Communication from the Commission to the Council and the European Parliament - Annual Report 2005 on the European Community’s Development Policy and the Implementation of External Assistance in 2004 {SEC(2005)892}
Date: 2005-07-15
Institutions: European Commission
Subjects: activity report, aid evaluation, aid policy, cooperation policy, developing countries, development aid, impact study

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 15.07.2005 
COM(2005) 292 final 

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL 
AND THE EUROPEAN PARLIAMENT 

Annual Report 2005 on the European Community’s Development Policy and the 
Implementation of External Assistance in 2004 

{SEC(2005)892} 

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COMMUNICATION FROM THE COMMISSION TO THE COUNCIL 
AND THE EUROPEAN PARLIAMENT 

Annual Report 2005 on the European Community’s Development Policy and the 
Implementation of External Assistance in 2004 

A. 

EXECUTIVE SUMMARY  

Introduction 

This Annual Report presents the key features of the European Community’s policy 
initiatives  and  activities  in  the  field  of  development  co-operation  and  external 
assistance in 2004. It aims to reach a wide audience, including the institutions of the 
European  Union,  key  groups  in  the  Member  States  (especially  Parliaments  and 
administrations),  civil  society  and  the  general  public,  who  all  help  make  this 
important effort possible, as well as partner developing countries, and other agencies 
and organisations active in the area of development and external assistance.  

The European Union holds a unique status on the international stage and among the 
donor community. It is the world’s largest donor, as it accounts for more than half of 
the world’s official development assistance. The Commission itself manages +/- 11% 
of  the  world  total,  having  spent  over  €  6.9  billion  in  2004.  That  means  that  the 
European  Commission  manages  one  fifth  of  the  Official  Development  Aid  (ODA) 
delivered by the EU. Over the past four years, the Commission has been reforming 
the way it prioritises, organises and implements assistance projects and programmes 
abroad,  so  as  to  make  more  effective  use  of  funds  provided  by  the  European 
taxpayer. A special Eurobarometer1 survey carried through in 2004 confirms that the 
European public expects the European Union to play a central role in development. 6 
out of 10 European citizens believe that the European Commission helps poor people 
in developing countries – a goal that 9 out of 10 recognize as important.  

In  the  major  crises  and  natural  disasters  we  witnessed  in  2004,  the  European 
Commission played an important role, responding with emergency assistance when 
required, as well as continuing aid efforts in the regions which underwent  crises in 
previous  years.  This  support  in  the  search  for  peace,  stability  and  reconstruction  in 
countries  such  as  Afghanistan,  Timor-Leste,  Democratic  Republic  of  Congo,  Haiti 
and  Fiji,  and  the  efforts  towards  economic  growth  and  reduction  of  poverty  in 
countries  such  as  Uganda,  Vietnam  or  Rwanda,  bear  witness  to  the  Commission’s 
vital role in the world today.  

2004 was also the year of the EU enlargement, which has had a major impact on the 
Union’s external relations. The Commission has supported the active participation of 
the  new  Member  States  in  EU  development  policy  through  a  “Road  Map” 
programme adopted in 2003 which has continued and expanded in 2004-2005. The 
effects of enlargement go well beyond the Union’s immediate vicinity – it marks a 

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significant increase in the Union’s importance in global efforts to promote peace and 
stability, foster world trade, and fight poverty. 

Objectives set and underlying analyses 

The  key  development  objectives  for  2004,  in the  framework  of  sustainable  growth, 
were set out in the Commission’s 2004 Annual Policy Strategy2. These included: 

•  Follow-up 

to 

the  World  Summit  on  Sustainable  Development  (WSSD), 

particularly through the EU initiatives for Water and for Energy; 

•  Successful completion of the Doha round and other important trade negotiations, 

including South East Asia and Latin America; 

•  Implementation and revision of the Cotonou Agreement with African, Caribbean 

and Pacific countries; 

•  Progress  with  implementing  the  debt  initiative,  and  with  measures  in  the  global 

fight against communicable diseases in developing countries. 

