[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 1.9.2005

COM(2005) 390 final

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE EUROPEAN PARLIAMENT, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS

Migration and Developm ent: Some concrete orientations

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE EUROPEAN PARLIAMENT, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS

Migration and Development: Some concrete orientations

1. Introduction

In December 2002 the Commission adopted a Communication[1] that – among other issues – constituted its first attempt at clarifying the links between migration and development, at suggesting a number of key initiatives and at promoting coherence between the two policy areas.

Meanwhile, the issue of migration and development remains high on the global policy agenda. Countries and international organisations increasingly perceive migration as a phenomenon whose positive impacts in development terms can be substantial, provided that appropriate policies are in place. The migration and development nexus is one of the central issues being examined by the Global Commission on international migration (GCIM), whose report is due out by October 2005. The ‘High Level Dialogue on Migration and Development’ planned for 2006 in the framework of the General Assembly of the United Nations, is further evidence of the importance of this debate, in which developing countries have a strong interest. The European Parliament also addressed these issues, among others, in a hearing held in March 2005.

In light of these circumstances, and against a background of increasingly globalised migratory flows, the Commission herewith intends to provide further input to this debate. It is encouraged to do so by the Council[2] and by The Hague programme which was endorsed by the European Council[3]. This will also help refine the concept of co-development enshrined in the Conclusions of the Tampere European Council (1999).

The Commission believes that the links between migration and development offer a significant potential for furthering development goals, without constituting a substitute to enhanced Official Development Assistance (ODA) and improved policies that remain as necessary as ever to meet the Millennium Development Goals (MDGs) within the agreed timeframe[4].

This document builds on the December 2002 Communication, which continues to set the framework for integrating migration issues into the EU’s external relations and development policies. As underlined in that Communication and confirmed by the Council Conclusions of May 2003, the integration of migration aspects should respect the overall coherence of EU external policies and actions, and be consistent with the objectives and priorities of the Joint Council/Commission Statement on EC development policy[5].

Neither does this Communication cover the full spectrum of the 2002 Communication. It focuses on a number of specific topics that are associated primarily with South-North migration, and in particular on possible actions that could be carried out at EU level, in partnership with developing countries of origin[6].

A number of concrete steps were already taken by the Commission, notably in the framework of EC assistance to third countries, to improve the impact of migration on development. Some of these are detailed in Annex 1.

2. Further steps for improving the impact of migration on development

With 25 Member States, the EU is an important actor on the global stage. In order to further develop its policies and to ensure a concrete contribution of migration policy to the objective of policy coherence for development, it must build on the best practices that have been or are being developed by individual Member States or by non-State actors and should also learn from practices in other parts of the world, including in developing countries.

Reflecting the main issues in the global debate on migration and development, and in line with the Council Conclusions of May 2003, the Commission has identified concrete orientations for improving the impact of migration on development, with a focus on south-north migration. For each of these areas, an annex provides a brief presentation of the issues at stake and details of the initiatives the Commission is planning or considering and/or contains recommendations to Member States in the latter’s areas of responsibility.

2.1. Remittances[7]

The increase in the volume of recorded remittances from migrants over the last few years and the improved knowledge of these financial flows have generated a lot of attention from policy makers, as these flows can potentially help meet the development objectives of migrants’ countries of origin. Of course, despite their volume, they will not produce miracle solutions for development. They are private transfers and cannot substitute for ODA. Nonetheless, the cost of sending remittances, and more generally the conditions under which they are sent, often remains unsatisfactory.

There are therefore two main areas for policy action on remittances, namely making transfers cheaper, faster and safer and enhancing their development impact in recipient countries. However, the time scale for achieving both outcomes is not the same: in the latter area there are important overlaps and synergies with policies for development in general, in particular financial market development and a better regulatory framework, which can only improve over the medium to long-term. Improving transfer conditions, on the other hand, may be attainable in the shorter term.

2.1.1. Fostering cheap, fast and secure ways to send remittances

The Commission’s planned or envisaged initiatives and its recommendations for ensuring cheap, fast and secure flows of remittances can be summarised as follows:

Improved data

Official data on remittance flows is patchy, often poor and does not reflect alternative remittance channels. The Commission will launch initiatives to improve the collection of data to better understand the size of migrant remittance flows. In particular, it will raise with Member States the possibility of reporting on remittance data by destination.

In collaboration with institutions such as the World Bank, it will also promote household surveys which are able to capture informal remittance channels, focusing on selected bilateral “remittance corridors”.

In addition, it will launch studies to gather better information on the remittance industry, its cost structures, possible indicators of a lack of competition and technical inefficiencies.

Transparency

The Commission is planning to adopt a proposal for a Directive on payment services which will increase competition and enhance transparency by requiring payment service providers to make charges (including exchange rate conversions) and other conditions (e.g. execution times) fully transparent to customers. It will also require Member States to establish a register of all authorised payment institutions (including money transfer operators), to be updated on a regular basis and publicly available for consultation, in particular online.

The Commission also calls on Member States to encourage initiatives aimed at providing any additional and relevant information to migrants and will foster a dialogue amongst Member States with a view to identifying best practices in this field.

It will also give consideration to supporting the setting-up of a Europe-wide website providing information on the cost and conditions applying to the various remittance channels, including conventional ones.

Legal framework

Even within the EU with its largely integrated financial markets, the regulation of remittance services varies substantially from one country to another. The Commission plans to foster the creation of a level playing field with harmonised licensing provisions throughout the Union. The forthcoming proposal for a Directive on payment services will ensure that money transfer operators are subject to appropriate regulatory requirements, harmonised throughout the EU and adapted to their specific risk profile.

In addition, the Commission will support an exchange of information on market initiatives aimed at lowering the cost of remittance flows.

The Commission is willing to discuss with interested developing countries ways to overcome obstacles to remittance flows and to consider, where appropriate, whether specific technical assistance to improve their financial and economic infrastructure could be made available by the Community in the framework of its programmes, as well as by the European Investment Bank.

Technical framework

The Commission will further consider the possibility of providing, within the framework of the Aeneas programme, financial support to pilot projects fostering the use of new technologies with a view to providing cheap, easily available competitive remittance services that open up economic opportunities in developing countries.

Access to financial services

The Commission will raise the issue of the access of migrants to financial services in its contacts with relevant stakeholders. It is also ready to consider – in partnership with the countries concerned – initiatives aimed at improving access to banking and financial services in developing countries, with a focus on the possible role of micro-finance institutions., as well as appropriate accompanying measures (information activities, etc.).

These initiatives and recommendations are further detailed in Annex 2.

2.1.2 Facilitating the contribution of remittances to the development of migrants’ countries of origin.

As already stated, remittances are private money and they will only flow to productive investment if beneficiaries are able to make informed choices and if appropriate incentives exist. Developing such incentives and improving the choices in receiving countries is part of a more comprehensive and long-term development approach.

The Commission’s planned or envisaged initiatives and its recommendations for facilitating the contribution of remittances to the development of migrants’ countries of origin can be summarised as follows:

Financial intermediation in developing countries

The Commission is willing to look – in partnership with the countries concerned and, where relevant, in cooperation with the EIB – at possibilities to enhance financial intermediation in developing countries, including through facilitating partnerships between micro-finance institutions and mainstream financial institutions.

Although the EC cannot fund credit lines/revolving funds and guarantee funds for microfinance operations, including those involving migrants, the Commission is ready to consider partnerships in these areas with interested IFIs, including the EIB, provided that an upfront agreement can be reached with such institutions and under the condition that they take full responsibility for the operational implementation of the credit line/guarantee fund.

Collective remittances and co-funding schemes

Following an evaluation of the sustainability, relevance and effectiveness of the pilot projects funded under former budget line B7-667 (cf. Annex 1), the Commission will consider the possibility of providing funding in the context of the appropriate budget lines to joint projects by diaspora organisations – preferably from two or more Member States – and local organisations so as to support local development.

These initiatives and recommendations are further detailed in Annex 3.

2.2. Diasporas as actors of home country development

Diasporas are increasingly recognised as an important potential actor in the development of countries of origin, as already noted in the last section with regard to remittances. The Commission’s concrete planned or envisaged initiatives and its recommendations for contributing to a stronger involvement of willing diaspora members in the development of their home countries can be summarised as follows:

Helping developing countries map their diasporas and build links with them

The Commission will consider supporting efforts initiated by source countries at national or regional level to set up databases where members of diasporas interested in contributing to home countries’ development can register on a voluntary basis, and more generally to maintain links between these countries’ and their diasporas, in coordination with other donors.

The Commission invites those Member States that do not already do so to identify and engage diaspora organisations which could be suitable and representative interlocutors in development policy and/or possible initiators of development projects in countries of origin.

