementing the actions of the Member States in the field of
civil protection with a view to improving the effectiveness of systems for
preventing, preparing for and responding to natural and man-made disasters.

· 
the preparation of the
legislative proposal on the implementation of the Solidarity Clause[73], where the Union Civil Protection
Mechanism and the related Emergency Response Centre (ERC) are a central element
of implementation (with the ERC acting as the initial single 24/7 point of
contact at service level for the Union).

· 
preparations for the
creation of the EU Aid Volunteers initiative scheme which advanced significantly
with the adoption in September of the Commission proposal for a Regulation[74] establishing the programme with a planned
budget of EUR 239 million for the period 2014-20. The scheme would provide
financial support to train and deploy volunteers to complement humanitarian aid
actions in third countries as well as to build capacity for volunteering in
third countries.

· 
a joint communication
by Commissioners Piebalgs and Georgieva calling for increased support to
resilience building in the context of EU external action. The lessons learnt
from the recent Horn of Africa and Sahel food crises fed into the design. The
communication underlines the EU's commitment to strengthening links between
humanitarian and development stakeholders so as to address both the symptoms
and the underlying causes of crises.

· 
further implementation
of the European Consensus on Humanitarian Aid. Both EU Member States and the
Commission maintained their efforts to put in place the key elements of the
Consensus Action Plan through various internal and external initiatives. In
2012, the Commission prepared a first Annual Report on the implementation of
the Consensus in 2011. The report was prepared on the basis of the input
provided by Member States and a Commission mapping exercise conducted in early
2012.

· 
regular contact with
relevant international organisations, in particular the UN and the Red Cross on
policy development and operational issues. There was close cooperation with the
UN Emergency Relief Coordinator Valerie Amos on efforts to obtain a more
inclusive humanitarian aid system through outreach to new partners, as well as the
"Transformative Agenda" agreed with the IASC (UN Inter-Agency Standing Committee Task
Force) in 2011. This seeks to strengthen the international humanitarian system
in the areas of leadership (the role of Humanitarian Coordinators), coordination
(more efficient cluster system) and accountability (including more coordinated
needs assessments).

· 
negotiations for a new
Food Assistance Convention (FAC), which were successfully concluded in April
2012. The EU has become one of the founding parties of the new Convention,
which it ratified in November 2012. The FAC reaffirms donors' commitment to
addressing the food and nutrition needs of the most vulnerable, striving to
respond to food and nutrition needs with the most efficient and effective
tools.

3.6. 
Macro-Financial Assistance

Macro-financial assistance (MFA) is an
external financial instrument for countries close to the EU which address
exceptional external financing needs in the form of balance of payment support.
MFA therefore contributes to strengthening macroeconomic and financial
stability in countries which are neighbours or are geographically close to the
EU, while encouraging the implementation of appropriate structural reforms. It
complements, and is conditional on, the existence of an adjustment and reform
programme with the IMF. MFA can take the form of loans, for which the
Commission borrows the necessary funds in capital markets and on-lends them to
the beneficiary country or, in some cases, grants, financed from the EU budget,
or a combination of loans and grants.

MFA is currently subject to case-by-case
legislative decisions, taken jointly by the European Parliament and the Council
through the ordinary legislative procedure (co-decision). The Commission proposed
to streamline the decision-making process by adopting (on 4 July 2011) a
proposal for a Framework Regulation for MFA. The proposed Framework Regulation
aims to make MFA faster, more transparent and more effective by speeding up
decision-making with respect to individual MFA operations and laying down the
key rules governing MFA in a formal legal act. The proposal has been under
consideration by the two co-legislators, the European Parliament and the
Council in 2012 and discussions will continue in 2013.

In 2012 the co-legislators also considered
two Commission legislative proposals for new MFA operations adopted in 2011. These
are a proposal to extend MFA to Georgia for EUR 23 million in loans and EUR 23
million in grants and a proposal to extend an exceptional MFA to the Kyrgyz
Republic for EUR 15 million in loans and EUR 15 million in grants. The adoption
of the relevant decisions has been delayed by disagreements between the
co-legislators over procedures to be used for implementation.

Progress was made in 2012 on the
implementation of MFA operations already approved. Implementation of the
Armenia MFA (EUR 65 million in loans and EUR 35 million in grants) was
completed, with the disbursement of the second loan tranche of EUR 39 million
in February 2012. Implementation of the Moldova MFA (EUR 90 million in grants)
was also completed, with the disbursement of the last tranche of EUR 30 million
in April 2012. Obstacles to the implementation of the MFA operation for Bosnia
and Herzegovina (EUR 100 million in loans), which was approved in 2009, were
overcome, and disbursement of the first tranche (EUR 50 million) is foreseen in
the first quarter of 2013. Progress has also been made on the MFA for Ukraine
approved in 2010, which, together with the funds available from a previous
operation approved in 2002 amount to EUR 610 million in loans. Agreement on the
substance of the Memorandum of Understanding has been reached with the
Ukrainian authorities and the implementation of the MFA operation could start
in 2013, provided that some general preconditions (including an agreement on a
new IMF programme) are met.

As regards future possible MFA operations,
Egypt and Jordan submitted requests for MFA assistance in November and December
2012, respectively. Discussions with the two countries are ongoing. Lastly, the
financial difficulties linked to the major political and economic changes
arising from the Arab Spring make additional requests for MFA assistance more
likely.

4. 
Chapter 4 Managing aid for results

4.1. 
Monitoring project performance
4.1.1. 
Project
results: results-oriented monitoring

For more than 10 years, the Commission's
Results Oriented Monitoring (ROM) system has been used to assess the
performance of projects funded by the EU. As such it forms a part of the
overall quality assurance cycle, which starts during the design of projects and
ends after their implementation.

The ROM system is based on onsite visits, with
external experts interviewing project staff, reviewing key project documents
and, most importantly, interviewing relevant stakeholders including the beneficiaries.
The methodology is based on internationally Organisation for Economic
Cooperation and Development (OECD)/Development Assistance Committee (DAC)
agreed criteria, namely: relevance, efficiency, effectiveness, impact and
sustainability. ROM reports are disseminated by the EU to project managers,
partner governments and other stakeholders.

ROM provides benefits:

· 
at the level of a project or programme by giving
feedback to project managers on the performance of the operations under their
responsibility and giving recommendations on how to improve them, if necessary.

· 
by providing a statistical overview of the
performance of the EU development aid portfolio with data, allowing comparison
over time, across regions and between sectors etc.

· 
at the level of programming and learning:
quantitative and qualitative studies based on ROM data can contribute lessons
learned and best practices to the programming and planning of new projects.

ROM performance in 2012

1 047 ongoing projects and 307
regional programmes (linked to 244 national components) and 17 Sector Policy
Support Programmes (SPSPs) were assessed in 2012. In addition, 192 projects and
12 Regional Programmes have been assessed ex-post, i.e. after their
closure to focus specifically on impact and sustainability.

In 2012, the ROM system covered roughly one
third of the development cooperation interventions, representing in financial
terms one quarter of total portfolio.

