Communication from the Commission to the Council and the European Parliament - Annual Report 2004 on EC development policy and external assistance {SEC(2004)1027}
Date: 2004-07-29
Institutions: European Commission
Subjects: activity report, aid evaluation, aid policy, cooperation policy, developing countries, development aid

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 29.07.2004 
COM(2004)536 final 

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE 
EUROPEAN PARLIAMENT 

ANNUAL REPORT 2004 ON EC DEVELOPMENT POLICY AND EXTERNAL 
ASSISTANCE 

{SEC(2004)1027} 

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TABLE OF CONTENTS 

A. 

1. 

1.1. 

1.2. 

1.3. 

1.4. 

1.5. 

1.6. 

1.7. 

1.8. 

2. 

3. 

4. 

5. 

Foreword ...................................................................................................................... 3 

The EC commitment to development co-operation ..................................................... 4 

The link between trade and development..................................................................... 5 

Regional integration and co-operation ......................................................................... 6 

Support for macroeconomic policies and equitable access to social services ............. 6 

Transport ...................................................................................................................... 7 

Food security and sustainable rural development ........................................................ 7 

Governance, institutional capacity building and the rule of law.................................. 8 

Scientific and Technological Co-operation in support of development....................... 8 

Other EC Co-operation activities ................................................................................. 8 

Efficiency of EC Co-operation..................................................................................... 8 

The EC’s global reach: achievements in 2003 region by region ................................. 9 

Special Feature: Peace as a priority ........................................................................... 11 

Annexes...................................................................................................................... 11 

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A. 

FOREWORD 

This is the European Commission’s fourth Annual Report on development policy and external 
assistance and the last of the Prodi Commission. It sets out the objectives agreed for 2003 and 
highlights progress against these.  

The European Union is a world player in economic, trade and development terms. It accounts 
for  55%  of  global  aid  flows  –  about  €  30  billion  per  year  –  of  which  more  than  a  fifth  is 
managed  by  the  European  Commission.  This  assistance  is  provided  to  more  than  160 
countries,  territories  or  organisations  worldwide.  It  is  a  tangible  expression  of  the 
Community’s  commitment  to  the  Millennium  Development  Goals,  which  centre  on  poverty 
reduction.  Since  2000  the  core  objective  of  Community  development  policy  has  been  to 
reduce and eventually eradicate poverty. Through its external assistance, the European Union 
demonstrates  its  support  for  the  promotion  and  entrenchment  of  universal  values  such  as 
democracy and human rights. 

For  2003,  the  Commission  set  out  to  improve  the  global  partnership  between  North  and 
South, notably by delivering on commitments made in the 2002 UN conferences on Financing 
for  Development  in  Monterrey  and  the  Sustainable  Development  in  Johannesburg  and  by 
using  the  framework  of  the  Cotonou  Agreement1  to  affirm  Europe’s  solidarity  with  Africa. 
Moreover,  the  objective  was  to  ensure  that  the  positive  effects  of  globalisation  are  shared 
evenly  between  and  within  countries,  while  respecting  their  cultural  diversity  and 
environmental heritage, and to work for a fairer distribution of resources between North and 
South. 

2003  was  also  a  significant  year  in  terms  of  improving  the  coherence  and  impact  of  EC 
external  assistance.  The  Commission  pursued  its  reform  of  how  it  prioritises,  organises  and 
implements  its  programmes,  and  this  began  to  deliver  concrete  results.  Commitments  and 
payments in both the budget and European Development Fund reached record levels in 2003. 
Devolution  of  day-to-day  decision-making  to  delegations  has  made  the  Union’s  external 
assistance programmes more responsive to partner countries and other donors report markedly 
improved co-ordination. The devolution exercise will be largely complete by mid-2004. The 
quality of strategy documents, which serve to  analyse the situation in a partner country and 
select the sectors on which aid should be concentrated, has also much improved.  

Important steps were taken in 2003 to overhaul the Union’s Common Agricultural Policy in 
order  to  minimise  its  distorting  effects  on  international  trade  and  to  promote  both  a  more 
development  friendly  approach  and  improved  coherence  between  the  EU’s  agriculture  and 
development policies in line with aspirations for the WTO Doha Development Round. Further 
reforms are in preparation for the sectors not yet affected, in particular cotton, tobacco, olive 
oil and sugar.  