It would also welcome steps by the organisations representing diasporas involved in the development of countries of origin to set up a mechanism that could ensure appropriate representation of their interests at EU level, in particular as far as policies of interest to these countries are concerned.

Young people

In addition to already existing initiatives, notably by local authorities in the framework of twinning schemes, which should be encouraged, the Commission will assess the feasibility of youth exchange schemes focused in particular on migrant communities, based on the experience gathered with existing intra-EU schemes.

These initiatives and recommendations are further detailed in Annex 4.

2.3. Circular migration and brain circulation

Migrants’ return[8], even temporary or virtual, can play a useful role in fostering the transfer of skills to the developing world, together with other forms of brain circulation. Facilitating circular migration could also play a key role in this respect. In addition, the orientations which the Commission will identify as a result of the debate following the publication of its Green Paper on economic migration will constitute an opportunity to further develop this aspect and increase the integration of development concerns into the Community immigration policy. The Commission’s detailed planned or envisaged initiatives and its recommendations in these areas can be summarised as follows:

The potential of temporary migration

Policies to maximise the developmental impact of temporary migration, in addition to the general recommendations on remittances, should focus on encouraging circular migration, by giving a priority for further temporary employment to workers who have already worked under such schemes and have returned at the end of their contract, and also on offering appropriate rewards to participating migrants. This could for instance build on the experience of some Member Starts in reimbursing pension contributions at the end of the worker’s contract or include the payment by the country of residence of a top up on the worker’s savings. Taking into account the results of the debate on the Green Paper on economic migration, the Commission will also examine the possibility of defining a general framework for the entrance and short-term stay within the common area of seasonal migrants.

Facilitating return migration

The Commission will invite Member States and other interested stakeholders to share their experience of the elaboration and management of assisted return programmes and of support of countries of origin with the successful reintegration of return migrants. Within this framework, it will engage in a discussion with Member States on related short-term visa policy issues.

The Commission will look at the possibility of proposing measures in areas such as the transferability of pension rights, the recognition of qualifications or mechanisms to ensure that researchers or other professionals who have worked in the EU can keep in touch with their former colleagues to facilitate voluntary returns and help them reintegrate successfully.

Temporary or virtual return

The Commission proposes to build upon existing experience in temporary or virtual return programmes and extend it, where necessary, to other parts of the developing world. It will also look at the possible support that could be provided to e-learning schemes within the framework of Community programmes on information and communication technologies (ICT).

In addition, initiatives will be taken within the framework of the 7th Framework Programme on Research and Development to facilitate networking between foreign researchers working in the EU – especially those working in areas of direct interest to developing countries – and research organisations in their countries of origin.

The Commission will also look at how to ensure that the residence rights in the EU of diaspora members who decide to engage in such activities are not affected by temporary returns to countries of origin.

The Commission will continue to make support available in future, under the Aeneas programme, to projects by which migrants or diaspora members set up sustainable economic activities in countries of origin, with a preference for projects in third countries involving diasporas in two or more Member States. Such projects should be coherent with the development strategy of the third country concerned.

In addition, it will further study the ways in which interested entrepreneurs from migrant communities can contribute to the development of their country of origin, the obstacles they face in doing so and the policies that should be followed to overcome these obstacles.

The Commission will foster the identification of best practices in areas such as secondments or sabbatical leaves, and the related social security aspects, that can facilitate temporary return, as part of the dialogue to be launched with Member States as a follow-up to this Communication.

These initiatives and recommendations are further detailed in Annex 5.

2.4. Mitigating the adverse effect of brain drain

The North/South dimension is only one example of the brain drain issue, which also has North/North (it also affects the EU) and South/South dimensions. It is an expression of the broader phenomenon of globalisation, and there is no uniform and simple policy response to this formidable challenge. Similarly, it is not an issue that affects all developing countries and sectors. Policy responses therefore need to be tailored to the specific needs and challenges of each affected country. In addition, it is an area where Member States retain significant responsibilities and where the means of action at Community level are therefore relatively limited. In 2002, the Commission had already launched the idea of an EU code of conduct with a view to disciplining recruitment in cases where it would have significantly negative repercussions for developing countries. So far, this idea has not received any follow-up from Member States. Nevertheless, the Commission is confident that other initiatives can be developed to address the issue of brain drain, along the following lines:

The evidence base

The Commission, in collaboration with other interested organisations and donors, is willing to support efforts by interested developing countries to improve their knowledge of their labour markets, including shortages or excesses of skills at sectoral level. This would serve as a basis for countries to devise responses to the identified problems, in the framework of their poverty reduction strategies.

As an example of possible responses, the Commission is currently preparing a separate Communication on 'Addressing the Crisis in Human Resources for Health', which will aim to prepare a set of innovative responses to human resource crisis in developing countries, within the broader health context of these countries, and building upon the framework set out in this Communication.

Disciplining recruitment

The Commission encourages Member States to develop mechanisms such as codes of conduct to limit active recruitment in cases where it would have significantly negative repercussions for targeted developing countries, especially in the healthcare sector, and to coordinate their respective efforts in this area.

The Commission will also strive to persuade other important destination countries to work towards similar arrangements. The possibilities for a global approach to recruitment policies should be explored and this issue be raised in the appropriate international fora, such as the WHO.

Fostering institutional partnerships

Fostering partnerships between institutions in the EU and in interested developing countries or region could play a role in addressing the causes of brain drain. In each case the precise mix of measures to be put in place would depend on a preliminary assessment of the country or region’s specific problems and needs. Measures could include support for the creation of partnerships between scientific or university institutions in developing countries and in the EU to conduct research activities jointly.

Other forms of partnerships between research institutions, universities, hospitals or other bodies in developing countries and EU Member States to mitigate brain drain could include ‘shared work schemes’ in which scientists, researchers, doctors, technicians or other professionals from developing countries would share their work between an institution in their country of origin (University, hospital, research centre, etc.) and a partner institution in an EU Member State. The possibility of providing Community support to such schemes could be assessed, notably in the framework of the 7th Framework Programme on R&D.

Development cooperation as a source of employment opportunities for skilled professionals in developing countries

The Commission believes that donors, in the context of OECD/DAC, could usefully review the operational mechanisms of their technical assistance programmes with the specific objective of assessing whether stronger incentives for the employment of skilled professionals from developing countries by implementing bodies could be introduced.

These initiatives and recommendations are further detailed in Annex 6.

3. Follow-up to this Communication

In this Communication and its annexes, the Commission puts forward several concrete orientations for an EU contribution to effective progress on a number of issues related to the migration and development nexus. Whereas some of these suggestions are essentially ready to be implemented – or could be the subject of projects that can benefit from Community funding, for example in the framework of the Aeneas programme[9], which will continue to exist beyond the end of the current financial perspectives as one of the thematic programmes for Community assistance to third countries[10] – others will require further discussion and analysis. In a number of areas, the competence for implementing these suggestions belongs to Member States. And the implementation of these ideas implies an in-depth dialogue with interested countries or regions of origin.

In the Commission’s views, the follow-up to this Communication should include the following elements:

- the Council should carry out an in-depth examination of this Communication in view of coordinated implementation of the initiatives and recommendations it includes;

- on this basis, a multidisciplinary dialogue between the Commission and the Member States on the issues covered by the Communication should take place. It should focus in particular on reinforcing the coordination of Member States’ policies with each other and with Community policies;

- the dialogue based on partnership with interested developing third countries and their regional organisations should also be enhanced, in the framework of the existing institutional framework and mechanisms. It could focus on supporting willing developing countries to assess their or the regional migratory situation, the needs and problems that arise from it; and help identify possible tailor-made responses. Where relevant, these issues should be reflected in the respective strategy papers. Migration profiles (cf. Annex 8) would be a useful tool for supporting such dialogue and cooperation;

- a reinforcement of the Commission’s co-operation with relevant international organisations;

- exchanges with other stakeholders, in particular NGOs, social partners and civil society, with a special focus on those organisations representing diasporas.

These aspects are further detailed in Annex 7.

The implementation of the orientations contained in this Communication will use the framework of already existing financial resources and instruments, or those that might replace them in the context of future financial perspectives.

4 . Conclusion

This Communication has looked at some practical aspects of migration and the way they can benefit the development process in countries of origin, with a primary focus on South-North migration. Some of the initiatives or recommendations contained in this Communication can also apply to South-South migration. However, South-South migration, which is an increasingly important phenomenon for developing countries, has specific impacts on the economic, social, political and even environmental situation of these countries. The Commission therefore intends to devote an in-depth reflection to these issues in the near future. Nor did this Communication look at the specific issues related to refugees. Lastly, it has not assessed the wider impact of EU immigration policy on developing countries, or the issue of integrating development concerns in EU immigration policy. Both sets of issues will remain part of the Commission’s policy agenda[11].