Table 40: overview of ROM activities

|| Nb of Projects & Programmes monitored || ENPI || Africa || Caribbean || Pacific || Asia & Central Asia || Latin America || CMTP || Total 2012

Ongoing || National projects || 281 || 362 || 53 || 52 || 179 || 115 || 5 || 1047

Regional programmes (as a whole) || 136 || 46 || 10 || 14 || 23 || 36 || 42 || 307

Regional programme components || 60 || 57 || 11 || 18 || 27 || 3 || 68 || 244

SPSP || - || 7 || 5 || 1 || - || 4 || || 17

Million EUR covered Ongoing || 1.328,24 || 2.325,27 || 465,49 || 234,35 || 688,42 || 814,54 || 477,18 || 6.333,49

Ex-Post || National projects || 42 || 67 || 9 || 4 || 32 || 38 || - || 192

Regional programmes (as a whole) || 3 || - || - || - || 2 || 6 || 1 || 12

Regional programme components || 3 || - || - || - || 6 || - || 3 || 12

Million EUR covered Ex-Post || 160,22 || 268,45 || 149,11 || 54,41 || 205,42 || 134,35 || 1,20 || 973,16

Table 41: overall performance of ongoing
national projects by category

Of the projects subject to a ROM assessment,
a large majority was considered "very good" or "good". Over
the last three years the percentage of such projects has remained constant -
that is to say between 73% and 75% - while projects facing major difficulties
count for only 5% to 8%. The figures for 2012 show a decrease in projects
falling under category IV from 8% to 5%.

Table 42: Performance by evaluation
criteria: "very good" and "good" ratings for ongoing
national projects

The performance of projects assessed by ROM
in 2012 shows best results for the relevance and potential impact criteria.
However, it should be stressed that under the relevance criterion, ROM takes
into consideration two specific dimensions: relevance and quality of design. If
relevance scores very highly (96% of "good" and "very good"),
design scores lower (72.5% of "good" and "very good"). This
confirms the continued importance of the Commission's ex-ante quality
assessment, the Office Quality Support Groups (oQSG) system.

Table 43: project performance by for
selected ODA (sub-) sectors

|| Performance category of ongoing (national) projects by sector || Very good performance || Good performance || Performing with problems || Not performing or major difficulties || N° reports produced || Million EUR covered

|| || I || II || III || IV || ||

Social infrastructure and services || 110 - Education || 3,0% || 74,2% || 16,7% || 6,0% || 66 || 225,99

120 - Health || 1,6% || 84,4% || 12,5% || 1,6% || 64 || 165,24

130 - Population policies/programmes and reproductive health || 0,0% || 92,3% || 7,7% || 0,0% || 26 || 41,35

140 - Water and sanitation || 4,2% || 68,1% || 25,0% || 2,8% || 72 || 221,94

150 - Government and civil society || 3,4% || 70,1% || 20,9% || 5,6% || 355 || 824,02

160 - Other social infrastructure and services || 2,0% || 83,7% || 12,2% || 2,0% || 49 || 126,71

|| Economic infrastructure and services || 1,8% || 72,3% || 14,3% || 11,6% || 112 || 1.348,70

|| Production sectors || 4,8% || 67,8% || 23,3% || 4,1% || 146 || 461,50

|| Multisector - Cross-cutting || 1,2% || 69,4% || 23,5% || 5,9% || 85 || 609,05

|| Commodity aid and general programme assistance || 0,0% || 67,4% || 28,3% || 4,3% || 46 || 130,01

New developments in 2012

Internal monitoring

In 2012, the Commission worked on improving
tools and instructions for operational monitoring by its staff in Delegations
and headquarters. The objective is to harmonise the different local solutions
used to date, strengthen the operational manager's role as informed
interlocutor of implementing partners and partner government officials, as well
as improving progress and performance reporting. A toolkit has been developed
which will be tested in 2013. It will be a first step towards the development
of an online IT tool for operational management during project and programme
implementation.

Twice a year, part of the External
Assistance Monitoring Report (EAMR) reporting system requires operational
managers to assess the performance of the projects/programmes they are responsible
for by means of a "traffic light" system. This serves as an early
warning system with which to identify projects with problems and to apply corrective
measures.

Improving ROM and project evaluations

During project/programme implementation, the
Commission uses two different tools to assess performance and identify
potential for improvement: the ROM system with its brief, highly structured
format managed centrally by headquarters and more in-depth evaluations managed
mostly by the Delegations. Building on the strengthened monitoring system of
operational staff, the Commission is currently reviewing options to improve
coordination between the two external performance assessment tools. ROM reviews
are to be applied in such a way as to allow for the aggregation of performance
data for accountability and learning purposes, and to feed into a new result
reporting framework (see below).

A new IT tool to manage, store and
analyse ROM and project evaluations

The Commission has developed an IT
application for both project/programme evaluations and ROM to: facilitate
planning and coordination; support the management of evaluations; serve as a
central storage point for all reports and to enable advanced search and
analysis functionalities. This application will be part of a wider new
information management system (PCM platform), which will serve as the central
tool for operational management of Commission interventions throughout their
lifecycle. The IT development is ongoing, with a pilot testing expected in
2013.

Towards a results measurement framework

In the "Agenda for Change"
communication, the Commission stated its commitment to developing a common EU
framework for measuring and communicating results. As a consequence, it set up
an EU-wide Expert Group on Results to share experiences and reflect on common
approaches in the measuring and reporting of results. The group has now met
three times and it is obvious that there is increasing interest from several
Member States. In order to support this process, the Commission launched a
study drawing together lessons from other development actors (e.g. development
banks and bi-lateral donors) already in the process of implementing results
frameworks. Findings from the study will be shared with the Member States to
promote a common approach and feed into the proposal for building an EU results
framework in 2013.

4.1.2. 
Evaluation:
review of the 2012 work programme
Overview

In this area of work, the Commission (specifically the EuropeAid
evaluation unit) manages three main types of strategic evaluation: geographic (at
country and regional level), thematic and sector programmes, as well as aid
delivery mechanisms (issues on project-level evaluations are dealt with in the section
on project results). Evaluations are carried out by independent external
consultants following a standardised methodology in a transparent manner. All
evaluation reports and the responses to their recommendations are made public[75].

The 2012 work
programme

In 2012, ten geographic evaluations were completed: Colombia,
Djibouti, Ecuador, Ethiopia, Honduras, Jamaica, the Republic of Congo, the Caribbean
Region, Nepal, and Zambia. Five were launched (Asia, Cameroon, Democratic
Republic of Congo, Kenya, and Pacific) and two were ongoing: Burundi (joint
evaluation), and European Neighbourhood Regions (East and South). Evaluations
on budget support were launched in Morocco, South Africa and Tanzania.

In addition, four thematic evaluations were completed on health,
decentralisation, agricultural commodities and human rights. At the end of
2012, three were ongoing, namely: integrated border management, private sector
development, and trade-related assistance.

Evaluations were completed on visibility and cooperation with the
Council of Europe (CoE) and four in-country seminars were organised to discuss
the results in Nepal, the Republic of Congo, Ecuador and Jamaica. A seminar on
cooperation with the CoE took place in Strasbourg, while six were held in
Brussels on the themes of justice and security sector reform, human rights, decentralisation,
agricultural commodities, health, and the Caribbean region

Methodology development

Capacity development

The evaluation unit completed a results-oriented methodology to
evaluate capacity development support. It will considerably strengthen the
evidence base on the results of capacity development interventions, and enable
project managers to better focus and adapt EU support to capacity development
in partner countries.

Budget support

The OECD/DAC working group, led by the Commission, finalised the guidelines
on the methodological approach of budget support evaluations, which are now published
on the OECD/DAC website[76].
All evaluations of BS should now follow the agreed methodological approach.