The EU's relations with its near neighbours were given new impetus and clearer definition in 
2003. In December, the European Council agreed the principles of a new policy framework 
offering  these  countries  a  partnership  aimed  at  sharing  everything  but  institutions.  The 

1 

A  multilateral  agreement  covering  trade,  development  cooperation  and political  dialogue  between  the 
EU and 78 countries in Sub-Saharan Africa, the Caribbean and the Pacific signed in the year 2000. 

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European  Neighbourhood  Policy  will  ensure  that  following  enlargement  of  the  EU  new 
dividing lines are not drawn on this war-torn continent between the 'haves' and the 'have nots'.  

The  year  2003  also  brought  an  innovative  leap  forward  in  the  Community’s  contribution  to 
peace building in Africa. The Commission will be making a € 250 million contribution to an 
African  Peace  Facility.  It  will  be  based  on  the  principles  of:  (i)  ownership  reinforcing  the 
capacity of the African people to deal with African conflicts; (ii) solidarity through financial 
contributions from all African countries; and (iii) development recognising that without peace 
and stability there can be no development in Africa.  

C.  PATTEN.  Member  of  the  European  Commission  responsible  for  External  Relations. 
Chairman of the Board of the EuropeAid Co-operation Office. 

P.  NIELSON.  Member  of  the  European  Commission  responsible  for  Development.  Chief 
Executive Officer of the Board of the EuropeAid Co-operation Office. 

G.  VERHEUGEN.  Member  of  the  European  Commission  responsible  for  Enlargement. 
Member of the Board of the EuropeAid Co-operation Office. 

P. LAMY. Member of the European Commission responsible for Trade. Member of the Board 
of the European Co-operation Office. 

J.  ALMUNIA.  Member  of  the  European  Commission  responsible  for  Economic  and 
Monetary Affairs. Member of the Board of the European Co-operation Office. 

________________________________________________________________________ 

1. 

THE EC COMMITMENT TO DEVELOPMENT CO-OPERATION 

This  Annual  Report  provides  an  overview  of  the  European  Community’s  policy 
initiatives  and  activities  in  the  field  of  Development  Co-operation  and  External 
Assistance  in  2003.  It  intends  to  reach  a  widespread  audience:  the  European 
Institutions  themselves,  Member  State  administrations,  other  agencies  active  in  the 

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development and external assistance fields, partner countries and Europe’s Non State 
Actors and citizens who, as taxpayers, help make this important effort possible. 

Financial  assistance  is  vital  to  achieve  all  the  ambitious  objectives  which  the 
developing  countries  and  the  donor  community  have  set  for  themselves.  The 
European  Union  as  a  whole  is  the  world’s  largest  donor  in  the  development  field, 
providing  more  than  half  of  all  global  development  assistance:  over  €  30  billion  in 
2003.  

More than one-fifth of the European Union’s total current aid budget is managed by 
the European Commission on behalf of the European Community. These funds come 
from the Community budget as well as the European Development Fund (EDF).  

The  geographical  span  of  the  Community’s  assistance  programmes  is  also  global  - 
from  the  EU’s  immediate  neighbours  to  small  Pacific  islands.  This  report  accounts 
for the € 7.8 billion committed and the € 5.8 billion disbursed during the year 2003. 

The objective of European Community development co-operation policy is to foster 
sustainable  development  designed  to  eradicate  poverty  in  partner  countries  and  to 
integrate  them  into  the  world  economy.  This  can  only  be  achieved  by  pursuing 
policies  that  promote  the  consolidation  of  democracy,  the  rule  of  law,  good 
governance and the respect for Human Rights. 

Ownership  of  these  strategies  by  the  partner  countries  -  through  strengthening  the 
democratic system and extending participation to all segments of society - is the key 
to success. The Community attaches great importance to the quality of dialogue with 
each  partner  country  to  ensure  coherence  between  policies  pursued  by  that  country 
and the Community’s support operations. 

The report provides an update on progress towards the strategic goals set by the EC 
and  the  achievements  of  the  past  year.  The  EC’s  strategic  goals  are  based  on  the 
Millennium  Development  Goals  (MDGs)  agreed  by  the  world’s  leaders  at  the 
Millennium Summit in September 2000, with the overarching objective of reducing 
world poverty by half by 2015. 

The EC contributes to the achievement of the MDGs by focusing its assistance on six 
key  areas  where  it  can  add  particular  value.  The  report  analyses  progress  in  these 
focal  areas:  the  link  between  trade  and  development;  regional  integration  and  co-
operation;  support  for  macroeconomic  policies  and  equitable  access  to  social 
services; transport; food security and sustainable rural development; and institutional 
capacity building, in particular good governance and the rule of law. The promotion 
of  Human  Rights,  equality  between  men  and  women,  environmental  sustainability 
and  conflict  prevention  are  cross-cutting  issues  that  need  to  be  integrated  at  every 
stage and within all of the Community’s assistance programmes. 