A  further  objective  for  2004  was  the  preparation  for  the  High-Level  Event  in  New 
York  in  September  2005,  for  which  an  EC  MDG  report  was  launched  in  October 
2004, suggesting that specific EU measures shall be prepared in the areas of Finance 
for Development, Coherence for Development and Focus on Africa. 

a) 

The political dimension 

The  main  objective  of  Community  development  policy  must  be  to  reduce  and 
eventually,  to  eradicate  poverty.  This  objective  entails  support  for  sustainable 
economic  and  social  and  environmental  development,  promotion  of  the  gradual 
integration  of  developing  countries  into  the  world  economy  and  a  determination  to 
combat inequality. 

The  European  Commission  continued  to  support  countries  in  the  fight  against 
poverty,  and  to  encourage  their  efforts  to  foster  peace,  security  and  democracy,  as 
well  as  to  promote  the  rule  of  law,  good  governance  and  the  respect  of  Human 
Rights, all of which are key factors for development. 

The  European  Commission  took  steps  in  2004  to  promote  human  security,  which 
relies both on strategic security and political stability on the one hand and on good 
governance  and  Human  Rights  on  the  other  hand.  This  innovative  people-centred 
approach is about turning formal rights into concrete access  possibilities: on top of 
the traditional focus on protecting or defending assets, it places a specific emphasis 
on meeting basic needs and achieving well-being.  

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b)  Achievement of the MDGs 

In November, 2000 the Community adopted a single overall framework to guide its 
development  co-operation  policy  with  developing  countries3.  Its  objective  is  the 
reduction  and  eventual  eradication  of  poverty.  Since  2000,  this  focus  has  been 
strengthened and underpinned by a number of detailed policy statements on specific 
areas  and  sectors  of  co-operation,  particularly  education  and  health,  transport  and 
institution-building.  

Moreover, in order to establish an explicit link between development policy and the 
internationally-recognised  goals  for  fighting  poverty  (the  Millennium  Development 
Goals,  or  MDGs)  the  Commission  identified  -  in  close  co-operation  with  the  EU 
Member States and international organisations such as the World Bank, the UN and 
the  OECD  -  a  core  set  of  ten  key  indicators  related  to  income,  child  malnutrition, 
enrolment in primary education, immunisation and other health indicators (including 
HIV prevalence).  In 2003, the Commission started to use these indicators to assess 
the  performance  of  the  countries  and  regions  where  it  provides  development 
assistance. However, it should be noted that: 

•  Firstly,  the  different  indicators  are  closely  interrelated  –  for  instance,  lack  of 
access  to  clean  water  and  sanitation  has  not  only  a  major  impact  on  health,  but 
lack  of  sanitation  in  school  buildings  is  a  strong  disincentive  among  others  for 
girls to go to school.  

•  Secondly, support may be crucial in other areas for creating the right framework 
for making progress in the indicators – for instance, the effective delivery of basic 
social services depends heavily on factors such as an adequate road infrastructure, 
and an effective system for public finance management.  

•  Thirdly, objectives cannot be achieved in conditions of chronic insecurity, and so 
conflict  prevention  has  been  made  a  key  cross-cutting  issue  for  Community 
external relations. 

•  Fourthly,  further  progress  needs  to  be  made,  particularly  among  the  least 
developed countries, to enhance statistics governance with a view to ensuring that 
data required can be adequately provided on a sustainable basis. 

Work in this area continued in 2004. In October 2004, the Commission furthermore 
presented  a  comprehensive  report  on  Millennium  Development  Goals  2000-20044. 
The report provided information on how the EC contributed to progress towards the 
MDGs,  with  a  specific  focus  on  MDG8  (Develop  a  Global  Partnership  for 
Development).  The  report  concluded  that  in  order  to  strengthen  the  basis  for  real 
progress,  generic  donor  action  is  needed  on  three  accounts:  (1)  more  and  better 
finance  for  development,  (2)  enhanced  policy  coherence  for  development;  (3)  a 
specific focus on (sub-Saharan) Africa. 

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c)  A partnership approach  

Wherever possible, the Commission-funded programmes of development assistance 
are  based  on  the  country’s  own  strategy  to  reduce  poverty,  set  out  in  a  Poverty 
Reduction  Strategy  Paper.  These  strategies  should  be  used  to  co-ordinate  all  the 
support  from  development  partners  and  should  ensure  a  coherent  and  effective 
programme.  