Summary of
evaluations
Geographical
evaluations

Caribbean region (2003-10): The EU
strategy was relevant and made good use of the increased resources channelled
to the region - critical for the EPA negotiations and a model for donor
coordination. However, results in other sectors could be improved with more
suitable aid modalities, a better selection of implementing partners, more
effective complementarity between regional and national programmes and by
strengthening the Delegation in charge of the regional programme.

Colombia (2002-2011): The EU cooperation
strategy focused on peace building and was coherent with the Colombian policies
by contributing to address the root causes for conflict. Sustainability remains
an issue to be tackled in the future; EU support to transition from relief to
rehabilitation did not sufficiently succeed to link the long term objective of
development to these medium term objectives. The EU succeeded in setting up a
good basis on trade and competitiveness and environmental sustainability.

Djibouti (1996-2012): A sectoral
approach to national/regional development was impossible due to a lack of prioritisation
in the government's policies. Cooperation was limited to a series of
interventions not part of a strategic vision. The Commission did not address
governance or the strengthening of civil society, nor did it establish itself
as a strategic partner to government or civil society. However, the recent
establishment of an EU Delegation in Djibouti may improve cooperation.

Ecuador (2003-10): EU cooperation was
well aligned to the government's priorities and the population's needs. This
was particularly the case in the health and education sectors which led to
positive results and ensured sustainability. The non-financial input in the
context of budget support improved alignment to national policies and
established dialogue with the government. It also led to the adoption of
national systems for the design, managing, monitoring and reporting of
programmes. Coherence was good at the strategic level, but limited in
implementation.

Ethiopia (2002-09): EU support was
relevant to the country's needs. The alignment with the government's policies
and programmes through budget support was particularly effective in fighting
poverty, strengthening ownership and ensuring sustainability. However,
cooperation had less impact on democratic governance and related capacity
building. Compared to agricultural development, support for food security was
too dominant. Programmes were too ambitious and ignored the limitations of
specific instruments and, in particular, the Delegation's staff capacity.

Honduras (2002-09): The EU strategy had
positive results, though implementation was difficult. The programme was
initially aligned to the government’s policies. However, these changed over
time which undermined implementation and the sustainability of some actions.
Cooperation was suspended following the political crisis of 2009. In order to
ensure results and to offset weaknesses in capacity, continued support through
technical assistance and increasing the involvement of civil society is
necessary.

Jamaica (2002-09): The EU strategy in
Jamaica was positive, particularly with the most recent interventions. EU
support has proved to be more effective when focussed on high priority needs
and using budget support. Support for the security and justice sector was
appropriate and the evaluation recommends drawing on additional sources of
expertise and instruments, such as those used in EU Neighbourhood countries.
The use of process indicators for budget support worked well and helped to
catalyse actions by government stakeholders. The Delegation used technical assistance
to effectively support budget support operations.

Nepal (2002-10): The Commission helped
to keep the poverty reduction strategy on track, but the direct contribution to
increasing production, employment and income remained limited. The mix of
instruments and aid modalities was good. Synergies with other development partners
and donor coordination were rather good in some areas, such as budget support
in education but limited in others (for example social
inclusion, democracy and the rule of law). The role of
the Commission in sector policy dialogue, particularly in the areas of trade, the
rule of law and democracy was modest, reflecting the size of its support.

Republic of Congo (2000-09): The EU has
succeeded in adapting its cooperation strategy to a changing context. It has
made a significant contribution to restoring peace and preventing the outbreak
of new conflicts. However, even though aid priorities were relevant and support
led to important reforms, impact was low because these reforms were not effectively
implemented. The structural weaknesses in the Republic of Congo's aid
management also significantly reduced impact. While the participation of
non-state actors in public policies increased, the Commission's interventions fell
far short of the desired results.

Zambia (2001-10): EU support to Zambia
was well-focused on the needs of the population, especially in the initial part
of the evaluation period. The EDF10 response strategy underestimated the speed at
which the macro-economic situation would evolve in Zambia. EU contribution to dialogue
on PFM issues was a driver of reforms in this area. However, the administrative
arrangements for PFM provided only limited regulatory autonomy. The EU should
adjust its strategy in response to the decrease in the leverage of its
financial inputs and focus a “Good Governance and Development Contract” on
accountability, democratic and economic governance, and performance monitoring.

Thematic and
sector evaluations

EU support to decentralisation processes (2000-09): The EU has responded to demand from partner countries and local
authorities by increasing direct support to decentralisation from less than EUR
20 million to more than EUR 120 million over the period 2000-09. EU support was
most effective in the early stages of reform and less so in more mature, decentralised
contexts. It helped to significantly strengthen local governments' management
and administrative capacities, to promote greater transparency in funding
allocations from central to local level and to improve access to service
delivery. However, substantial challenges remain such as addressing central
government through effective policy dialogue, raising the participation of
civil society and improving the quality of service delivery. Continued support
is important in poor and fragile contexts.

EU support to agricultural commodities in ACP countries (2000-09): The Commission strategy was implemented at international level but
did not affect local and bilateral operations. The establishment of a
functional EU/Africa Partnership on cotton has been a success. On the ground,
coordination remained a challenge and restricted the learning process.
Availability of information and lesson learning has been relatively poor. Procedural
rigidity was made up for by the flexibility of the Stabex instrument (Stabilisation of Export Earnings). The impact
on competitiveness was most significant when support was substantial; isolated
interventions brought only temporary benefits. Exit strategies were rarely
considered which hampered long-term effectiveness.

EU support to the health sector (2001-10): EU support was coherent with development policy and
well-focused on poverty reduction. However, the Commission should define a
global strategy for health cooperation that can be operationalised at the field
level in conformity with national sector development plans. Health strategies
have tended to focus on the present, not on the longer term. While interventions
have been generally effective, in several areas, such as health finance reform
and human resources, results were modest compared to the scope of the
challenges.

EU support for the respect of human rights and fundamental freedoms
(2000-10): In many countries, the Commission has
made valuable contributions to the promotion of the human rights agenda at
various levels through the use of funding and non-funding instruments. However,
insufficient political commitment to an effective and coherent human rights policy
was noted, as well as a lack of related knowledge,
capacities and incentives. As a consequence, the political status of
human rights in EU external action should be upgraded so as to ensure coherent
action and increase impact.

Aid
modalities evaluations

Visibility of the European Commission's external action (2005-10): The perception of the EU's external action has generally been in line
with pre-Lisbon official priorities. Actual communication activities based on
clear political strategies are reasonably good, though lacking in clear
leadership and coordination. While working in partnership with others is
essential, this involves a trade-off in terms of EU visibility and coordination
between partners. The resources for promoting EU external action visibility
have been adequate. The current image of the EU external action should be
strengthened by delivering clear messages, communicating on results and
avoiding raising unrealistic expectations.

Cooperation with the Council of Europe (CoE) 2000-10: Political and strategic relations between the EU and CoE improved
over time. The CoE's comparative advantage is its expertise in the sectors of the
rule of law, human rights and democracy, its legal and moral authority and its
unique combination of roles. Regarding the rule of law, specific and targeted
support has enabled the transposition of conventions into national legislation
and facilitated the building of the capacity to implement requirements. The CoE
shows weaknesses as an implementing agency, but its recent large-scale
institutional reform addresses many of them. The CoE should be encouraged to
align assistance with international best practice and to strengthen strategic
joint priority setting at country level.