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1.1. 

The link between trade and development 

the  Council  of  Ministers  adopted  conclusions  on 

In  November  2002 
the 
Communication2  on  Trade  and  Development  prepared  by  the  Commission  and  this 
led to a series of EC initiatives during the year under review. The key objective of 
the  Commission  is  to  ensure  that  developing  countries,  especially  the  most 
vulnerable  ones,  capture  important  benefits  from  their  participation  in  the  world 
trading  system.  Accordingly,  the  Commission  has  been  working  to  improve 
coherence  between  new  WTO  trade  rules  and  the  goals  of  development  policy. 
Sustainability  Impact  Assessments  (SIAs)  are  now  regularly  used  to  assess  the 
potential  economic,  social  and  environmental  impact  of  trade  agreements  at 
multilateral and at bilateral or regional level. 

1.2. 

Regional integration and co-operation 

EU policy regards regional integration of developing countries as an important step 
towards their integration into the world economy. Regional integration was therefore 
a  key  feature  of  EU  support  for  the  Mercosur  initiative,  the  Central  America 
Common Market (CACM) and the Andean Community, while regional co-operation 
efforts were stepped up in South-East Asia. 

The EC was active in 2003 in promoting the concept of greater regional co-operation 
in  the  African,  Caribbean  and  Pacific  (ACP)  countries  covered  by  the  Cotonou 
Agreement.  By  mid-2003  support  strategies  for  six  regions  within  the  ACP  group 
had been agreed, all including regional integration and trade as a focal sector. 

The  European  Neighbourhood  Policy  reflects  a  new  emphasis  on  partnership 
between  the  EU  and  Russia,  the  Western  NIS  and  ten  Mediterranean  countries.  In 
2003,  the  Commission  developed  the  concept  of  Neighbourhood  Programmes 
bringing together both internal and external funding in a newly harmonised way.  

1.3. 

Support for macroeconomic policies and equitable access to social services 

The  principle  of  direct  budget  support  to  help  countries  implement  their  poverty 
reduction  strategies  has  been  applied  with  considerable  success  in  2003.  Budget 
support  and  macro-economic  assistance  are  two  different  methods  essential  to  the 
reduction  of  poverty;  to  support  public  expenditure  on  vital  health  and  education 
services and to measure their results in practice. 

A total of € 770 million was committed and € 390 million were disbursed in budget 
support  to  19  ACP  countries  during  2003,  supporting  the  implementation  of  the 
partner  country  government’s  own  poverty  reduction  strategies,  ensuring  progress 
reform  programmes,  and  encouraging 
with  public 
governments to focus on results. 

financial  management 

Work in 2003 on the education component of the EC’s development policy followed 
the strategy defined in the March 2002 Communication on Education and training in 
the context of poverty reduction in developing countries. The Commission played an 

2 

Policy  proposal  from  the  Commission  to  the  EU  Member  States  and  the  European  Parliament. 
[KOM(2002)513] 

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active  role  in  the  planning  and  launching  of  the  international  partnership  for  the 
Education for All Fast-Track Initiative, which aims at accelerating progress towards 
universal  primary  education  in  developing  countries.  Commitments  in  2003  for 
country-specific education programmes and projects is a total of approximately € 250 
million,  of  which  approximately  €  135  million  was  for  ACP  countries.  These 
country-specific  education  programmes  and  projects  cover  basic,  vocational  and 
higher  education  programmes,  each 
the  partner  country’s 
development programmes, and monitored through a set of indicators agreed on with 
the partner government. 

incorporated 

in 

The  European  Commission  has  kept  progress  towards  health-related  Millennium 
Development  Goals  –  such  as  child  mortality,  maternal  health  and  communicable 
diseases - as a high priority in its policy. This is reflected in programmed support to 
developing countries. The EC has also pledged € 460 million into the Global Fund to 
Fight  AIDS,  Tuberculosis  and  Malaria.  The  EU  contribution  (EC  plus  Member 
States)  represents  so  far  more  than  half  of  all  resources  already  disbursed  to  the 
Fund. 

1.4. 