The  Commission’s  experience  in  the  field  of  external  assistance  confirmed  that 
ownership  by  EU  partners  is  pivotal  for  the  efficiency  and  sustainability  of  all 
initiatives.  By  granting  the  beneficiary  countries  more  responsibility,  this  approach 
contributes to enhancing their strategic and management experience, and fosters the 
spread of tailor-made best practices. 

Actions taken to achieve these objectives 

a) The political dimension 

2004 saw both the consolidation and deepening of the traditional links with Africa, 
Caribbean  and  Pacific  countries  and  the  launch  and  promotion  of  an  innovative 
partnership framework with the EU neighbouring countries. 

In  May 2004,  the  negotiations  on  the  revision  of  the  Cotonou  Agreement  were 
launched  at  the  joint  ACP-EU  Council  of  Ministers  in  Gaborone.  The  overarching 
objective  in  the  revision  process  was,  while  reaffirming  the  fundamental  acquis  of 
the  Cotonou  Agreement,  to  enhance  the  effectiveness  and  quality  of  the  EU-ACP 
partnership.  Steady  progress  in  the  negotiations  was  made  throughout  the  year, 
culminating  in  a  conference  in  December  2004  where  Ministers  reiterated  their 
common objective to conclude the discussions by February 2005. 

On 12 May 2004, the Council approved the European Neighbourhood Policy (ENP)5, 
which  aims  to  share  the  benefits  of  the  EU’s  enlargement  with  the  neighbouring 
countries, notably by offering them a stake in the Internal Market. By strengthening 
stability,  security  and  well-being  for  all  partners  involved,  the  ENP  prevents  the 
emergence  of  new  dividing  lines  between  the  enlarged  EU  and  its  neighbours.  The 
ENP  stands  as  a  realistic  co-operation  framework  based  on  a  common  set  of  core 
values  yet  adapted  to  each  partner’s  specific  needs  on  a  bilateral  basis,  through 
Action Plans (the first seven of which, concerning Israel, Jordan, Morocco, Moldova, 
the Palestinian Authority, Tunisia and Ukraine, were presented in 2004). Its ultimate 
objective is to create a “ring of friends” for the EU. 

Conflict prevention and crisis management remained at the top of the Commission’s 
agenda.  In  December  2004,  a  call  for  proposals  for  the  creation  of  a  conflict 
prevention  network  was  launched,  and  a  pool  of  experts  has  been  created  for 
deployment in future crisis management missions led by the EU – lessons from the 
EU intervention in tsunami-hit areas in late 2004 will also be drawn upon to further 
improve crisis management co-ordination mechanisms.  

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Moreover, in 2004, African-led attempts to restore peace, funded substantially by the 
EC,  began  to  yield  results.  The  African  Union  (AU)  inaugurated  a  Peace  and 
Security Council to deploy troops to prevent genocide and crimes against humanity 
and  to  keep  the  peace.  Peacekeepers  were  promptly  sent  to  Burundi  and  ceasefire 
monitors to Darfur in the Sudan. At an extraordinary AU summit in Libya, outgoing 
European  Commission  President  Prodi  praised  the  dynamism  of  the  AU  and  its 
impressive pace of progress to date.  

In  2004,  the  Commission  allocated  a  total  of  €  217.5  million  to  reconstruction  in 
Iraq,  making  the  Commission  one  of  the  most  important  donors.  Funding  was 
primarily channelled through the International Reconstruction Fund Facility for Iraq, 
which  seeks  to  combat  the  day-to-day  challenges  facing  Iraqis,  for  instance  in  the 
fields of education, health, water and sanitation. 

Commitments to support the return to stability in Afghanistan amounted to € 216.5 
million, and are financing both the reconstruction of roads, and the strengthening of 
the country’s democracy through support for voter registration and the administration 
of  elections.  The  EU  was  also  engaged  in  activities  such  as  border  monitoring  and 
the  fight  against  drug  trafficking,  in  particular  providing  decisive  support  to 
Afghanistan’s National Drug Control Strategy. 

EU  support  for  Human  Rights  and  democracy  was  strong  in  2004.  Election 
observation missions were one of the most direct and visible tools; the Commission 
deployed  632  election  observers  in  Indonesia,  Sri  Lanka,  Malawi,  Mozambique, 
West Bank and Gaza, and Afghanistan, as well as prepared for the elections in Iraq. 
Financial support from the EC also allowed many African countries to continue their 
efforts  to  improve  the  way  they  are  governed.  Free  and  fair  elections,  partly 
supported by the Commission, were held in Ghana, Guinea-Bissau and Niger, while 
voters in the Central African Republic approved a new constitution.  