Outlook for 2013

The rolling evaluation work programme 2012-14 was approved by the
Commissioner in charge in November 2012. The following evaluations are
scheduled to be launched before the end of 2013:

· 
Geographic evaluations in Haiti, Jordan,
Madagascar, Palestine, Timor-Leste, Togo, Yemen and Central America.

· 
Budget support evaluations in Lao PDR and
Mozambique.

· 
Thematic evaluations on the environment and
climate change, research and development, water and sanitation, food security
and gender.

4.1.3. 
Lessons learned

The "fiches contradictoires": a key tool to ensure the
follow-up of evaluation recommendations.

The "fiche contradictoire" is a document which follows up
on evaluation recommendations and is prepared by the services in charge of
implementing them. It sets out, in tabular form, the main recommendations of an
evaluation, the response of the services and actions to be taken the follow-up
of these actions one year later. Every "fiche contradictoire" is
available[77].

Synthesis of main lessons learned in 2012

· 
In terms of relevance at the strategic
level, EU interventions address the needs of partner countries and population.
However, they should stay flexible enough to be able to anticipate changing
contexts and adjust to them. In fragile states, the EU should focus more on
development and good governance.

· 
An appropriate mix of aid modalities
enhances efficiency at the strategic level. This is more important in fragile
contexts where aid instruments need to be particularly flexible.

· 
Budget support has proven to be an effective
tool to help improve public financial management and other reforms, but it
cannot "buy" reforms. It can enhance alignment and support to
institutions with the help of non-financial inputs such as policy dialogue.

· 
The generally positive impact on poverty
reduction can be further enhanced through better coordination with donors, improved
links between regional and national programming and further synergies between
different sectors.

· 
EU projects and programmes would benefit from an
improved and more structured monitoring system. The EU should also encourage
other donor partners to improve their own monitoring systems.

· 
Non-financial inputs are key factors of success,
notably concerning budget support. A more inclusive and effective policy
dialogue should be developed. Civil society organisations can act as a catalyst
to improve the relevance of EU strategies and in holding governments
accountable.

· 
In order to improve coordination and the
management of programmes and to better anticipate long term trends, EU Delegations
need to further develop their own technical and sectoral capacity and
expertise.

4.2. 
Aid delivery modalities
4.2.1. 
Developments in
aid delivery modalities and channels

Programme and project cycle management

The design and implementation of
cooperation programmes follows a well-established cycle. As a consequence of the
Agenda for Change's calls for increased concentration on a limited number of focal
sectors, the "project management" methodologies are now being
improved (for example, by strengthening the analysis of country and sector
context).

Development of new elements of the
methodology takes place through research and testing involving EU Delegations
and, in some cases, EU Member States. In 2012, such a participatory process was
organised with EU Delegations on the revised programme and project cycle
management guidance. Case studies on political economy analysis were also
implemented in 2012 in partner countries such as Cameroon, Lao PDR, Mozambique,
Senegal and the Republic of Guinea.

Capacity development as a key objective
across aid modalities

Delivering sustainable results and
increasing the impact of EU development policy is only possible if there is
effective capacity in partner countries.

In 2011, at
the High Level Meeting on Aid Effectiveness in Busan[78], partner countries
promoted a more open approach to capacity development stating that there should
be a wider process of supporting partner institutions to achieve change and
reform.

Similarly,
the Agenda for Change states that one of its priorities is to increase the
impact of EU policy. This will only be possible if there is capacity in the
partner countries.

In 2012, two main areas of work were
consolidated:

Implementation of technical cooperation
reform for capacity development:

The Backbone Strategy on the Technical
Cooperation Reform translated the aid effectiveness agenda into operational
principles. The year 2012 saw the consolidation and promotion of capacity development principles in all aid
modalities, not only in technical assistance and training activities.

Different quality assessment tools were
consolidated throughout 2012 in order to internally assess and monitor capacity development at different stages of the
project cycle. The 2012 analysis shows that diverse aid modalities, such as
working through local NGOs, can result in good results in terms of quality.

Knowledge sharing for Capacity
Development:

The knowledge sharing platform
capacity4dev.eu began in 2009 as a direct result of the Backbone Strategy on
the Technical Cooperation Reform. Since then, it has continuously evolved to
become the Commission’s knowledge sharing platform in this specific area,
covering all development topics and facilitating knowledge sharing between the Commission
(in this case, specifically EuropeAid) and EU Delegations, as well as with
other related actors. In 2012 the platform saw a 40 % growth, with approximately
2 500 new members joining the community.

Through this tool the EU is consolidating
and capitalising on the knowledge generated within its network in order to
enhance the quality and impact of its development cooperation.

4.2.2. 
Budget support

The 2011 communication
"The Future Approach to EU Budget Support to Third Countries"[79], was endorsed by the
Foreign Affairs Council on 14 May 2012 and has since been translated into practice. Revised
guidelines on budget support were approved and, after being gradually phased-in,
will be fully implemented from 1 January 2013. The new policy provides a stronger link with the fundamental values of human rights, democracy
and the rule of law, a stronger focus on accountability and transparency and a greater
emphasis on results, performance and ownership.

A risk-management
framework has been set up and will be applied to all new budget support contracts
and disbursements. Among other things, it aims at:

· 
identifying the
specific risks linked to the provision of budget support.

· 
identifying mitigating
measures.

· 
identifying frameworks
with which to react to a sudden deterioration in a partner country.

The governance of budget support has
been improved through the creation of the Budget Support Steering Committee
(BSSC) made up of senior management from responsible Commission services and
the EEAS. The objectives of the BSSC are to:

· strengthen continuous political/policy steering
at senior management and Commissioner level,

· ensure policy coherence across countries and
regions,

· reinforce risk management and mitigation
mechanisms.

The BSSC met 12 times in 2012 and
examined 40 cases for decision and 40 cases for information.

During the transition period, the
first State Building Contracts (Sierra Leone, Burundi, Tunisia and Ivory Coast)
as well as Good Governance and Development Contracts (Malawi, Cape Verde,
Lesotho etc.) were approved.

Good
Governance and Development Contract (GGDC) for Malawi

In November
2012, the EU approved a EUR 98 million Good Governance and Development Contract
(GGDC) for Malawi. It is one of the key instruments of the EU’s new budget
support policy. It will support the Malawian government’s macroeconomic reform
programme whilst providing a platform for dialogue on key development
priorities, reform of Public Financial Management (PFM) and wider political
developments.

The GGDC was drawn up in the wake of the
country’s political transition which saw the inauguration of President Joyce
Banda in April 2012. The new administration swiftly moved to restore
macro-economic stability and began to unwind the restrictive governance
measures of recent years. It also took decisive steps to re-establish political
freedoms and enhance the poverty focus of the budget. The IMF quickly responded
with the approval of a new support programme in July 2012.

State Building Contract
signed with Sierra Leone

The EU prepared, for signature
in January 2013, a State Building Contract with Sierra Leone under which the
government gives commitments to improve the delivery of basic services and
reforms in Public Financial Management (PFM).

The programme was drawn up in
collaboration with two other donors, the United Kingdom and the World Bank.

Sierra Leone is one of the pilot
countries for the international community’s "New Deal for Engagement in
Fragile States". The country is in a fragile situation; with acute
weaknesses particularly with regard to the delivery of basic services and the
raising of revenue to ensure macroeconomic stability.