Transport 

Transport is an essential service to improving access to health, education, water and 
food security. It is one of the six priorities of EC development co-operation and the 
focal  sector  of  32  ACP  country  programmes  and  three  ACP  regional  programmes 
under  the  9th  EDF,  under  which  commitments  to  transport  programmes  in  ACP 
countries  and  regions  in  2003  totalled  approximately  €  500  million  to  be  used  for 
supporting policy and strategy reforms and network investments, mainly in the road 
sector. 

Transport is also one of the priorities in the TACIS3 and Central Asia and Western 
Balkans  regional  Programmes.  Under  the  name  of  TRACECA,  the  Commission 
supports the creation of a common transport corridor from Europe to Central Asia: in 
2003 eleven projects were identified with a total budget of € 12 million. A Regional 
Balkans  Infrastructure  Study  and  a  needs  assessment  of  Aviation  Safety  and  Air 
Traffic Control in the five CARDS Countries were also completed in 2003. 

1.5. 

Food security and sustainable rural development 

Rural  poverty  remains  the  dominant  feature  in  both  the  incidence  and  depth  of 
poverty  in  developing  countries.  In  2003  the  Commission  chaired  a  Task  Force  of 
EU  Member  States  to  draft  a  new  land  policy  in  support  of  developing  countries. 
This  lays  the  foundations  for  sustainable,  participatory  and  pro-poor  land  policies 
and  land  administration  systems  built  on  the  recognition  of  existing  rights  in  local 
cultures and societies. 

During  2003  the  Commission  contributed  to  the  establishment  of  a  Global  Donor 
Platform for rural development with the participation of key bilateral and multilateral 
donors.  The  EC  also  started  work  on  the  establishment  of  a  Strategic  Partnership 

3 

The TACIS programme provides grant-financed technical assistance to 12 countries of Eastern Europe 
and Central Asia (Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, 
Tajikistan, Turkmenistan, Ukraine and Uzbekistan). 

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with key UN agencies such as the Food and Agriculture Organisation and the World 
Food Programme. 

The  Commission  provided  €  440.6  million  via  a  specific  EU  budget  line  for  Food 
Security and Food Aid budget line to 32 priority countries, mainly in Africa as well 
as to support key international organisations. 

1.6. 

Governance, institutional capacity building and the rule of law 

Good  governance  and  the  promotion  of  democracy  have  been  identified  by  the 
international  community,  including  the  European  Union,  as  critical  factors  in 
reaching the Millennium Development Goals. EC policy on governance, institutional 
capacity building and the rule of law has been addressed in a recent Communication 
on  Governance  and  Development.  The  approach  is  a  practical  one  and  focuses  on 
different  types  of  situations,  i.e.  difficult  partnerships,  post-conflict  situations  and 
effective partnerships. 

While  continuing  in  2003  to  target  its  support  to  ‘good  performers’  as  a  means  of 
increasing aid effectiveness, the EC also takes the policy line that the populations in 
less  performing  countries  should  not  pay  the  price  for  bad  leaders.  For  reasons  of 
solidarity,  security,  and  long-term  aid  effectiveness,  and  instead  of  totally 
withdrawing  from  these  countries,  the  Communication  proposes  to  find  alternative 
entry points and approaches to co-operation. 

1.7. 

Scientific and Technological Co-operation in support of development 

The 6th RTD Framework Programme (2002-2006) includes a component of research 
for development, entirely based on cooperation with Developing Countries. 

1.8. 

Other EC Co-operation activities 

Highlights  of  the  year  include  the  EC’s  contributions  to  global  initiatives  and 
progress on commitments made at the Monterrey and Johannesburg conferences on 
sustainable and equitable development, as well as on the Doha Development Agenda 
of  the  WTO.  The  effects  of  the  recent  European  Union  enlargement  -  in  terms  of 
expansion  of  the  donor  community  and  the  role  of  the  new  neighbours  -  are 
described in the annexes to this document. 

2003 saw the completion of Mid-Term Reviews (MTRs) of Strategy Papers for the 
Mediterranean, Asian, Latin America, TACIS (Eastern Europe and Central Asia) and 
CARDS  (Western  Balkans)  regions  and  the  start  of  the  process  for  the  ACP 
countries.  The  aim  of  these  MTRs  is  to  maintain  relevance  and  enhance 
responsiveness to evolving situations.  

2. 