In the area of international justice, targeted initiatives to strengthen the functioning of 
the international Tribunals for Rwanda, the former Yugoslavia, and the International 
Criminal Court were launched in 2004. Co-operation with the Council of Europe was 
the  basis  for  actions  to  consolidate  the  rule  of  law  and  democratisation  in  the 
Balkans, Central Asia, and the Russian Federation.  

The first version of a Commission handbook on Good Governance, which has been 
developed  in  consultation  with  Member  States  and  partners  in  civil  society,  was 
field-tested in 2004. The Commission is also working with OECD donors to develop 
indicators in the area of governance. 

Steps  were  taken  to  mainstream  the  rights  of  indigenous  peoples  into  the 
programming process, with the development of a practical guide, and a contract was 
signed  with  the  UN  to  support  a  project  in  this  area  in  Guatemala  and  in  Mexico. 
Efforts to reinforce the mainstreaming of  children’s rights included the launch of a 
training  programme  with  UNICEF,  and  the  establishment  of  an  inter-institutional 
group. EU Heads of Mission in countries affected by armed conflict are now required 
to  report  on  the  impact  on  children,  covering  not  only  the  recruitment  of  child 
soldiers, but also the effects on schools and hospitals. 

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b) MDGs-related initiatives 

In  the  framework  of  follow-up  to  the  WSSD,  the  Commission  launched  an 
innovative ACP-EU Water Facility6 of a total budget of € 500 million (first tranche 
of € 250 million agreed in 2004), which will fund proposals from community groups, 
private companies and other non-state actors, as well as governments. A facility on 
similar lines for energy projects was being prepared in 2004.  

the  Commission  continued 

Increased  trade  is  one  of  the  most  important  instruments  for  moving  towards  the 
MDGs.  During  2004, 
to  achieve  a 
development-friendly  outcome  of  the  Doha  Development  Agenda.  By  emphasising 
the development dimension, WTO General Council’s decision of 1 August 2004 is a 
good basis to continue the negotiations, which should ultimately lead to a more level 
playing field for all, in particular developing countries  striving to integrate into the 
world  economy.  The  Commission  is  keen  to  ensure  that  all  developing  countries, 
especially  the  Least  Developed  Countries  (LDCs)  and  other  vulnerable  and  small 
economies, derive sizeable benefits from the Doha Round. 

its  efforts 

The mid-term reviews of the Country Strategy Papers for ACP countries, which were 
held in 2004, provided a timely opportunity to assess implementation of the Cotonou 
Agreement to date and to strengthen the focus of the strategies on co-ordination and 
coherence in support of the achievement of the MDGs. The quality of the planning 
and design of individual projects and other operations, to ensure that the lessons of 
the  past  are  taken  into  account  and  that  issues  such  as  gender  or  sustainable 
development  are  adequately  covered,  has  been  the  focus  of  much  attention.  An 
internal  survey  in  2004  largely  confirmed  a  gradual  improvement  in  the  design  of 
operations.  Efforts  are  under  way  to  reinforce  the  system  and  to  develop  and 
implement a more comprehensive quality support system. Practical steps were taken 
in 2004 to improve country strategies from a gender equality point of view and create 
awareness  of  the  importance  of  gender-disaggregated  data  as  a  necessary  basis  for 
country analysis. Efforts were also made to work with Member States at field level 
by pooling expertise, analytical tools and best practice. Projects and programmes for 
more  than  €  770  million  had  promotion  of  gender  equality  as  a  principal  or 
significant  objective,  indicating  that  mainstreaming  is  working.  Support  for 
environmental  aspects  of  co-operation  also  registered  well  –  €  700  million  was  the 
equivalent  figure.  In  addition,  the  Commission  played  a  leading  role  in  other 
international initiatives such as the Global Fund for Aids, tuberculosis and malaria, 
the  Global  Polio  Eradication  Initiative.  The  Commission  adopted  on 
and 
26 October 2004  the  Communication  on  “A  coherent  European  Policy  Framework 
for external action to confront HIV/Aids, Malaria and Tuberculosis”7. 

c) A partnership approach 

Through the €250 million Africa Peace Facility, launched in May 2004, the EC funds 
peace-keeping  by  the  African  Union  and  sub-regional  entities.  This  flagship 
partnership  enabled  the  European  Union  to  fulfil  immediately  the  African  Union's 
request for help to send a ceasefire monitoring mission to Darfur in western Sudan. 