A State Building Contract for
Burundi

The EU signed a State Building
Contract with Burundi in December. The country is exiting a protracted period
of civil war and crises. It is presently in a relatively long period of
stability, but remains fragile. Vulnerable to internal shocks, an increase in
fuel and food prices in 2012 pushed inflation up to 18.4%, compared to a rate
of 9.7% in 2011.

Budget
support is a crucial element for macro-economic stabilisation and the
maintenance of social services. Burundi is an aid orphan, receiving budget
support from only the WB, ADB, the EU and the IMF. The EU budget support
programme was drawn up in coordination with the WB and ADB.

Budget support commitments

The year 2012 witnessed a clear increase in
commitments, with a total of nearly EUR 2.4 billion, representing an increase
of 90 % compared to 2011 (EUR 1.25 billion).

General Budget Support (GBS), Good
Governance and Development contracts (GGDCs) and State Building Contracts (SBCs)
were nearly four times (EUR 815 million) that of the exceptionally low level of
2011 (EUR 205 million).

Sector Budget Support (SBS) and Sector
Reform Contracts (SRC) increased by 50 % to EUR 1.56 billion in 2012, compared
to EUR 1 billion in 2011.

There is a strong concentration of GBS in Sub-Saharan
Africa which covers 80 % of the commitments. SBS commitments are more
evenly spread in Neighbourhood countries (42 %), Sub-Saharan Africa
(24 %) and Asian countries (14 %). The remaining regions share the
remaining 20 %.

Payments were kept at nearly the same level
as in 2011. In total EUR 783 million for GBS
and EUR 919 million for SBS respectively.

Results

Short and medium-term
results, in the form of outputs, outcomes and process indicators, were systematically
analysed in each of the 141 disbursement files positively assessed in 2012. The
country evaluations (for further information see chapter 4 part 1.2) for the
same year also show positive results. In Ecuador, for example, the non-financial input (policy dialogue, the participation of the civil
society and technical assistance) improved alignment to national policies and
established dialogue with the government. In Jamaica,
the evaluation has confirmed that the use of budget support process indicators
helped to catalyse government stakeholder action, while in Zambia the EU's contribution to dialogue on public financial
management issues is held to have been a driver of reforms.

Public finance and public finance
management (PFM)

Strengthening public finance management
(PFM) systems and capacities remains a key area of cooperation. In 2012, over 80
capacity building projects were in progress in close cooperation with key
partners such as the International Monetary Fund (IFM). In addition, 22
assessments of the performance of PFM systems using the Public Expenditure and
Financial Accountability (PEFA) methodology took place under the Commission's
lead. The Commission also supported the development of specific tools to assess
tax administrations and, through the International Organisation of Supreme
Audit Institutions (INTOSAI), measure the capacities of State Audit
Institutions.

Concerning domestic revenue mobilisation,
capacity building on transfer pricing matters was further strengthened through
a tripartite initiative with the World Bank and the OECD, notably in Ghana,
Vietnam, Kenya, Honduras and Colombia.

Seminars on transfer pricing, as well as
on exchange of information and indirect taxation were organised with the
African Tax Administration Forum (ATAF), while assessments of tax burden and
electronic invoicing were promoted, among others, through the Inter American
Centre of Tax Administrations (CIAT).

The Commission also cooperated with the
UN in the preparation of a Practical Manual on Transfer Pricing. In addition,
the Commission continues to support the Extractive Industries Transparency
Initiative (EITI), both financially and politically, in order to strengthen
transparency in the extractive sector (see chapter 4 part 4.2).

4.2.3. 
Blending of
grants and loans/innovative financing

Using EU grants strategically via blending

The Commission is increasingly using blending as an instrument
with which to deliver development aid to partner countries. The blending
mechanisms combine EU grants with additional non-grant resources for important
investments in EU partner countries. By using grants strategically, via
blending, substantial additional public and private financing can be unlocked
which can be used to support EU development policy objectives.

Since 2007, the Commission, together with the Member
States, has set up seven EU regional blending facilities:

· 
the EU-Africa Infrastructure Trust Fund (ITF)

· 
the Neighbourhood Investment Facility (NIF)

· 
the Latin America Investment Facility (LAIF)

· 
the Investment Facility for Central Asia (IFCA)

· 
the Asian Investment Facility (AIF)

· 
the Caribbean Investment Facility (CIF)

· 
the Investment Facility for the Pacific (IFP).

With the establishment of the facilities for Asia, the
Caribbean and the Pacific in 2012, the EU is now equipped to make use of
blending in all regions of its external cooperation.

In the last six years, 150 blended projects have been
financed from EUR 1.2 billion in grants from the EU budget, the EDF and Member
States. The EU grant contributions to individual projects have leveraged
approximately EUR 14 billion of loans from eligible finance institutions,
unlocking project financing of at least EUR 32 billion, in line with EU policy
objectives. The volume of blending has greatly increased in recent years. In
2012 alone, EU grant contributions of more than EUR 400 million facilitated
investment projects in beneficiary countries with a total project volume of
approximately EUR 10 billion.

The basic idea behind blending is to make strategic use
of grants in order to make investments with a high economic and social return
financially viable. At the project level, grant and non-grant resources such as
loans and equity are "blended" to create the right financing-mix for the
specific project. The grant element can bridge
financing gaps in investment projects or make them more effective and
sustainable.

The composition of projects supported through the EU
regional blending facilities differs from project to project, but always
contains EU grant contributions and loans from European Public Finance
Institutions. In addition, grants from other donors, loans from regional development
banks, the beneficiary’s own resources as well as private financing can be included
in the financing mix. In the same way, the grant to non-grant ratio – the "leverage"
– varies: For example, in large renewable energy projects involving many actors
the ratio may be above 10:1, whereas in social sector projects it may be only
3:1.

The EU regional blending facilities support a wide range
of sectors such as transport, energy, water, support to SMEs, ICT and the
social sector. The facilities also have several different financial tools available
through which the grant element can be delivered: direct investment grants and
interest rate subsidies, which decrease the investment cost for the beneficiary;
technical assistance can accelerate projects and improve quality, efficiency and
sustainability; risk capital aims to "crowd in" additional private
and public financing for development, and guarantee mechanisms and insurance
premiums financing aim to unlock market financing for development that is held
back by the perception of high risk.

A further added value of the EU regional blending
facilities is the increase in cooperation and coordination among donors and
public finance institutions which are encouraged to work together to identify,
prepare and finance projects. Lead financiers are usually assigned to present
the projects and to coordinate work with the other finance institutions and the
partner countries. This practice has led to lower transaction costs, increased harmonisation
and greater efficiency.

In December 2012, a new EU Platform for Blending in
External Cooperation was launched to further increase the effectiveness of aid
delivered by the European Union through blending by providing recommendations
and guidance. Led by the Commission, the platform includes representatives from
Member States, the European Parliament, the EEASs and finance institutions. Standardising
approaches and scaling up activities with partners provides the potential to
reduce transaction costs and further improve the positive impacts. The platform
will act as a major forum on which to build on the successes to date.

4.3. 
Progress in aid management 
4.3.1. 
Progress on
qualitative issues in aid management

Staff development: training and
knowledge sharing

Continuous development and updating of
knowledge and expertise of its staff is a high priority for the Commission. It
provides a wide-ranging learning programme on its core business and new
approaches in development cooperation policies, with 615 training courses
organised by EuropeAid in 2012, corresponding to 15545 training days. It also
organises workshops to discuss lessons learned and other knowledge sharing
activities including discussion forums and communities of practice.