With this Communication, the Commission hopes to make a first contribution to the global debate on the links between migration and development, in particular in view of the 2006 High Level Dialogue within the framework of the United Nations General Assembly. The policy presented in this Communication, elaborated and implemented in close partnership with source and transit countries and tailored to their needs, will contribute to enhancing the coherence of the external dimension of the EU’s immigration policy with development policy.

ANNEX 1: STEPS FORWARD AT EU LEVEL SINCE 2002

1. Legislative or regulatory reforms

Directive 2004/114/EC on the admission to the EU of third country nationals for the purposes of studies, pupil exchange, unremunerated training, or voluntary service, was adopted on 13 December 2004[12]. This Directive lays down common conditions and rules for the admission of third-country students, thus facilitating entry and residence, without, however, containing a right to entry. It is left to Member States’ discretion whether to apply the Directive to other categories of persons, such as school pupils, unremunerated trainees and people doing voluntary service in the EU. Member States must transpose the Directive by 12 January 2007. Furthermore, a Directive on a specific procedure for admitting third-country nationals for purposes of scientific research[13] is expected to be adopted by summer 2005. This procedure shall both speed up and ease the admission of researchers from third countries into the EU.

In addition, the recent Green Paper on economic migration[14] has triggered a debate on what rules should apply to the admission of migrants for economic purposes. It should lead to new Community initiatives in this field, which the Commission will set out in an Action Plan to be published before the end of 2005 (cf. point 1 of Annex 5).

2. Facilitating return migration

According to the Return Action Programme, approved by the Council on 28 November 2002, country-specific return programmes should be designed. The aim of such programmes should be to ensure effective and timely return. Furthermore, the question of creating sustainable solutions as a means to tackle root causes for illegal immigration should be considered.

Return, either temporary or permanent, can bring back human, financial, economic and social capital to developing countries. Return programmes should therefore explicitly take this dimension into account. Such was the case of the Afghanistan Return Plan, the first country-specific return programme adopted by the Council. Moreover, thanks to the financial support of the European Union, over 150 highly qualified and skilled Afghans have returned from Member States to their country of origin in order to support capacity building for relevant Ministries and overall reconstruction efforts. The Afghanistan experience demonstrated that return of nationals can give an important boost to reconstruction and development efforts. Ensuring a good matching between the needs of the developing country and the skills available can be an important factor in making returns successful.

The experience gained from the Afghanistan return programme will be used in the planning of similar future country-specific return programmes. Those programmes will also benefit from Community funding within the framework of preparatory actions for a financial instrument for return management in 2005/2006 and from the future European Return Fund for the period 2008-2013 as part of the General programme ‘Solidarity and Management of Migration Flows’[15].

3. Provision of assistance to pilot projects in the area of migration with an impact on development

Since 2001, the Community has provided financial support, within the framework of the now discontinued budget line B7-667, to various preparatory actions for cooperation with third counties in the area of migration and asylum. A number of these preparatory actions seek to maximise the impact of migration on the development of countries of origin of migrants, by facilitating and enhancing the various types of contribution – financial contributions, but also skills or other forms of know-how – which migrants can make to these countries.

For instance, several projects seek to facilitate the involvement of migrants residing in EU Member States in development-friendly activities in their countries of origin, usually with a view to helping them set up or participate in small scale entrepreneurial activities there. In several of these projects migrants’ organisations in EU Member States play an important role in mobilising and supporting potentially interested migrants. Some projects are oriented toward the permanent return of interested migrants to their country of origin while others are not. Some of these projects also include a component for making it easier for SMEs in countries of origin of migrants to reach out to markets in the EU. Other projects worth noting include an initiative for developing alternative, inexpensive remittance channels based on new technology (debit cards and use of automatic teller machines – ATMs); a project for assisting countries in the Mediterranean area and Africa to develop mechanisms for encouraging development-friendly forms of labour migration; and two projects for facilitating the return of Afghan nationals to their country for contributing to the reconstruction effort. The vast majority of these projects are still underway, and it is therefore too early to draw definitive conclusions. An independent evaluation of budget line B7-667 will be carried out; its results will certainly help to identify the activities that this type of instrument can usefully support.

On the basis of these three years of preparatory actions, the Aeneas programme, for technical and financial assistance to third countries in the areas of asylum and migration, was established in March 2004 (for the period 2004-2008 with a total budget of € 250 million). This programme aims to support third countries’ efforts in better managing migratory flows in all their dimensions (legal and illegal migration, readmission and reintegration of migrants, trafficking in human beings, international protection of refugees and displaced persons). It is intended to be applicable to any third country of interest for the Community. In particular, article 2.2 provides indications on the types of actions that could be undertaken in order to foster closer linkages between migration and development:

- development of actions aimed at maintaining links between local communities in the country of origin and their legal emigrants and facilitating the contribution of migrants to the social and economic development of communities in their country of origin, including facilitating the use of remittances for productive investments and development initiatives, as well as providing support to micro-credit programmes;

- facilitation of dialogue and exchange of information between the institutions of the third country and the nationals of that country who are considering emigrating;

- support for targeted socio-economic reintegration of returnees into their country of origin, including training and capacity-building aimed at facilitating their integration into the labour market.

The first call for proposals (2004) was closed on 30 March 2005 and allowed the submission of 83 projects.

4. Mainstreaming migration into development policy and assistance to third countries

Since the 2002 Communication, significant steps have been taken to mainstream migration issues into development policy and Community assistance to third countries. In many cases this can contribute to improving the impact of migration on development.

A dialogue on migration issues, also touching sometimes on development aspects, has been going on with a number of third countries in the EU’s neighbourhood, in the framework of the relevant bodies and in a spirit of partnership. Migration is also increasingly part of the dialogue between the EU and ACP countries, both in a bilateral and regional context. In this context, all Country Strategy Papers, which constitute the framework under which Community assistance to its developing country partners is programmed, were reviewed to assess whether there was a case for addressing migration issues. Although the dialogue on migration issues has just started with some countries, it has already contributed to a better understanding of the migration and development dimension and allowed a number of developing countries to highlight issues such as the mobilisation of diasporas as priorities that should be the focus of Community assistance in the future.

ANNEX 2: INITIATIVES AND RECOMMENDATIONS FOR FOSTERING CHEAP, FAST AND SECURE WAYS TO TRANSFER REMITTANCES

Over the past few years, the cost of sending remittances over a number of corridors[16] has come down significantly in some parts of the world. For example, in Latin America, according to the Inter-American Development Bank (IDB), average costs have almost halved from around 15 % at the end the 1990s to 7.9 % by February 2004. Still, such rates cannot be called cheap. In addition, progress is far from uniform and the high cost of remitting – especially if compared with the cost for intra-Euro zone transfers – certainly remains an obstacle to higher remittance flows through formal channels. The efforts the EU will make in this area are in line with the commitments taken by the G8 at the Sea Island Summit in June 2004 to ensure a decrease in the cost of remittances[17].

The Commission believes that action is needed in the five areas that are addressed in this annex[18]. Moreover, as financial institutions are key actors in the area of remittances, the Commission will propose to the European organisations representing this sector to discuss various aspects relating to remittances, in the context of the on-going dialogue within the framework of the European Payments Council.

1. Improving available data on remittance flows and services

Policy on remittances needs to be based on accurate data. Unfortunately, this is at present rarely available. Remittance flows through informal channels[19] are almost never covered, and there are indications that formal flows are often grossly under-estimated. In addition, most Member States do not provide a breakdown of remittance flows by receiving country. Improved data would need to cover informal flows, to address the underestimation of formal flows[20], and to provide a detailed breakdown of bilateral flows. Finally, the development of specific studies, such as longitudinal surveys, and ensuring more comparability of international statistics would allow the development of policies that are better targeted and adapted to the situation. More information is also needed about the ways in which money is being transferred and the reasons for doing so. Household surveys could be an important instrument in providing that knowledge[21]. Initiatives in this area are already being prepared with regard to remittance flows from the EU to Latin America, as a follow-up to the Conclusions of the Guadalajara Summit. Work in this area should be co-ordinated with other institutions and international organisations active in this field[22]. In addition, it would also be useful to know more about the various types of use of remittances in countries of origin (consumption, investment or savings, and, in the latter case, the type of savings vehicles) and the respective share of the various economic activities for which remittances are used, in the case of investment.

