WRITTEN QUESTION E-0552/99

by Anita Pollack (PSE) to the Commission

(12 March 1999)

Subject: Development aid

Why is EC aid to middle income countries allegedly three times more than for low income countries on a per capita basis? Are there any plans to re-focus EC development aid on poverty eradication and to shift resources, from 2000 to 2006, toward low income countries?

Answer given by Mr Pinheiro on behalf of the Commission

(6 May 1999)

The Honourable Member is right that the proportion of aid to the poorest countries has declined over recent years. The Community is committed to fostering the campaign against poverty in the developing countries. The Commission is naturally concerned that this shift should not undermine that campaign, and therefore intends to keep under close review the proportion of Community aid devoted to the poorest countries.

The problem of ensuring coherence and effectiveness in development aid strategy, which lies at the heart of the Honourable Member's question, is nevertheless complex. Allocation of aid cannot depend solely on poverty levels. Factors such as historical or cultural ties, foreign policy objectives, political and economic stability, the quality and extent of the partnership, and the level of development of civil society inevitably enter into the equation, as both the Council and the Parliament have recognised. It should also be emphasised that local absorption capacity and the prevailing degree of good governance in the country or region are crucial factors in determining the effectiveness of co-operation, and that these factors are not easily influenced by donors.

In the last decade, following new policy objectives laid down by the Member States and supported by the Parliament, there has been an expansion of Community aid programmes to the Mediterranean, to Latin America and to Eastern Europe. This has indeed led to a decline in the share of aid devoted to low income countries (from 75 % to 56 % of the total between 1986 and 1996). However, the monetary value of aid made available to these countries increased by 31 % in the same period. Furthermore, the proportion of Community aid to least-developed countries remains higher at 34 % than the average for Member States (32 %). In terms of aid per capita, Community aid in 1996 amounted to ECU 2 per capita in the least-developed countries, compared with ECU 1,4 per capita for lower middle income countries.

In this context it is worth recalling that the allocation of Community aid to least-developed countries is not a measure of the overall effort being devoted to poverty alleviation, since it does not take account of Community partnership programmes being implemented in middle income countries (for example, in Latin America), many of which retain persistent and important pockets of poverty despite their higher level of prosperity. In addition, these countries are the main beneficiaries of economic co-operation agreements which contribute to their development by helping them to create an environment more favourable to investment, international trade and technology transfer, thereby adding to their own capacity to combat poverty.

For the future, the new financial perspectives adopted by the European Council in Berlin foresee a very limited increase of 0,22 % per year in real terms, rising from [fmxeuro] 4 550 million in 2000 to [fmxeuro] 4 610 million by 2006. This does not take account of Community development aid for African, Caribbean and Pacific (ACP) countries which is provided by the separately-funded European development fund (EDF). Until 2001 the current 8th EDF (worth 15 000 million euro over a five year period) will be the source of most commitments in this area. Projections after that date depend on decisions regarding the amount and the functioning of the post-Lomé financial arrangements. The Commission intends to make a proposal on the financial envelope for these arrangements in the next few months.

One of the central planks in the Commission's approach to the post-Lomé negotiations is to gear the future partnership with the ACP states (which include the majority of less developed countries (LDCs)) to the central objective of reducing poverty. This will be based on the guidelines produced by the development aid committee of the Organisation for economic co-operation and development (OECD), and will certainly involve a re-focusing of resources towards the poorest countries.

Finally, in this context it is worth noting that the regular review of programmes and, where necessary, the re-allocation of funds to the central objective of poverty reduction is already taking place as far as the ACP countries are concerned. The Commission has recently introduced an annual review system designed to monitor the overall picture of Community aid allocation to each beneficiary and to make re-allocations where necessary. This system will be combined with a mid-term review of all ACP country agreements (national indicative programmes) during the course of this year, which will enable uncommitted or under-employed aid allocations to be re-focused towards low-income countries even before the new phase of financing foreseen for the period 2000 to 2006.