The Commission also offers a wide range of
online courses that gives its staff in Delegations the same access to relevant training.

The Commission seeks synergy effects and
enhanced quality in learning through its cooperation with other donors in the
"learn4dev" donor competence development network acting as part of
the network's steering committee. Major bilateral and multilateral donors work
together, harmonising learning approaches with the final aim of speaking with
one voice and thus enhancing efficiency of development cooperation. The network
also serves as a knowledge sharing platform, providing mutually access to
learning possibilities, avoiding duplicating of existing offers and thus ensuring
efficiency gains.

Methodological work and training

Developing the skills and capacities of key
actors involved in the design and implementation of EU-funded programmes is
essential to improve quality, impact and sustainability. The Commission is
investing in capacity building for its staff and other stakeholders through
methodological work and training.

In 2012, particular attention was paid to
updating project and programme cycle management (PPCM) guidance. Other areas
were also targeted such as civil society, the environment and climate change,
fragility and blending.

Training events on the design and
implementation of EU assistance were also held with a view to improving context
analysis, dialogue with partners and to guide the choice of the appropriate aid
modalities so as to better achieve results and capacity development. In 2012,
75 methodological courses were held benefiting over 1 300 participants.

Quality of design

The quality of design of aid intervention
is also assured by an internal peer review mechanism – the "quality
support groups" (QSG). Each new action is scrutinised by a QSG in the
initial phase of identification to ensure that the problem to be addressed is correctly
identified and that the approach and aid modality proposed are the most
appropriate for it. Similarly, at the end of the design phase, another peer
review assesses the quality of the proposed intervention.

The Commission continued work on a new IT
architecture called the project cycle management platform (PCM Platform) that
should facilitate accessibility to project data and workflows, as well as lead
to better use of human resources working on development and cooperation.

4.3.2. 
Simplification
of procedures

A revision of the Practical Guide to
contractual procedures for external actions (PRAG) entered into force on 20
January. The changes related mostly to re-designing the procedure for selecting
experts under service contracts and also include a wider use of global-price contracts. Another
major revision was undertaken throughout the year to simplify contractual
procedures in line with the revision of the Financial Regulation and the
outcome of a wide-scale consultation of relevant stakeholders.

This major revision will take effect at the
start of 2013 and includes among other simplifications raising the thresholds
for procurement procedures and pre-financing guarantees, harmonising all
general conditions of contracts, introducing the possibility for tenderers to
propose variants and allowing them more freedom to define their methodology.

As regards grants, the main features are
introducing lump sums, relaxing the rules on sub-contracting and sub-granting,
allowing beneficiaries to use interests produced by pre-financing and to
reshuffle the budget more freely, all of which is contributing to simplified
financial management and a better focus on results.

Looking forward, one major element of
simplification reflected in the proposals for external financial instruments
under the 2014-20 Multiannual Financial Framework (MFF) is that national
development strategies will replace those drafted by the EU institutions,
provided they comply with certain requirements. Programming will start in all
countries by assessing whether the national strategy can be the basis for aid
programming. Through this approach, synchronisation with the partner country's
budgetary cycle will become easier. The introduction of unallocated funds is
intended to bring more flexibility to programming by providing the financial
resources to adopt amendments if needed. The Commission has also proposed
simplified rules for the adoption of programming documents, notably concerning
non-substantial amendments and the adoption/amendment of programming documents
in justified cases of urgency. The negotiation of the future Common
Implementing Regulation progressed steadily, with the Commission’s proposals on
untying of aid and eligibility of taxes meeting wide support.

A major novelty in the revision of the
Financial Regulation is the introduction of EU Trust Funds, which will allow
the Commission to create and manage trust funds, either thematic or in response
to crises, to which other donors can contribute. These will allow providing a
truly European response to major world challenges, using procedures specifically
designed for fast and effective action.

4.4. 
Communication & transparency
4.4.1. 
Communication
and visibility

Communication

EU development and external
assistance policies produce
great achievements in partner countries, helping people out of poverty and
creating lasting change for the better. As an investment in the future it also
benefits Europeans by creating trade and growth or improving global security. Communicating and illustrating this effectively
to a global audience is key if the EU wants to maintain support for policies
and funding. A survey carried
out in June 2012 showed that even in times of economic crisis, a large majority
of EU citizens believe that Europe should continue to assist developing
countries[80].
This represents overwhelming
support for cooperation which, however, cannot be taken for granted. The EU
uses a wide range of communication tools to demonstrate to European citizens
that its work adds value and improves the lives of people all over the world.

In 2012, a number of events on the future of
development were held and included the 'EU Sustainable
Energy for All' (SE4ALL) Summit in April[81] and the European Development
Days in October. The debates at the SE4ALL Summit brought together high-level
participants, including UN Secretary General Ban Ki-moon, and helped prepare the way for the EU's
contribution to the UN SE4ALL initiative. The
European Development Days[82]
were held under the theme 'Sustainable and Inclusive Growth for Human Development'
and attracted 5 700
participants.

Conferences, visits and debates at the External Cooperation Info
Point of EuropeAid attracted more than 7 000 visitors. In 2012 the Kapuscinski
Development Lectures[83]
which are co-organised by the Commission and the UNDP covered new emerging donors, the MDGs, economic integration in Asia,
and innovations in development. The lectures, given by
top global development thinkers gave students a
platform to discuss these topics.

In addition to press releases on major policy initiatives and
responses to global events[84]
published throughout the year, media work included tailored seminars and journalist
briefings in Brussels and partner countries such as Myanmar/Burma, Jordan,
Kenya and Tunisia. Numerous articles as well as radio and TV broadcasts
resulted from these briefings, including by leading media such as the BBC, Le
Monde, The Guardian and Deutsche Welle, among many others. The Commission (EuropeAid)
website is the key entry point for the general public and stakeholders alike
who look for information in this area, with more than
100 000 people using it every month.

Case studies show the impact of projects and programmes on the
ground. A more user-friendly version of the online case study library[85] will be made available in 2013
and better integrated into the website. A series of videos on aid effectiveness[86] was also produced, along with
a short animated film on the Agenda for Change[87].
Complementing the present report, a number of other publications[88] reported on specific areas of
development and external assistance policy.

The Commission's social media presence increased significantly
during 2012, including with the implementation of a social media strategy. This
included the setting up of a page on Facebook[89]
and increased the use of Twitter[90].
It also continued publishing videos through the 'EU in the World' portal on
YouTube[91]
thus increasing the coverage of events organised by EU Delegations.

4.4.2. 
Transparency

The Busan Partnership for Effective
Development Cooperation stressed once again the importance of the transparency of
development results, with the EU and its Member States announcing the EU
Transparency Guarantee. This commits EU donors to
disclosing all information on aid programmes to ensure that it is more easily
accessed, shared and published. Furthermore, implementing
the common standard for publishing aid information is an important part of the
Busan follow-up and will substantially contribute to reaching the aims of the Transparency
Guarantee. It comprises the existing OECD aid reporting systems and the
International Aid Transparency Initiative (IATI). The Commission completed the
second phase of its IATI implementation in 2012 on schedule.