Collecting and publishing better data has at least two functions: firstly, it helps policy-makers to take informed decisions; secondly, data on flows in particular remittance corridors can act as a wake-up call to the financial industry that there are business opportunities out there. The experiences of Turkish banks in Germany, Greek banks in countries of Greek emigration or, more recently, Spanish banks vis-à-vis the Latin American communities residing in Spain show that banking institutions, once aware of the potential market represented by remittances, can become quite competitive actors in these markets, thus fostering competition.

In the framework of the Inter-Agency Task Force on International Trade in services, the UN-Technical Subgroup on Movement of Natural Persons will carry out work on developing a new definition of remittances within the balance of payments framework, and on developing a statistical framework for the measurement of the economic impact of the movement of persons. The Technical Subgroup recommends changing the definition of “workers´ remittances” to a broader concept of personal transfers, which includes all household to household transfers.

Official data on remittance flows is patchy, often of mediocre quality and does not reflect alternative remittance channels. The Commission will launch initiatives to improve the collection of data to better understand the size of migrant remittance flows. In particular, it will raise with Member States the possibility of reporting on remittance data by destination.

In collaboration with institutions such as the World Bank, it will also promote household surveys which are able to capture informal remittance channels, focusing on selected bilateral “remittance corridors”.

In addition, it will launch studies to gather better information on the remittance industry, its cost structures, possible indicators of a lack of competition and technical inefficiencies.

Such studies could shed light on possible ways to improve competition and realise efficiency gains. They should include the identification of main channels by destination (different channels are relevant for different countries of origin), as well as of the cost of a typical remittance through the different relevant channels and analyses of the cost structure of remittance providers and their margins .

2. Increasing transparency

A relatively simple but potentially forceful measure to increase competition is to make the information on the costs and other conditions – including the exchange rates used – that apply to each remittance channel more widely available to the public. Increasing the transparency of the remittance market will enable potential remitters to make better informed choices. A number of Member States have taken active steps to improve transparency in the remittance market[23].

The Commission is planning to adopt a proposal for a Directive on payment services which will increase competition and enhance transparency by requiring payment service providers to make charges (including exchange rate conversions) and other conditions (e.g. execution times) fully transparent to customers. It will also require Member States to establish a register of all authorised payment institutions (including money transfer operators), to be updated on a regular basis and publicly available for consultation, in particular online.

The Commission also calls on Member States to encourage initiatives aimed at providing any additional and relevant information to migrants and will foster a dialogue amongst Member States with a view to identifying best practices in this field.

It will also give consideration to supporting the setting-up of a Europe-wide website providing information on the cost and conditions applying to the various remittance channels, including conventional ones.

Such initiatives will make it easier for potential clients to compare the various options available. In addition to benefiting migrants, they would allow comparisons across Member States and help reveal limited competition or other market inefficiencies.

The Commission also supports joint efforts by the Committee on Payment and Settlement Systems of the Bank for International Settlements (BIS) and the World Bank to define remittance principles. Applied by money transfer operators on a voluntary basis, they would make it easier for remittance senders to understand what service they can expect for their money.

Pre-departure information initiatives in countries of origin, as provided for example in the Philippines, could also contribute to more transparency.

3. Improving the legal framework for remittances

* On the EU side , Article 56 of the EC Treaty already facilitates remittance flows by providing for freedom of capital movements between the EU and third countries. However, it is also necessary to ensure that no disproportionate requirement is placed on money transfer operators (MTOs). Whereas some countries only impose light registration requirements on MTOs, others operate licensing systems and some even impose the same requirements as on banking institutions, a step that does not appear justified in terms of prudential risk, since the money transfer business typically does not involve any lending. A lighter hand in regulating would allow a number of presently informal MTOs to be appropriately regulated, thus retaining their advantages in terms of cost, speed and reliability while addressing public authorities’ legitimate security concerns. This would help foster competition on the market for formal remittance services.

Even within the EU with its largely integrated financial markets, the regulation of remittance services varies substantially from one country to another. The Commission plans to foster the creation of a level playing field with harmonised licensing provisions throughout the Union. The forthcoming proposal for a Directive on payment services will ensure that money transfer operators are subject to appropriate regulatory requirements, harmonised throughout the EU and adapted to their specific risk profile.

Whilst ensuring that MTOs are subject to anti-money laundering/terrorist financing measures, this regulatory regime will establish a level playing field for the provision of payment services in the internal market and thus foster competition. The Commission has extensively consulted all stakeholders in preparing the draft Directive.

In addition, the Commission will support an exchange of information on market initiatives aimed at lowering the cost of remittance flows.

More generally, other steps that increase competition and encourage new entrants into the remittance market are highly beneficial. For example, exclusive agreements that tie up existing large-scale retail networks – such as national post offices – to a given MTO should be reconsidered, as they unduly limit competition.

* On the side of recipient countries , a number of regulations can act in a direct or indirect way as obstacles to remittance flows. For example taxes on remittance flows will reduce the amount of formal remittances; restrictions on capital movements or dual exchange rates will also favour informal channels of remittance transfer; and insufficient competition in the banking sector can be a contributory factor in making remittance payments expensive.

The Commission is willing to discuss with interested developing countries ways to overcome obstacles to remittance flows and to consider, where appropriate, whether specific technical assistance to improve their financial and economic infrastructure could be made available by the Community in the framework of its programmes, as well as by the European Investment Bank.

The Commission will also continue to coordinate efforts with those Member States that provide similar types of assistance to developing countries.

4. Improving the technical framework for remittances

A first issue in this respect is the potential for creating links between EU payment systems and those of developing countries which are the source of significant migration flows to the EU. This could draw on the experience acquired by the EU in setting-up a Pan European Automated Clearing House for retail payments for the introduction of the euro. There is already a precedent in this area, with the establishment of an automated clearing house between the United States and Mexico. Some EU Member States are currently looking at the feasibility of similar schemes, and the Commission wishes to take part in such efforts.

The proposal for a Directive on payment services (see above), by supporting the creation of EU-wide infrastructure for the provision of payment services, will in itself make it easier to reach the critical mass that might make it profitable to link EU payment systems with those of third countries.

In addition, a number of schemes involving the use of state of the art technology[24] are currently being developed. The Commission believes that such systems can offer a potential, even though illiteracy and technological shortfalls could limit their relevance in some developing countries.

The Commission will, in the light of market developments and with the involvement of private operators, further consider the possibility of providing, within the framework of the Aeneas programme, financial support to pilot projects fostering the use of new technologies with a view to providing cheap, easily available competitive remittance services that open up economic opportunities in developing countries.

5. Improving access to banking/financial services

In sending countries , apart from transparency (see point 2. above), the main issue is facilitating the access of migrants to banking services. Better information about remittance flows may increase financial institutions’ interest for migrants as potentially interesting customers. Several Spanish banks have taken significant steps to attract migrants, for example by opening off-hours banking facilities and hiring staff from the main migrant communities. But public authorities can have a role to play in facilitating this change of mindset, as was indeed the case in Spain. Measures to improve the financial inclusion of migrants should be inspired by good practice in the EU and beyond.

In recipient countries , insufficient access of the rural population and the poor to banking services often remains a critical issue, as banking networks rarely extend beyond large cities. Solutions include partnerships between ‘mainstream’ banking institutions and those networks that are present in rural areas, i.e. micro-finance institutions or post offices. Already effective or planned partnerships such as those between Spanish financial institutions and Latin American micro-finance institutions or between French and African institutions seem to point to the way forward. At the same time, recipient countries should look at regulatory obstacles that often make it difficult or impossible for micro-finance institutions to team up with mainstream institutions, including those that prevent the emergence of real competition in the banking sector.

The Commission will raise the issue of the access of migrants to financial services in its contacts with relevant stakeholders. It is also ready to consider – in partnership with the countries concerned – initiatives aimed at improving access to banking and financial services in developing countries, with a focus on the possible role of micro-finance institutions., as well as appropriate accompanying measures (information activities, etc.).

ANNEX 3: INITIATIVES AND RECOMMENDATIONS FOR FACILITATING THE CONTRIBUTION OF REMITTANCES TO THE DEVELOPMENT OF MIGRANTS’ COUNTRIES OF ORIGIN

The discussion of this issue raises an important caveat. Whereas remittances do constitute very important financial flows to developing countries, they have a specific characteristic when compared with other types of flow: they are private money.

The Commission believes that respecting the private nature of remittances must be the overarching principle underlying Community policy in this area. The objective in this area should therefore be to open opportunities for migrants who wish to use part of their remittances for any form of investment supporting development.

In addition, remittance flows are influenced by a number of factors on which policy makers have little influence. For example, the composition of migration will matter as much as its size for determining the size of remittance flows. Migrants remit money to those who are close to them, usually members of their family who stayed behind. This is why family reunion, for instance, tends to lead to a reduction in the volume of remittances from the EU to Turkey and North Africa. Looking ahead, the retirement of the first generation of migrants will also affect remittance flows to the Mediterranean region. Another example of the importance of the composition of migration flows relates to the fact that highly skilled migrants tend to send a smaller proportion of their income home. Therefore, selective immigration schemes can also affect remittance flows.

