WRITTEN QUESTION E-1612/96 by Richard Howitt (PSE) to the Commission (24 June 1996)

Subject: Development aid to Latin America

Given the maintenance of European aid levels to Latin America compared with United States aid, is the Commission aware of the overall decline of worldwide aid to Latin America in recent years, and how does it evaluate the impact of this decline?

Can the Commission outline the increase of private direct investment to Latin America over the same period of analysis, and what assessment does it make of the different economic and social development goals achieved by this transition?

Answer given by Mr Marín on behalf of the Commission (12 July 1996)

The Commission would point out that the overall contribution from the Member States and the Community budget for Latin America has been constantly increasing since the eighties, making the Community the top official development assistance (ODA) donor to Latin America, with almost 62% in 1993. Despite this remarkable increase, the share of the Community budget earmarked for the subcontinent still lags very far behind the aid granted by the Community to other geographical areas, and in particular the Eastern European and Mediterranean countries.

The Community's contribution greatly exceeds the combined shares of Japan and the United States. The 1996 report of the Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development (OECD) confirms the loss of influence of the United States in terms of its participation in official development assistance; it has reduced its budget for international affairs by 27% since 1984. The recent G7 Summit in Lyon showed that the United States is now fourth on the world list of suppliers of official development assistance, its ratio between ODA and GNP having reached the lowest level since 1950.

The Commission has been monitoring these developments very closely; they reflect a global economic context and an inevitable need for limits. Bearing in mind this new situation, and in line with the Member States' cooperation trends, the Commission has worked out a response which, making maximum use of the limited resources available, keeps up a substantial level of traditional development assistance in certain countries and expands economic, scientific and technical cooperation in the most developed regions.

Although Latin America is receiving less development assistance, it is benefiting, as pointed out by the Honourable Member, from renewed interest on the part of investors who, despite some remaining weaknesses, see the subcontinent as one of the world's newly emerging areas. International investment flows to Latin America increased from USD 3.5 billion in 1976-80 to USD 17 billion for 1993 (source: Bank for International Settlements).

The improvement of the Latin American political climate is helping the subcontinent's incipient economic growth, so that it can become a dynamic source of new opportunities for trade and investment even if the need for macroeconomic reform remains. The resumption of the Latin American integration process is helping to boost trade, improve competitiveness and develop new opportunities enabling Latin America to play a greater role at international level. The remarkable progress made to date must, however, be continued and consolidated. While the countries of the subcontinent must first of all rely on their own capacities, they must nevertheless enjoy the solidarity and cooperation of their partners at international level. The Community can and must reaffirm its willingness to act as a special partner of Latin America.