EFFICIENCY OF EC CO-OPERATION 

Implementation of the external assistance reform process, which started in year 2000, 
continued  in  2003.  The  transfer  of  management  responsibilities  to  the  EC 
Delegations in the recipient countries is well advanced, focus has shifted from inputs 
to results, and the reform has resulted in a simplification of procedures and a greater 
emphasis  on  the  strategic  planning  and  programming  of  external  assistance.  The 

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management  capacity  of  the  EuropeAid  Co-operation  Office  has  continued  to 
improve, with particular emphasis on quality improvement and the enhancement of 
management information systems. 

Co-ordinating  development  activities  between  partners,  harmonising  policies, 
programmes,  procedures  and  practices,  and  maximising 
the  development 
effectiveness  of  aid  resources  are  all  essential  parts  of  the  reform  process.  The 
Community has been actively promoting the implementation of the concept of “the 
Three Cs”: Co-ordination, Complementarity and Coherence.  

3. 

THE EC’S GLOBAL REACH: ACHIEVEMENTS IN 2003 REGION BY REGION 

The  European  Community  is  active  in  140  countries  and  six  regions  of  the  world 
within the domain of the delivery of assistance: the Western Balkans; Eastern Europe 
and  Central  Asia;  the  Mediterranean  countries;  the  Africa,  Caribbean  and  Pacific 
(ACP)  countries  and  Overseas  Countries  and  Territories  (OCTs);  Asia;  and  Latin 
America. Full details including financial execution figures and commitments in 2003 
can be found in the annexes. 

Western Balkans 

The strategic objective of Community actions in the Western Balkans, delivered via 
the  CARDS  programme,  remains  support  for  the  Stabilisation  and  Association 
Process  (SAP).  The  year  2003  confirmed  a  further  shift  in  Community  assistance 
from reconstruction and democratic stabilisation to other sectors more closely linked 
to  the  SAP  reform  agenda,  i.e.  administrative  and  institution  capacity  building, 
economic  and  social  development,  justice  and  home  affairs,  and  closer  alignment 
with EU acquis. 

A total of € 620 million was committed and € 425 million disbursed in the Western 
Balkans region in 2003. 

Eastern Europe and Central Asia 

A key priority for 2003, with the prospect of enlargement of the Union in May 2004, 
was closer co-operation across the external borders of the Union. A new Strategy and 
Indicative  Programme  2004-2006  for  the  TACIS  Cross  Border  Co-operation 
programme,  adopted  in  November  2003,  sets  out  how  this  policy  will  be 
implemented on both sides of the eastern borders of the enlarged EU: in late-2003, 
the Commission started work on revision of the TACIS Regulation. It is important to 
accommodate  the  social  consequences  of  transition,  address  the  need  for  greater 
security  in  the  nuclear  industry,  and  ensure  that  the  TACIS  programme  is  well 
adapted to the emerging priorities of the European Neighbourhood Policy. 

A total of € 504 million was committed and € 420 million disbursed in the Eastern 
Europe and Central Asia region in 2003. 

Mediterranean and Near and Middle East  

Activities  in  this  region,  implemented  via  the  MEDA  Programme,  reflected  the 
Barcelona process and the Neighbourhood Policy of the EC.  

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In  2003  the  Community  continued  to  support  initiatives  aimed  at  reinforcing  sub-
regional  integration  in  areas  such  as  trade,  infrastructure  networks  and  migration 
policy, along the lines of the Mahghreb Arab Union (UMA) and the Agadir process. 
Promoting  investment  in  the  countries  of  the  Mediterranean  South  is  also  a  major 
challenge: in this respect, the ECOFIN Council of November 2003 proposed further 
development  of  the  European  Facility  for  Euro-Mediterranean  Investment  and 
Partnership (FEMIP). 

The  Naples  Conference  of  December  2003  approved  the  creation  of  a  Euro-
Mediterranean  Foundation  to  promote  a  dialogue  between  the  cultures.  In  the 
educational  field,  the  extension  of  the  Tempus  Programme  to  the  Mediterranean 
countries  will  reinforce  co-operation  in  the  higher  education  and  professional 
training  fields.  Finally,  a  co-operation  programme  in  the  justice  and  home  affairs 
domain has been launched and specific projects on police training and cooperation, 
judicial training and cooperation as well as gathering and analysing information on 
migration flows in the Mediterranean area are being implemented. 

A  total  of  €  600  million  was  committed  and  €  498  million  disbursed  in  the 
Mediterranean and Near and Middle East region in 2003. 

African Caribbean Pacific Countries/OverseasCountries and Territories 

The EU-ACP political dialogue set out in the Cotonou Agreement reflected issues of 
common  concern  including  developments  in  Human  Rights  and  democratic 
principles. The EC contributed to the peace-keeping efforts of the African Union and 
the Economic Community of West African States (ECOWAS). 