This being said, there are a number of ways in which a policy mix, which should be country specific, can support such objectives. In this respect, specific attention needs to be paid to so-called collective remittances, i.e. the transfers that migrants make collectively for philanthropic purposes via their organisations in the country of residence, also known as Hometown Associations (HTAs).

The Commission believes that action can be considered in the following four areas:

1. Improving the investment climate and fostering good governance

There is significant evidence that no incentive system will be as effective in persuading migrants – as indeed any other investor – to invest part of their remittances in business activities in their home country as a sound investment climate. This entails simplified business procedures, a transparent bureaucracy, a functioning judicial system that guarantees the rule of law and property rights, absence of corruption as well as a sound macro-economic framework and good quality infrastructure. All these factors also impact on brain drain, return and retention, three issues that are discussed in other parts of this Communication. Promoting these and other aspects of good governance is above all a responsibility for developing countries themselves, but donors can and should play a supportive role. The approach the Commission proposes to follow in these areas will be further explored in the forthcoming review of the EU Development Policy Statement[25].

2. Extending financial intermediation in developing countries [26]

Not all migrants are willing and/or able to become entrepreneurs – especially where, as they remain in their country of residence, they would have to manage their investment from a distance. However, the Commission believes that there are ways to make it easier for migrants to contribute to the development of their country of origin, while reaping fair rewards for their hard-earned savings. The establishment of an efficient system of financial intermediation can play a key role in encouraging migrants or their relatives back home to entrust their savings to financial institutions. This could lead to a better allocation of resources promoting productive investment and therefore result in welfare gains for the country or region of origin. In a number of developing countries, especially in Africa, there is reportedly a ‘financing gap’ between micro-finance loans on the one hand (typically up to a few hundred euros) and loans to large SMEs (from a few tens of thousand euros upward), with small enterprises finding it difficult to obtain loans in the region of a few thousand euros. Guarantee mechanisms could play a useful role in this respect. In addition, there are in some cases rules that make it difficult for micro-finance institutions to offer a full range of financial services to poor or rural people. Addressing them would make it easier to ‘bank the unbanked’ and therefore help maximise the potential of remittances (for example by enabling recipients to have access to savings instruments). In addition to the assistance already being provided to some developing countries in developing their financial service sectors, the Commission could consider further assistance in this area. Community assistance in making micro-finance institutions more active in the area of remittances will need to take into account the ongoing work by other donors.

The Commission is willing to look – in partnership with the countries concerned and, where relevant, in cooperation with the EIB – at possibilities to enhance financial intermediation in developing countries, including through facilitating partnerships between micro-finance institutions and mainstream financial institutions.

Although the EC cannot fund credit lines/revolving funds and guarantee funds for microfinance operations, including those involving migrants, the Commission is ready to consider partnerships in these areas with interested IFIs, including the EIB, provided that an upfront agreement can be reached with such institutions and under the condition that they take full responsibility for the operational implementation of the credit line/guarantee fund.

3. Collective remittances and co-funding schemes

Hometown Associations (HTAs) can play an important role in helping allocate part of the savings of individual migrants towards initiatives that either are directed towards productive activities (industry, agriculture) or at least play a role in improving the living conditions of people in communities of origin, for example via the financing of small-scale local infrastructure (water sanitation, health infrastructure, etc.). There is now significant evidence that, in order for such efforts to bear fruit, migrants’ organisations and the relevant local communities need to be at the origin of the projects. Support from local authorities and other donors can however be an asset. Co-funding to top up the efforts of migrants is sometimes provided by public authorities, either from the receiving country[27] or from the country of origin (this is the case of the ‘tres por uno’ scheme, initiated by the State of Zacatecas and later emulated in other Mexican States).

Following an evaluation of the sustainability, relevance and effectiveness of the pilot projects funded under former budget line B7-667 (cf. Annex 1), the Commission will consider the possibility of providing funding in the context of the appropriate budget lines to joint projects by diaspora organisations – preferably from two or more Member States – and local organisations interested in supporting local development.

It also invites Member States which run similar schemes or consider doing so to exchange experiences and best practices.

4. Incentive-based policies

Many countries of origin have developed special incentive schemes to encourage migrants to invest part of the funds they remit in savings vehicles that are used for funding development-friendly infrastructure or productive activities, such as Government bonds or savings accounts offering privileged interest-rates. The record of such incentive schemes is somewhat mixed, however, and the Commission does not wish to recommend this sort of action, given the variety of possible schemes. Nonetheless it is clear that the governments of countries of origin of migrants should refrain from creating or maintaining disincentives to such investments (i.e. treating them less favourably than purely domestic investments).

ANNEX 4: INITIATIVES AND RECOMMENDATIONS FOR FACILITATING THE INVOLVEMENT OF DIASPORAS IN HOME COUNTRY DEVELOPMENT

As part of transnational communities linking countries of origin and countries of residence, diasporas[28] can make an important contribution to the development of their home countries. The various ways in which their possible forms of contribution – remittances, skill or know-how transfers, etc. – can be facilitated are addressed in the various sections of Chapter 2 and the relevant annexes. This annex, however, looks at how – if appropriate – public authorities can encourage diaspora members to become more involved in the development of their country or region of origin.

Of course, it is up to each diaspora member to decide whether, to what extent and in what form (s)he wishes to contribute to the development of his/her country of origin. Public policies in this area can only provide incentives, facilitate and be responsive to people’s own initiatives.

The Commission believes that action in this area should concentrate on the following three sets of issues:

1. Helping developing countries map their diasporas and build links with them

A key difficulty that sending and receiving country governments are often faced with in terms of dealing with the diaspora is precisely knowing the diaspora. There is therefore a case for a policy to support the creation of databases of the skills available in a given country’s or region’s diaspora abroad, where interested members can register. A number of projects along these lines have already been launched – for example a database where skilled members of the Senegalese diaspora abroad can register their interest in contributing to the country’s development and provide details of their skills – and such initiatives could be used as sources of inspiration by other countries. Another example is the support provided by Italy to Egypt[29] or to Ghana and Ethiopia (via the MIDA-Italy programme, managed by the International Organisation for Migration), to improve their links with their respective diasporas, notably in Italy.

In addition, governments in receiving countries that would like to involve foreign diasporas in their work with developing countries, or to support their initiatives, are faced with the additional difficulty of identifying ‘the right interlocutors’ among the various organisations representing diasporas. France, for example, has addressed this problem by encouraging diaspora organisations involved in the development of countries of origin to pool their efforts within the framework of an umbrella organisation, FORIM[30]. Other Member States are moving in the same direction, for example the Netherlands, which has set up a ‘National Ethnic Minorities Consultative Committee’ (LOM), which groups together seven ethnic minority organisations and which will in future be consulted on important development policy initiatives, or Germany’s GTZ, which has taken steps to build a working relationship with organisations representing the diaspora. The UK is also taking steps in the same direction, through support to an umbrella organisation (Connections for Development).

The Commission will consider supporting efforts initiated by source countries at national or regional level to set up databases where members of diasporas interested in contributing to home countries’ development can register on a voluntary basis, and more generally to maintain links between these countries’ and their diasporas, in coordination with other donors.

The Commission invites those Member States that do not already do so to identify and engage diaspora organisations which could be suitable and representative interlocutors in development policy and/or possible initiators of development projects in countries of origin. It would also welcome steps by the organisations representing diasporas involved in the development of countries of origin to set up a mechanism that could ensure appropriate representation of their interests at EU level, in particular as far as policies of interest to these countries are concerned.

2. The role of young people

Helping young people from migrant communities maintain some form of relationship with the country of origin of their parents can both contribute to their integration – by helping avoid a sense of not belonging anywhere – and encourage them to maintain a commitment to the development of that country[31], for example by encouraging them to visit it and get acquainted with the challenges it faces. Community policy, based on existing intra-EU experience, could play a role in this respect.

In addition to already existing initiatives, notably by local authorities in the framework of twinning schemes, which should be encouraged, the Commission will assess the feasibility of youth exchange schemes focused in particular on migrant communities, based on the experience gathered with existing intra-EU schemes.

3. Integration and citizenship

Integration of migrants is much more than just a part of a diaspora mobilisation policy; it is one of the central pillars of EU immigration policy, and its main features are covered in a number of recent policy documents[32]. This policy, by allowing migrants to feel that their cultural identity is recognised and valued, should encourage them to remain committed to their country of origin and those they have left behind. In addition, it is also increasingly being recognised that migrants’ personal involvement in the development of their country of origin in turn facilitates their integration in the country of residence. The Commission is about to propose new orientations in the area of integration, by way of a Communication that will be adopted simultaneously with this Communication.