The Commission/EuropeAid was ranked as the
fifth most transparent donor in the world in the 2012 Aid Transparency Index, showing
that determination brings results. The Commission progressively implements the
common standard, shares its experience and cooperates with the EU Member States
to improve aid transparency across Europe.

In 2012, the Commission also issued a new
version of the EU Donor Atlas, which provides a detailed mapping of aid by the
EU and its Member States in a user-friendly format[92].

5. 
Chapter 5 Financial annex

5.1. 
Introduction to financial tables

This Annual Report provides an overview of policies, objectives and
achievements in 2012. The tables and graphs which follow present the main data
on EU development assistance in 2012 by country, region, or sector and per
source of funding, such as the different instruments of EU external assistance.

The geographic cooperation with the ACP countries, is based on the
Partnership Agreement with the ACP signatory states and is mainly financed,
South Africa excepted, from the European Development Fund which is separate
from the EU budget. External assistance for other geographic areas and the
thematic programmes with worldwide coverage are financed from the general EU
budget.

Data for 2012 again show improved overall Official Development
Assistance (ODA) levels. Figure 5.1 shows the
importance of external assistance in the overall expenditure of the European
Commission. Defined as the resources used to foster programmes and projects
outside the EU, external assistance accounted for 9% of the total allocation in
2012 (general EU budget and EDF taken together).

A global overview of the share of resources is given in Figure
5.2. A detailed breakdown of the budget by policy areas can be found in Table
5.3. A similar breakdown for the EDF is presented in Table 5.4.

The concept of ODA used throughout the tables and figures is that
defined by the OECD’s Development Assistance Committee (DAC). Not all EU
external assistance can be reported as ODA. Whether an action, programme or
project is classified as ODA or not depends on the recipient country and the
purpose and content of the aid. Figure 5.5 shows the share
of the EU's external assistance classified as ODA. In all, 94% of EU aid
committed in 2012 is considered reportable as ODA, indicating an increased
focus on development in external financial allocations.

Figures 5.6
and 5.7 show the
evolution from 2004 to 2012 of external assistance and ODA. Figure 5.6 shows
the commitments evolution of the main sources of funding: external assistance
from the EU Budget and EDF, indicating the share managed by EuropeAid. Figure
5.7 shows the disbursements evolution of the sector breakdown of ODA.

Figure 5.8
and Table 5.9 present the
breakdown per region. For this breakdown, it is necessary to differentiate
between bilateral and multilateral aid. Bilateral aid, as defined by the DAC,
is direct cooperation by the Commission with a country (or region) where the
Commission controls the activities and knows how, when and where the resources
are being spent. Multilateral aid comprises direct contributions to the core
funding of multilateral agencies, who report back to the Commission at a later
stage on how the money was spent.

Figure 5.8
provides a breakdown of EU ODA per region. Africa
tops the list (37% of ODA) with, Sub-Saharan Africa receiving 31% of total ODA
in 2012. A more detailed breakdown, per country and region, in line with the
OECD/DAC recipient list, is presented in Table 5.10 (Commitments) and
Table 5.11 (Disbursements).

Leaving aside regional programmes, the top ten ODA recipient
countries in 2012 (disbursements) were Turkey, Palestine, Afghanistan,
Ethiopia, Serbia, Democratic Republic of Congo, Niger, Kosovo[93] , Sudan and Pakistan.

Figure 5.12 focuses on ODA recipients
classified under the four UN/OECD categories based on GNI. The table monitors
disbursements in 2012 by DAC recipient and by main OECD sectors. One indicator
shows ODA disbursement per capita.

It is also important to identify the main sectors of activities that
receive support. Table 5.13 shows this breakdown of EU ODA per
main sector as defined by the DAC.

A more detailed sector breakdown of ODA is provided in Table 5.14 for
commitments and in Table 5.15 for payments.

Tables 5.16 and 5.17 give an overview of the ODA managed
by EuropeAid, with a breakdown per sector and region. In these tables, the
definition of region reflects the country groupings used in the EU instruments
and corresponding budget structure.

Tables 5.18 and 5.19 show the sector breakdown of ODA per
EU external assistance instrument and sub-component within the instruments,
with the associated Figure 5.20 providing a
closer look.

Finally, Table 5.21 focuses on budget support commitments
2012 by EU instruments.

Please note that where references are made in the following tables
to 'EU budget', this refers to the budget managed by the European Commission
and does not cover EU Member States' national budgets for development
assistance.

5.2. 
Financial tables

[1] Commission press release IP/13/299  http://europa.eu/rapid/press-release_IP-13-299_en.htm

[2] COM(2011) 637 final of 13.10.2011

[3] JOIN(2012) 14 final of 15.5.2012

[4] 12 country
progress reports; two regional progress reports and a statistical annex.

[5] JOIN(2012) 27 final

[6] COM(2011) 886 final of 12.12.2011

[7] Eunavfor Atalanta, EUTM Somalia, EUCAP
Nestor and Euavsec at Juba Airport

[8] COM(2011) 637

[9] COM(2011) 638

[10] JOIN(2012) 27 final

[11] http://www.unep.org/greeneconomy/AdvisoryServices/tabid/4603/Default.aspx

[12] http://www.seedinit.org/

[13] http://www.un.org/millenniumgoals/pdf/MDG%20Report%202012.pdf

[14] COM(2012) 446 "Social Protection in European
Union Development Cooperation"

[15] Council
Conclusions on Social Protection in EU Development Cooperation 14538/12

[16] 'Progress on Drinking Water and Sanitation
2012' produced by the WHO/UNICEF Joint Monitoring Programme for Water Supply
and Sanitation (http://www.wssinfo.org/)

[17] “Drinking water: Equity, Safety and
Sustainability” produced by WHO/UNICEF, 2011 (http://www.wssinfo.org/fileadmin/user_upload/resources/report_wash_low.pdf)

[18] Council 2010, Council
conclusions on the EU role in Global Health; 3011th Foreign Affairs Council
meeting Brussels, 10.5.2010

http://register.consilium.europa.eu/pdf/en/10/st09/st09644.en10.pdf

[19] http://ec.europa.eu/europeaid/how/public-consultations/towards_post-2015-development-framework_en.htm

[20] Hereinafter Moldova

[21] JOIN/2012/06
final

[22] COM(2011) 886 final, 12.12.2011

[23] European Commission (2012) « The Roots of Democracy and Sustainable Development: Europe's
Engagement with Civil Society in External Relations », COM (2012) 492 final. URL: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2012:0492:FIN:EN:PDF

[24] Council Conclusions (2012), URL: http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/EN/foraff/132870.pdf

[25]http://ec.europa.eu/europeaid/what/development-policies/financing_for_development/accountability_report_2012_en.htm
/ http://www.un.org/esa/ffd/doha/documents/Doha_Declaration_FFD.pdf

[26] http://www.un.org/esa/ffd/monterrey/MonterreyConsensus.pdf

[27] Final ODA outcome figures 2011, published by the OECD DAC in
January 2013. Final 2012 ODA numbers will only become available in early 2014.

[28] http://daccess-dds-ny.un.org/doc/UNDOC/GEN/N11/476/10/PDF/N1147610.pdf?OpenElement

[29] http://www.cbd.int/doc/press/2012/pr-2012-10-20-cop-11-en.pdf

[30] http://unfccc.int/meetings/doha_nov_2012/session/7049/php/view/decisions.php

[31] http://www.consilium.europa.eu/uedocs/cms_Data/docs/pressdata/EN/foraff/132865.pdf

[32] Unshaded cells
2013-2015 are Member States’ own forecasts. Grey shaded cells are Commission
projections.