The  main  sectors  of  intervention  in  bilateral  co-operation  programmes  were 
transport, regional integration, rural development, macroeconomic and social sector 
support  and  other  focal  areas  mentioned  in  section  I.  EC  contributions  to  global 
initiatives such as the Heavily Indebted Poor Countries (HIPC) and the Global Fund 
for  AIDS,  TB  and  Malaria  particularly  benefited  poor  countries  in  sub-Saharan 
Africa.  

On  the  trade  front,  negotiations  for  the  conclusions  of  Economic  Partnership 
Agreements (EPAs) started with regional groups – Central and Western Africa being 
the  first.  The  objective  is  the  establishment  of  a  new  trade  regime  with  ACP 
countries after 2008. Another major EC initiative launched in 2003 – in response to 
the fact that almost 40% of people in sub-Saharan Africa lack access to safe water or 
adequate sanitation – is the € 500 million European Union Water Facility. 

The year 2003 also provided an opportunity to reflect on the future development of 
the  OCT-EC  association.  Twelve  of  the  Overseas  Countries  and  Territories  which 
have been granted individual budget support for the period up to 2007 had submitted 
their draft programming documents by the end of the year. 

Performance  figures  for  the  European  Development  Fund  were  especially  strong, 
with an upsurge in primary commitments (€ 3.7 billion in total) and record levels of 
contracts signed (€ 3 billion) and payments effected (€ 2.5 billion). 

Asia 

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In  line  with  the  European  Union’s  co-operation  strategy  for  Asia,  practical  co-
operation  was  stepped  up  in  the  following  fields:  trade  and  investment,  sector 
approaches  for  poverty  reduction,  good  governance,  Human  Rights  and  democracy 
and conflict management. Economic relations with Asia were strengthened through 
regular  dialogue  at  regional  and  bilateral  level  and  were  backed  by  co-operation 
programmes on an Asia-wide basis, as well as support for Trade Related Assistance 
(TRA). 

EC strategy has increasingly focused on institutional capacity development through 
the  delivery  of  trade-related  assistance  in  line  with  the  WTO  Doha  Development 
agenda,  including  assistance  on  public  finance  management.  Good  examples  of 
practical  co-operation  are  the  five  Asia-Wide  programmes,  targeting  key  areas  of 
business  investment  and  trade  facilitation,  urban  development,  higher  education 
linkages  and  scholarships,  accelerated  use  of  information  and  communications 
technology, and promotion of environmentally friendly technological solutions. 

A  total  of  €  558  million  was  committed  and  €  470  million  disbursed  in  the  Asia 
region in 2003. 

Latin America 

The EC’s co-operation with Latin America in 2003 follows on the conclusions of the 
2002 Madrid Summit. This co-operation privileged three main activities during 2003: 
institutional  and  democratic  reinforcement,  modernisation  of  the  state  and  human 
rights;  social  development,  and  development  of  the  less  prosperous  regions;  and 
trade-related assistance and regional integration. 

The  European  Commission  continued  negotiations  with  the  Mercosur  countries  in 
2003,  signed  Political  Dialogue  and  Co-operation  Agreements  with  the  six  Central 
American  countries  and  the  Andean  Community,  and  implemented  an  Economic 
Partnership, Political Coordination and Co-operation Agreement with Mexico and an 
Association Agreement with Chile. 

A  total  of  €  329  million  was  committed  and  €  280  million  disbursed  in  the  Latin 
America region in 2003. 

4. 

SPECIAL FEATURE: PEACE AS A PRIORITY 

The  annex  to  this  report  accords  special  attention  to  an  issue  that  has  gained 
increased recognition within the development community, namely the link between 
governance, peace and security and development. It presents a thorough analysis of 
this interdependency and describes the steps the EC is taking to enhance standards of 
governance and security and, thereby, ensure a stable and peaceful environment for 
effective development. 

5. 

ANNEXES (COMMISSION STAFF WORKING PAPER SEC(2004)1027) 

The  annexes  conclude  with  analysis  of  progress  on  the  MDGs,  progress  made  in 
list  of 
harmonisation  of 

financial  procedures  and  administration  and  a 

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Communications on development policy and external assistance prepared by the EC 
during the year. 

Finally, in the financial annexes, DAC tables show the breakdown of commitments 
and  payments  in  2003.  Moreover,  all  2003  commitments  are  listed  per  region,  in 
accordance with geographical and thematic budget lines. 

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