ANNEX 5: INITIATIVES AND RECOMMENDATIONS FOR FOSTERING CIRCULAR MIGRATION AND BRAIN CIRCULATION

The development of new, faster modes of transportation and communication as well as the emergence of transnational communities mean that circular migration, in which migrants tend to go back and forth between the source country and the destination country, and return migration will become increasingly widespread. From a development standpoint this is good news, as circular and return migration offer a significant potential for both source and destination countries, the migrant and his/her relatives in the country of origin. Return, even temporary, is likely to lead to the transfer of skills, know how and/or new cultural attitudes. Both circular migration and return can help mitigate the impact of brain drain. Both also foster brain circulation, which can be defined for the purpose of this Communication as the possibility for developing countries to draw on the skills, know-how and other forms of experience gained by their migrants – whether they have returned or not – and members of their diaspora abroad. However, there are still obstacles to circular migration and to the return of migrants to their country of origin. Removing them would help liberate the potential of brain circulation for development.

The Commission believes that action is necessary in the four following areas:

1. Managed migration as an instrument of brain circulation

The Commission recently published a Green Paper on an EU approach to managing economic migration[33], the aim of which is to actively contribute to the on-going debate on the most appropriate form of Community rules for admitting economic migrants.

The Green Paper stresses the need for the Community to manage migration flows in cooperation with countries of origin, thereby taking into account the challenges they face– including brain drain in particular – and their needs. It specifically asks the question of whether preference, in terms of admission, should be granted to certain third countries and how[34].

As a result of the comprehensive debate launched by the Green Paper, which culminated with a hearing organised on 14 June 2005, the Commission will present, by the end of 2005, a policy plan on legal migration. This plan will include ideas on how the joint management of economic migration flows between countries of origin and destination can contribute to improving the benefits of migration for the development of countries of origin

2. Maximising the potential of temporary migration

Temporary migration – sometimes even seasonal migration – is becoming an increasingly popular way of meeting the demand for unskilled or relatively low skilled labour in a number of Member States. Whilst it is true that such temporary migration has limited advantages in terms of skills enhancement, especially as far as low-skilled workers are concerned, its potential positive impact on development or at least poverty alleviation should not be dismissed too quickly. It can help relieve excess labour supply in developing countries, and the remittances which workers send to their relatives often represent a significant share of families’ overall income – especially since temporary migrants tend to remit more than longer-term migrants as a percentage of their income.

Policies to maximise the developmental impact of temporary migration, in addition to the general recommendations on remittances[35], should focus on encouraging circular migration, by giving a priority for further temporary employment to workers who have already worked under such schemes and have returned at the end of their contract, and also on offering appropriate rewards to participating migrants. This could for instance build on the experience of some Member Starts in reimbursing pension contributions at the end of the worker’s contract or include the payment by the country of residence of a top up on the worker’s savings. Taking into account the results of the debate on the Green Paper on economic migration, the Commission will also examine the possibility of defining a general framework for the entrance and short-term stay within the common area of seasonal migrants. The Commission will continue discussions with Member States, social partners and civil society on these issues.

In addition, temporary migration linked to the cross-border provision of services is also starting to feature highly on the international trade policy agenda, within the framework of the General Agreement on Trade in Services (GATS – the so-called Mode 4), with a focus on skilled labour. However the numbers of people covered by Mode 4 commitments, or taking advantage of them, are extremely small in comparison with the numbers of other temporary migrants or of long-term migrants.

Whilst Mode 4 is only one form of temporary migration - and is essentially an aspect of trade rather than migration policy – it may offer insights into the development of temporary migration schemes that would help both to maximize brain circulation in the interests of developing countries and contribute to well managed migration through clear rules on period and purpose of stay. The Community is promoting an approach to Mode 4 which adopts common terminology and transparent arrangements governing the categories of people covered and length of stay. This model could be built on for the further development of Mode 4.

In addition, the Commission already proposed in March 2004 a Recommendation concerning the facilitation of issuing conditions for uniform short stay visas for researchers from third countries travelling within the EU for the purpose of carrying out scientific research.

3. Facilitating return migration

The return of migrants to their country of origin can have a significant positive impact in development terms, provided that it is well prepared and that the migrant is an active protagonist in his/her own return, with a project – entrepreneurial for example – (s)he intends to carry out. While schemes to assist the return of migrants will usually be focused on legal migrants, they should not necessarily be reserved to them. The experience of the French “aide à la réinsertion” scheme shows that such schemes sometimes offer an ‘honourable way out’ to migrants whose migration project has failed, including some illegal migrants.

A number of general lessons can be drawn from the various return schemes that have been developed, notably at the level of EU Member States[36], by the Community[37] and by international organisations such as the International Organisation for Migration (IOM). A first lesson is that financial support is not enough to make return a success[38]. Advice and other forms of non-financial assistance, both before and after the migrant’s return, play an indispensable role, especially when the migrant – who does not necessarily have directly relevant experience – intends to start his/her own business in the country of origin. Another lesson is that migrants are often reluctant to envisage a return to their home country unless they have some guarantee that they will be able to continue to travel back and forth between the country of origin and the (former) country of destination. This is obviously the case when the migrant plans to continue some form of business activity in his/her former country of residence, but such a possibility can also play the role of an insurance mechanism, especially when the migrant – be he or she a former refugee or asylum seeker or not – comes from a country whose future stability – economic or political – remains problematic. This problem can be addressed, at least on a temporary basis, by granting the returnee a multi-entry visa allowing him/her to return to his/her former country of residence. A number of Member States have taken steps in this direction. Another possibility that has similar effects is to maintain the validity of the returning migrant’s residence permit for a certain amount of time after his/her return. Such a system exists in Denmark, where, in addition, refugees potentially willing to return to their country of origin are given the possibility of returning temporarily to assess the situation and prospects before they make a final decision to return, and refugees and their families who return voluntarily are allowed to go back to Denmark within one year of their return.

The Commission will invite Member States and other interested stakeholders to share their experience of the elaboration and management of assisted return programmes and of support of countries of origin with the successful reintegration of return migrants. Within this framework, it will examine relevant short-term visa policy issues.

A number of practical steps should also be taken to facilitate the return of migrants to their country of origin:

- Member States should ensure that the pensions obtained in a migrant’s former country of residence can be paid to him/her in the country of origin after his/her return; or that the contributions made by a migrant and by his/her employers into public pension schemes can be paid back to him/her as a lump sum upon his/her return to the country of origin in cases where the total amounts paid are not enough to entitle him/her to a pension.

- Steps should be taken to ensure that a migrant’s education and qualifications received in the country of destination can be easily recognised by authorities in the country of origin, as this will facilitate his/her professional integration upon returning[39].

- Member States could offer the possibility for financial institutions to open up special savings accounts accessible to migrants intending to return to their home country at the end of their work experience. These products could benefit from a favourable tax treatment, and the Member State of residence could also grant an interest rate subsidy and/or a bonus at the time of return.

- As far as researchers and other skilled professionals are concerned, it is essential that they can, upon return, continue to have exchanges with their former colleagues. Fellowships for returning researchers and instruments such as web portals to allow continuous interactions within trans-national research communities are among the instruments that will be supported under the 7th Framework Programme on R&D[40].

The Commission will look at the possibility of proposing measures in areas such as the transferability of pension rights, the recognition of qualifications or mechanisms to ensure that researchers or other professionals who have worked in the EU can keep in touch with their former colleagues to facilitate voluntary returns and help them reintegrate successfully.

4. Temporary or virtual return

Migrants do not necessarily need to return permanently to their country of origin to contribute usefully to its development. Indeed, temporary return appears as a promising way in which diasporas can be mobilised in favour of countries of origin (cf. section 2.2. in the main text). Obviously, it is up to individual diaspora members to decide whether and how they want to get involved. However, available evidence shows that many diaspora members are already active, and many more would be willing to follow suit provided that more appropriate conditions were in place. This is where public policy can play an important role.

There are several ways in which temporary return can allow diaspora members to contribute to the development of their country or region of origin. Short or medium term secondments of scientists, doctors, engineers or other qualified professionals in institutions in their countries of origin can enable them to share their skills and knowledge with those who have remained “at home”. Diaspora skills databases (see point 1 in Annex 4) can enable authorities or institutions in countries to tap into the available skills potential. International organisations such as IOM (with the Migration for Development in Africa programme – MIDA) and UNDP (with the Transfer of Knowledge through Expatriate Nationals scheme – TOKTEN) have developed significant expertise in this area, and the activities they manage are often supported financially by one or several EU Member States[41] or the Community. In this case, temporary return can be complemented or in some cases replaced by “virtual return”, relying on electronic communications (for example, via distance learning, a University professor in an EU Member State can also teach to students in a University in his/her country of origin, where (s)he could also be physically present for a couple of months each year).