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In mid-August, the UN’s Food and Agriculture Organisation (FAO) appealed to the 
EC  to  help  tackle  a  locust  invasion  in  West  Africa.  Within  35  days,  the  EC  had 
transferred €24 million. It also issued a detailed plan to respond better to the needs of 
National  Authorising  Officers  (NAOs),  the  recipient  government  officials  who 
disburse the EC funds. 

In  March  2004,  the  AENEAS  Programme  (2004-2008)8,  with  an  overall  indicative 
budget of € 250 million, was adopted to provide financial and technical assistance to 
third countries in support of their efforts to ensure more effective management of all 
aspects  of  migration  flows.  In  November  2004,  the  Council  launched  a  new 
programme (the Hague programme) to develop the integration of security, migration 
and asylum issues into relations with third countries. 

Management issues 

a) Context: devolution process fully operational in 2004 

Alongside the emphasis on a better policy focus, the Commission launched in 2000 a 
management  reform  package  to  improve  radically  the  speed  and  quality  of  the 
delivery  of  its  external  assistance  programmes.  The  wide-ranging  reform  included 
both  the  creation  as  from  January  2001  of  a  single  organisation  to  manage  the 
external  development  assistance  programmes  (EuropeAid),  and  the  devolution  in 
2001-2004 of responsibilities and resources to the Commission’s offices in the field 
(Delegations). Devolution increased the role of the Delegations in matters such as the 
policy  dialogue  with  the  authorities  on  complex  public  service  and  governance-
related reforms, and in co-ordination with other donors.  

The  devolution  process  was  completed  in  2004  (with  a  very  few  exceptions).  The 
European  Court  of  Auditors  carried  out  in  2004  an  audit  of  the  Commission’s 
management  of  the  devolution  exercise.  It  will  take  time  for  the  full  impact  of 
devolution  to  be  seen,  but  the  Court  reports  that  in  the  majority  of  Delegations 
visited,  there  are  signs  that  the  speed  and  quality  of  project  management  are 
benefiting from the increased capacity in the operational units. This leads to a better 
problem-solving  capacity  within  the  Delegation,  to  increased  contacts  with 
beneficiaries  and  to  a  better  understanding  of  local  conditions.  The  Court’s 
recommendations  match  well  with 
the 
Commission.  

initiatives  currently  under  way  by 

b) Delivery of assistance 

Providing aid as direct budget support wherever the conditions allow has become a 
priority in this context. It has many advantages over traditional forms of aid, which 
tend  to  set  up  parallel  administrative  structures  with  expatriate  advisers  and  with 
their own procedures for monitoring, procurement and financial control. However it 
does require a careful assessment of the beneficiary’s existing budgetary systems and 
plans  for  reform.  The  Commission  has  been  working  closely  with  other  leading 
donors,  in  particular  the  World  Bank,  in  the  framework  of  the  initiative  on  Public 
Expenditure  and  Financial  Accountability  (PEFA),  developing  ways  to  improve 

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transparency  and  efficiency  in  the  public  financial  management  of  beneficiary 
countries,  and  participated  in  2004  in  an  assessment  of  the  testing  of  performance 
indicators. 

Most of the Community’s assistance goes to individual partner countries, and a key 
part of improving the speed and quality of this assistance lies in improving the design 
of the country programmes. The purpose is not only to adopt the strategy which will 
be  most  effective  for  the  country  concerned,  taking  into  account  its  resources  and 
policies,  but  also  to  ensure  the  coherence of  all  the  EU’s  policies  in  relation  to  the 
country strategy, and the co-ordination of EU actions with those of other donors.  

The  need  to  ensure  proper  co-ordination  of  emergency  aid,  rehabilitation  and 
development aid was taken into account and is the subject of special study in eight 
countries and two regions. 

