WRITTEN QUESTION E-2091/97 by Hiltrud Breyer (V) to the Commission (19 June 1997)

Subject: UNGASS Conference 23-27 June 1997

How and when is the new target of 0.5% of GNP as development aid to be met?

Joint answer to Written Questions E-2089/97, E-2090/97, E-2091/97 and E-2092/97 given by Mr Marín on behalf of the Commission (29 July 1997)

With 24,600 MECU annually, the Community is the greatest donor providing more than 56% of total official development assistance (ODA). This is equivalent to 0.37% of the gross national product (GNP) of the Community, but there are variations between Member States with some (Denmark, Netherlands and Sweden) going beyond the 0,7% of GNP target. This target was reaffirmed by the special session of the United Nations general assembly (UNGASS) and no new targets have been set.

Aid managed by the Commission accounts for 15.5% of the above amount.

The reasons that many Community Member States have not yet reached the United Nations 0,7% of GNP target relate in part to a shift in political emphasis and the budgetary constraints the Member States are facing, making substantial increases in ODA very difficult. It should be noted, however, that the Community is in a better position than other major donors which have allowed their aid flows to fall to significantly lower levels.

In addition to direct fund mobilisation, the Community is doing far more for the developing countries through a number of indirect instruments and policies aimed at creating an overall environment conducive to their economic expansion, trade integration and stability. In particular:

(a) the strengthened monetary and fiscal discipline for economic and monetary union has led to a substantial price and exchange rate stability and a steady interest rate decline within the Community. The developing countries are benefiting from this more stable environment;

(b) the European single market, implying extensive trade liberalisation and simplification and a number of trade, cooperation and association agreements (and their instruments) contribute considerably to enhance low developed countries access to the European market. Following trade integration and market liberalisation, European foreign direct investments and other private flows are re-directed towards several fast-growing, middle-income developing countries, accelerating their national development process and their integration into a more global economy. Furthermore, market liberalisation and simplification have also encouraged the transfer of European technology and 'know-how' to emerging economies.

Indeed, private development finance has expanded considerably in recent years. Private flows now account for more than 76% of all capital flows to developing countries and reflect the improved prospects for growth and development in many countries. Nevertheless, private flows have not been evenly distributed among all developing countries and the least developed among them are still highly dependant on ODA as a main source of external financing. Thus ODA is increasingly targeted towards the least developed countries, the fight against poverty and the provision of the necessary institutional and infrastructure support for sustainable development in the broadest sense.

Commitments on environment programmes in developing countries have increased more than four times since 1992. In the context of Regulation (EEC) No 443/92 on financial and technical assistance to, and economic cooperation with, the developing countries in Asia and Latin America ((OJ L 52, 27.2.1992. )), the Community aims to commit 10% of the overall development cooperation budget available for Asia and Latin America to environmental projects. Notwithstanding the lack of a universal definition of what determines an 'environmental project' the Community's annual commitments to sustainable development projects exceed several hundred MECU. As regards the involvement of Member States in environment programmes in developing countries, the Organisation for economic co-operation and development/Development assistance committee (OECD/DAC) reports show Member States commitments in this field.

The Commission intends to examine the UNGASS outcome and put forward proposals for its follow-up. These proposals will be communicated to the Parliament as soon as possible.