The Commission proposes to build upon existing experience in temporary or virtual return programmes and extend it, where necessary, to other parts of the developing world. It will also look at the possible support that could be provided to e-learning schemes within the framework of Community programmes on information and communication technologies (ICT).

Furthermore, initiatives will be taken within the framework of the 7th Framework Programme on Research and Development to facilitate networking between foreign researchers working in the EU – especially those working in areas of direct interest to developing countries – and research organisations in their countries of origin.

The Commission will also look at how to ensure that the residence rights in the EU of diaspora members who decide to engage in such activities are not affected by temporary returns to countries of origin.

Temporary return, and more generally circular migration, can also allow migrants or diaspora members who have succeeded in business activities in the EU to set up additional business activities – either directly connected or not to their main activity in the EU – in their country of origin, thereby actively contributing to the latter’s development through innovation and job creation. The work conducted by the Commission in the area of ethnic entrepreneurship[42] shows that migrants and more generally persons of foreign origin are often likelier than other people to engage in entrepreneurial activities. They therefore constitute an important skills potential for their countries of origin, provided that appropriate policies are implemented. Their knowledge of both the country of origin and the country of residence can be an important business asset, in particular for marketing in the EU products from the country of origin[43] – or even the country itself as a tourist destination. Some initiatives have been developed with a view to facilitating the investments of such people in their country of origin, for example a project – funded under EC budget line B7-667 – to help highly skilled members of the Moroccan diaspora in France set up innovative start-ups in Morocco.

The Commission will continue to make support available in future, under the Aeneas programme, to projects by which migrants or diaspora members set up sustainable economic activities in countries of origin, with a preference for projects in third countries involving diasporas in two or more Member States. Such projects should be coherent with the development strategy of the third country concerned.

In addition, it will further study the ways in which interested entrepreneurs from migrant communities can contribute to the development of their country of origin, the obstacles they face in doing so and the policies that should be followed to overcome these obstacles.

Perhaps more importantly, in addition to direct financial support for such involvement of diaspora members, public authorities can also contribute to such efforts by removing a number of obstacles, in particular by:

- in the public sector, offering the possibility for secondments to institutions in developing countries for migrants or diaspora members wishing to engage in such activities;

- in the private sector, removing legal obstacles to unpaid sabbatical leaves and encouraging businesses to enable their employees of foreign origin to take unpaid leave for engaging in such activities[44];

- in both cases, ensuring that the persons in question can continue to contribute to and benefit from social security schemes, in particular health insurance and pension schemes.

The Commission will foster the identification of best practices in areas such as secondments or sabbatical leaves, and the related social security aspects, that can facilitate temporary return, as part of the dialogue to be launched with Member States as a follow-up to this Communication.

ANNEX 6: INITIATIVES AND RECOMMENDATIONS FOR MITIGATING THE ADVERSE EFFECT OF BRAIN DRAIN ON DEVELOPING COUNTRIES

Whereas there are many cases where migration is profitable for countries of origin, it can cause damage in specific situations. This is particularly so when emigration leads to significant skills shortages in sectors that are essential for the social or economic development of the countries in question. Such cases are best documented in the healthcare and education sector and the worst affected countries appear to be in Africa and in the Caribbean, but problems could also appear in other sectors or parts of the world. The phenomenon of brain drain affects particularly poorer countries because emigrants tend to have a better education than those who stay at home (the greater the distance, the greater the difference tends to be) and because selective immigration policies in developed countries have contributed to the acceleration of the emigration of skilled professionals.

It must be noted that education abroad can also contribute to brain drain if students do not return at the end of their studies. This phenomenon can become self-sustaining if emigration, by depriving universities of their best students, leads to lower quality levels, encouraging further emigration.

While there is no such thing as a ‘right to migrate’, it must be acknowledged that the decision to look for and take up employment abroad is largely based on an individual assessment by the persons concerned of the costs and benefits of such a choice. Public policies often have little influence on this decision. In addition, Member States retain significant competences in the area of economic migration and there are obvious limits to the scope for Community action in this area. The Commission believes, however, that action in this area should encompass the following issues:

1. Improving the evidence base

The sensitivity to brain drain-type problems varies enormously from country to country and from sector to sector. Whereas some developing countries suffer from very significant shortages of critical skills, others have an excess supply of these skills[45], and some even have a deliberate policy of exporting skilled people, often trained in specialised, private educational institutions. Any sensible policy on mitigating brain drain should therefore be based on sound data at sectoral and country (or even sub-national, in the case of large countries) level.

The Commission, in collaboration with other interested organisations and donors, is willing to support efforts by interested developing countries to improve their knowledge of their labour markets, including shortages or excesses of skills at sectoral level. This would serve as a basis for countries to devise responses to the identified problems, in the framework of their poverty reduction strategies.

The Commission is ready to support such responses, in the framework of its assistance to these countries. In addition, it would also make such information available to Member States, so as to help them steer their recruitment policies in a way that does not harm the development of countries of origin, as well as to the general public.

As an example of possible responses, the Commission is currently preparing a separate Communication on 'Addressing the Crisis in Human Resources for Health', which will aim to prepare a set of innovative responses to human resource crisis in developing countries, within the broader health context of these countries, and building upon the framework set out in this Communication.

2. Disciplining recruitment

The issue of limiting recruitment of qualified professionals from developing countries suffering from severe skills shortages in key sectors was raised previously by the Commission in the December 2002 Communication. While it is not desirable to prevent individual would-be migrants from looking for suitable employment in the EU, there is a case for limiting active recruitment by or on behalf of EU employers in those developing countries and sectors that suffer from severe skills shortages. Especially at a time when the need for skills in developed countries is expected to increase, a situation where recruitment is carried out at the expense of development objectives must be avoided. One Member State, the United Kingdom, has developed a voluntary instrument in the healthcare sector[46] and there is therefore already some experience in the EU. In addition, the World Health Assembly has called for international action in this area[47].

It is the Commission’s view that isolated action by one or a few countries is unlikely to be very effective if other developed countries do not show the same degree of self-discipline.

The Commission encourages Member States to develop mechanisms such as codes of conduct to limit active recruitment in cases where it would have significantly negative repercussions for targeted developing countries, especially in the healthcare sector, and to coordinate their respective efforts in this area.

The Commission will also strive to persuade other important destination countries to work towards similar arrangements. The possibilities for a global approach to recruitment policies should be explored and this issue be raised in the appropriate international fora, such as the WHO.

The orientations which the Commission will issue as a follow-up to its Green Paper on economic migration could also further contribute to the debate on disciplining recruitment[48].

3. Helping developing countries replenish their skills base

For source countries the phenomenon of brain drain often represents a loss of significant investment in training and education, at least when the people who migrate have been trained by public sector institutions. It is difficult, from a human rights perspective, to restrict people’s mobility by preventing them from looking for better paid employment or better living and working conditions elsewhere[49]. However, the question arises whether destination countries could not, in one way or another, help developing countries that suffer from significant skills shortages as a result of migration to replenish their skills base.

Some Member States are already providing financial support for the training of health professionals in developing countries where they have been actively recruiting. In the Commission’s view this type of ‘compensation-schemes’ should not be viewed as a substitute for a policy for disciplining recruitment. However, the Commission encourages Member States to consider skill replenishment schemes in countries that, as a result of brain drain processes, need to upgrade their healthcare and/or education human resource basis.

4. Better use of existing skills resources within the EU

An obvious response to the phenomenon of brain drain is for the EU to better use its own, existing skills resources. In this respect, the Lisbon strategy’s general objective of raising the activity rate in the EU offers a first response. At a more specific level, a well designed integration policy[50] should also make it easier for the EU to tap into the partly unused potential represented by the migrants already residing in the EU. However, the maintenance by many Member States of transitional restrictions on the free movement of workers from the new Member States can also act in some cases as an obstacle to the optimal use of available skills resources[51] in the enlarged EU. This would appear to militate in favour of a relaxation of temporary restrictions on free movement of workers from the new Member States.

5. Fostering institutional partnerships

It is often difficult for developing countries seeking to encourage skilled professionals to stay in these countries rather than to emigrate or to encourage their return to compete against the wages and working conditions available in developed countries. Still, wages are only part of the equation and the Commission believes that providing such professionals with career prospects and an adequate infrastructure could play an important role in changing the working conditions. Nowhere is this truer than in the research area.