Collective EU ODA is the sum of the ODA reported by the EU
Member States and the additional ODA provided by the EU institutions. Most of
the EU institutions' ODA spending is, for the purposes of ODA/GNI reporting,
imputed to EU Member States, i.e. Member States data include part of the
institutions' spending. The ODA provided through European Investment Bank (EIB)
own resources (EUR  4.5 billion in 2012) is not imputed to Member States and is
additional to the Member States’ ODA. The Danish government is committed to
reaching the target of 1% ODA/ GNI but has not set a fixed timetable for
reaching it.

[33] Communication on "European Community
Cooperation with Third Countries: The Commission's Approach to Future Support for the Development of the Business sector", COM (2003) 267.

[34] Communication on "Increasing the Impact of EU Development Policy: An Agenda for Change", COM (2011) 637.

[35] The other existing regional blending facilities are the EU-Africa
Infrastructure Trust Fund (ITF), the Neighbourhood Investment Facility (NIF),
the Latin America Investment Facility (LAIF), the Investment Facility for
Central Asia (IFCA), the Asia Investment Facility (AIF) and the Western Balkans Investment
Framework.

[37] Article 208 of the TFEU

[38] Policy Coherence for Development Work Programme 2010-2013, SEC(2010) 421 final

http://ec.europa.eu/development/icenter/repository/SEC_2010_0421_COM_2010_0159_EN.PDF

[39] EU 2011 Report on Policy Coherence for Development, SEC(2011) 1627 final

http://ec.europa.eu/europeaid/what/development-policies/documents/eu_2011_report_on_pcd_en.doc.pdf

[40] Council Conclusions from 14.5.2012 http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/EN/foraff/130225.pdf

[41] European  Parliament resolution on the EU 2011 Report on Policy
Coherence for Development (2012/2063(INI))  http://www.europarl.europa.eu/sides/getDoc.do?type=TA&reference=P7-TA-2012-0399&language=EN&ring=A7-2012-0302

[42] http://ec.europa.eu/research/iscp/index.cfm?pg=strategy

[43] http://www.geant.net

[44]     For more information on CFSP visit  http://www.eeas.europa.eu/cfsp/index_en.htm

[45]     For more information on the IPA visit http://ec.europa.eu/enlargement/instruments/overview/index_en.htm

[46]     For more information on humanitarian assistance go to http://ec.europa.eu/echo/index_en.htm

[47] http://ec.europa.eu/world/enp/index_en.htm

[48] Joint communication
COM (2011) 0200, 8.3.2011

[49] The 5+5 Dialogue is an informal forum for
dialogue in the Western Mediterranean that has, since its creation in 1990, has
united five countries on the northern shores (Spain, France, Italy, Malta and
Portugal) with five countries on the southern shores (Algeria, Libya, Morocco,
Mauritania and Tunisia).

[50] JOIN(2012) 13
final

[51] http://ec.europa.eu/europeaid/what/energy/policies/eastern-neighbourhood/inogate_en.htm

[52] Budget support is the
preferred aid modality of the government of Mozambique. Both general and
sectoral support account for nearly 70 % of the EDF
cooperation programme.

[53] The G-19 now has 21 members. The 19 original
donors are: the EU and 12 EU Member States (Austria, Belgium, Denmark, Finland,
France, Germany, Ireland, the Netherlands, Portugal, Spain, Sweden, the United
Kingdom); the African Development Bank (AfDB); Canada; Norway;
Switzerland and the World Bank. In 2010 the USA and the United Nations joined the group. The
International Monetary Fund (IMF), Japan and the US have observer status. At
present G-19 commitments for GBS total around USD 400 million.

[54] http://www.edctp.org/

[55] ftp://ftp.cordis.europa.eu/pub/fp7/docs/wp/capacities/inco/u-wp-201301_en.pdf

[56] http://jelare-project.eu/

[57] The focal sectors of cooperation under the RIP are likely to be influenced by the "Joint Caribbean-EU Partnership
Strategy", adopted in
November 2012.

[58] In evaluating progress towards the MDGs in the region,
it should be noted that data is in some cases scarce. The trends presented draw
on the latest estimates from the UN and Asian Development Bank 2012 and the Asia-Pacific Regional
Report 2011/2012. Available at: http://www.unescap.org/pdd/calendar/CSN-MDG-NewDelhi-Nov-2011/MDG-Report2011-12.pdf

[59] JOIN/2012/06
final

[60] Pacific Islands Forum Secretariat, 2012, ''MDG Tracking Report'', 7

[61] Pacific Islands Forum Secretariat, 2012, ''MDG Tracking Report'', 6

[62] Council Decision 2001/822/EC of 27/11/2001 (OJ L 314, 30.11.2001),
amended by the Council Decision 2007/249/EC (OJ L 109, 26.4.2007)

[63] COM(2011)846 final, 7.12.2011and COM(2011)837 final, 7.12.2011

[64] Council Decision 5258/2012/EU of 24.09.2012 (OJ L 264,
29.9.2012)

[65] The proposal was based on a careful analysis of the 2001 decision, the outcome of numerous consultations, political
statements of the Commission, Council, OCTs and Member States as well as
external studies.

[66] COM(2012) 362 final, 16.7.2012

[67] http://ec.europa.eu/europeaid/infopoint/publications/europeaid/227a_en.htm

[68] JOIN(2012) 28 final

[69] http://www.fao.org/partnerships/great-green-wall/in-action/vision/en/

[70] The figure includes
requests for assistance, pre-alerts, and monitoring.

[71]  For Civil protection a single amount is indicated, without the
detail by country of operations.

[72] COM(2011) 934 final adopted on 20.12.2011 and transmitted to the Council and the European Parliament
COD(2011)461

[73] Art. 222 TFEU

[74] COM(2012)514

[75] http://ec.europa.eu/europeaid/how/evaluation/evaluation_reports/index_en.htm

[76]http://www.oecd.org/dac/evaluation/dcdndep/Methodological%20approach%20BS%20evaluations%20Sept%202012%20_with%20cover%20Thi.pdf

[77]
http://ec.europa.eu/europeaid/how/evaluation/evaluation_reports/index_en.htm

[78] http://www.effectivecooperation.org/

[79] COM(2011) 638

[80] http://ec.europa.eu/public_opinion/archives/eb_special_399_380_en.htm

[81] http://ec.europa.eu/europeaid/what/energy/sustainable/SE4ALL_en.htm

[82] http://eudevdays.eu/

[83] http://kapuscinskilectures.eu/

[84] http://europa.eu/rapid/search-result.htm?query=46&locale=en

[85] http://ec.europa.eu/europeaid/multimedia/case-studies/index_en.htm

[86] http://ec.europa.eu/europeaid/multimedia/videos/index_en.htm

[87]
http://ec.europa.eu/europeaid/what/development-policies/agenda-for-change/agenda_for_change_en.htm

[88] http://ec.europa.eu/europeaid/infopoint/publications/index_en.htm

[89] https://www.facebook.com/europeaid

[90] https://twitter.com/europeaid

[91] http://www.youtube.com/user/EUintheWorld

[92] http://euatlas2012.bbj.it/

[93] This designation is without prejudice to positions on status, and
is in line with UNSCR 1244/1999 and the ICJ Opinion on the Kosovo declaration
of independence