Fostering partnerships between institutions in the EU and in interested developing countries or region could play a role in addressing the causes of brain drain. In each case the precise mix of measures to be put in place would depend on a preliminary assessment of the country or region’s specific problems and needs. Measures could include support for the creation of partnerships between scientific or university institutions in developing countries and in the EU to conduct research activities jointly[52].

Other forms of partnerships between research institutions, universities, hospitals or other bodies in developing countries and EU Member States to mitigate brain drain could include ‘shared work schemes’ in which scientists, researchers, doctors, technicians or other professionals from developing countries would share their work between an institution in their country of origin (University, hospital, research centre, etc.) and a partner institution in an EU Member State[53]. The possibility of providing Community support to such schemes could be assessed, notably in the framework of the 7th Framework Programme on R&D.

6. Development cooperation as a source of employment opportunities for skilled professionals in developing countries.

Tens of thousands of skilled professionals from developed countries are employed in the elaboration, management and implementation of ODA-funded assistance projects in developing countries. If a significant number of these professionals could be replaced by nationals from the beneficiary countries or regions, this would create important employment opportunities for these nationals. Most donors have already taken some steps in this direction, but more can be done.

The Commission believes that donors, in the context of OECD/DAC, could usefully review the operational mechanisms of their technical assistance programmes with the specific objective of assessing whether stronger incentives for the employment of skilled professionals from developing countries by implementing bodies could be introduced.

With regard to projects funded by the European Development Fund (EDF) in ACP countries, article 26 of Annex IV of the Cotonou Agreement already provides that, ‘in respect of service contracts, given the required competence, preference shall be given to 1) experts … from ACP States where tenders of equivalent economic and technical quality are compared…”.

ANNEX 7 COMMISSION INTENTIONS WITH REGARD TO THE FOLLOW-UP OF THIS COMMUNICATION

1. Dialogue with Member States

Once the Council has adopted Conclusions on the implementation of this Communication, the Commission is in favour of initiating a multidisciplinary dialogue with and between Member States on migration and development, in which Member States’ Ministries dealing with migration in its various aspects – Development, Employment, External Relations, and Justice and Home Affairs – would be represented. This dialogue would aim at reinforcing coherence between the two policy areas. Its tasks would be threefold:

- informing Member States on the implementation of this Communication in general and more specifically on progress on a number of initiatives taken in this context;

- serving as a forum to exchange experiences and practices in the various areas covered by this Communication;

- and, in doing so, contributing to improve overall coherence of these activities, in particular to maximise EU leverage at the global level.

This dialogue could be complemented by an electronic forum for communication between members and an internet portal, also open to all interested parties, which would help access the various studies and research papers on issues related to the migration and development nexus prepared by or on behalf of the Member States, EU institutions or international organisations. This would help ensure that the significant amount of already available information is best used and avoid duplications.

At a later stage, this internet portal could be extended to include identified best practices in the various areas covered by this Communication.

2. Dialogue with Third Countries

As developing countries are directly affected by EU policy on migration and development, the Commission will continue to integrate migration related topics in the dialogue with these countries. A number of the orientations presented in this communication and its annexes will require further debate and cooperation with interested developing countries, either individually or as members of regional groupings. These dialogues should use the existing institutional frameworks[54].

Policy initiatives, including assistance projects, should be based on an analysis of the situation of the country or group of countries concerned and designed and carried out in a spirit of partnership with these countries. Where appropriate, issues linked to the migration and development nexus should also be reflected in the relevant country strategy papers (CSPs) or regional strategy papers (RSPs).

The Commission also proposes the establishment of a Migration Profile (MP) for each interested developing country. Such a document would bring together all information relevant to the design and management of an effective policy on migration and development[55]. This could help define a policy response which would tailor to the situation and needs of the country or countries concerned the instruments presented in a generic manner in this Communication and its annexes. (the proposed MP is further described in Annex 8).

In addition, the Commission is ready to discuss with interested developing countries and their regional groupings the possibility and appropriateness of better reflecting – where appropriate – issues related to the migration and development nexus in Poverty Reduction Strategy Papers (PRSPs).

3. Cooperation with international organisations

In devising and implementing strategies to maximise the contribution of migration to development, EU institutions should take proper account of the work already done by a number of international organisations in these areas and the expertise available there in order to avoid duplications of efforts. In addition, the Commission does not necessarily possess the specialist expertise available in these organisations. The Commission will therefore reinforce its on-going dialogue on issues of migration and development with organisations such as the World Bank, ILO, UNHCR, the OECD, UNDP or IOM.

4. Other stakeholders

The Commission will maintain a dialogue with non-governmental actors, including social partners, on issues related to migration and development. In particular, it will welcome efforts by diaspora organisations engaged in the development of countries of origin to set up mechanism or structures to ensure their representation at EU level[56]. This should help these organisations express their views on the issues and initiatives set out in this Communication and its annexes and to contribute actively to its follow-up.

ANNEX 8: MIGRATION PROFILES

Given the impact of initiatives in the area of migration and development, an evidence-based approach which takes into account the realities of developing countries is necessary. In order to develop a tailor-made, partnership approach for interested developing countries, a better understanding of the migration situation and related issues is a pre-condition. With this in mind the Commission proposes the establishment of a Migration Profile (MP) for each interested developing country. Such a document, which would be prepared by the Commission in cooperation with the relevant country, would bring together all information relevant to migration and development, thus allowing for a more appropriate policy approach and contributing to a better understanding of the results of the policies implemented.

Each MPs would aim to gather information on issues such as the labour market situation, unemployment rates, labour demand and supply and present or potential skill shortages by sector and occupation, skills needs in the country, skills available in the diaspora, migration flows, incoming and outgoing financial flows linked with migration, including migrant remittances, as well as relevant gender aspects and those related to minors.

MPs would also include an overview of the policy framework of the country considered, including legal instruments relevant to migration. An overview of relevant projects and other initiatives in the country could also be included. They should finally aim to assess both the short- and long-term impact on developing countries' labour markets of various relevant migration-related policies, if possible at a sectoral and occupational level.

A large amount of information required for devising MPs is already available, although not from a single source and not systematically for each country. MPs would provide a framework for bringing existing information from different sources together in a structured manner. In the beginning, MPs would be incomplete, but by revealing the gaps in the available information, they would make it easier to fill these gaps as time went on.

Besides this factual information MPs should also review the results of analyses of the various areas that are relevant for migration policy. They would help respond to challenges such as how to deal with skills shortages or on the contrary labour surpluses, how to tap into the skills of the diaspora or how to maximise inflows of remittances and make more productive use thereof.

[1] ‘Integrating migration issues in the European Union’s relations with third countries’ - COM(2002) 703, 3.12.2002.

[2] In Conclusions on migration and development adopted on 19 May 2003.

[3] The Hague Programme was adopted as an Annex to the Conclusions of the Brussels European Council on 5 November 2004.

[4] Commission Communications of 12 April 2005 ‘Speeding up progress towards the Millennium Development Goals - The European Union’s contribution’ - COM(2005) 132 -, ‘Accelerating progress towards attaining the Millennium Development Goals – Financing for Development and Aid Effectiveness’ - COM(2005) 133 -, and ‘Policy Coherence for Development - Accelerating progress towards attaining the Millennium Development Goals’ - COM(2005) 134.

[5] According to the Council Conclusions, the integration of migration issues into external relations and development policies should also be based on political dialogue and materialise in the strategic framework of the Regional and Country Strategy Papers.

[6] These objectives explain the coverage of this Communication: it looks primarily at migration from developing countries to the EU. It does not cover intra-EU migration or migration between the EU and other developed countries. Neither does it cover migration between developing countries, even though some of its orientations may well be relevant in the context of such flows as well.

[7] For the purposes of this Communication we define remittances broadly, as including all financial transfers from migrants to beneficiaries in their countries of origin. This is broader than the definition used for balance of payment purposes.

[8] Throughout this section, the meaning of the term ‘return’ is understood to be a broad one, which is not limited to repatriations in the context of illegal immigration. In most cases, it actually refers to the process of voluntarily going back to one's country of origin.

[9] Regulation (EC) No 491/2004 of the European Parliament and the Council of 10 March 2004 establishing a programme for financial and technical assistance to third countries in the areas of migration and asylum (AENEAS) (OJ L 80, 18.3.2004, p. 1). Also see Annex 1.

[10] Communication from the Commission to the Council and the European Parliament “External actions through thematic programmes under the future financial perspectives 2007-2013“ - COM(2005) 324, 3.8.2005).

[11] The Commission is already making a contribution to the debate on how to respond to refugee crises in the developing world with its Communication on Regional Protection Programmes - COM(2005) 388, adopted simultaneously with this Communication.

[12] Counci