The  European Union  has  been  at the forefront of international  efforts  to harmonise 
donor  practices.  In  over  60  developing  countries,  donors  are  beginning  to  use 
harmonised  and  simplified  procedures,  joint  analytical  work,  enhanced  focus  on 
delivery  of  development  results,  common  implementation  procedures  and  common 
arrangements  for  support  through  the  partner  country’s  budget.  The  EU  pilot 
initiative  launched  in  2002  in  order  to  promote  harmonisation  in  Morocco, 
Mozambique, Nicaragua and Vietnam was successfully completed in 2004 as those 
countries  have  proven  to  become  international  references  on  the  matter.  The  work 
carried out in the context of the OECD/DAC in 2004 where the Commission and the 
Member  States  played  an  active  role,  was  instrumental  in  defining  the  framework, 
first operational targets and indicators later adopted in the High Level Forum on Aid 
Effectiveness in Paris, February 2005. 

In order to contribute and implement those engagements the EU adopted a work plan 
in the General Affairs and External Relations Council of November 2004. Based on 
the report of an ad hoc group gathering Commission and Member State experts, this 
work plan, open to all donors, gives a central role to the partner country and is based 
on  pragmatic  field  approach.  This  plan  foresees  four  axes  of  work  for  the  years  to 
come: 

•  The  establishment  of  EU  road  maps  in  every  country  around  a  menu  of  actions 

supporting local harmonisation processes 

•  The  definition  of  a  joint  EU  programming  framework  targeting  improved 

complementarity 

•  The establishment of a Joint Financial Agreement favouring the harmonisation of 

procedures around the country systems 

•  The development of a real operational strategy on complementarity 

In  parallel,  co-operation  with  the  World  Bank  and  with  UN  organisations  has 
intensified, roughly doubling in financial terms between 2002 and 2004. 

Since  2000,  every  effort  has  been  made  to  ensure  much  wider  consultation  in  the 
preparation of these strategies, and further improvements in the quality and extent of 

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this participation will be sought in future exercises, targeting i.a. the civil society. In 
2004,  the  Commission  continued  implementing  the  policy  guidelines  based  on  the 
2002 Communication on the participation of non-state actors (NSAs) in development 
policy, through regular dialogues both on general issues and sectoral ones; financial 
support  to  implement  their  own  initiatives  and  to  act  as  ‘implementing  partners’  in 
EC  co-operation  programmes;  or  awareness  raising  in  the  ten  new  EU  Member 
States.  Moreover,  last  year  the  Guidelines  on  principles  and  good  practices  for  the 
participation  of  NSAs  in  dialogues  and  consultations  on  development  were 
published9.  

The Commission seeks to improve the efficiency  and  impact  of  its  programmes  by 
increasing  the  focus  on  a  limited  number  of  areas  of  intervention,  and  by  avoiding 
the  dissipation  of  its  aid  in  a  large  number  of  small  unrelated  projects.  Special 
attention is paid to maintaining a balance between commitments and payments (the 
“Reste à Liquider”, or “RAL”) and to monitoring the average time taken to complete 
a project or programme. Projects which appear not to be progressing smoothly, either 
because  no  transactions  have  taken  place  for  some  time,  or  because  the  accounts 
have not been closed after five years, are examined individually. 

c) Future prospects: rationalisation of legal instruments 

Our external assistance programmes have developed over nearly fifty years. They are 
based  on  more  than  30  different  legal  instruments,  some  thematic  (such  as  food 
security and Human Rights), some geographical (with aid to ACP countries separate 
from the main Union budget). There are also some specific instruments which cover 
the  external  impact  of  internal  policies.  Managing  these  various  programmes  in  an 
efficient  and  co-ordinated  way  has  become  increasingly  difficult  and  has  made  our 
aid  activities  needlessly  complicated,  not  least  for  the  beneficiaries.  In  September 
2004,  the  Commission  therefore  proposed  a  significant  simplification  of  the 
instruments in order to achieve better results with the available resources.  

Results obtained and lessons learnt 

a) 

Budget implementation and new commitments 

The  overall  level  of  budget  implementation  remains  high,  and  the  steady 
improvement  in  financial  performance  over  the  last  few  years  continued  in  2004. 
While total commitments (€ 6.916 billion) were lower than in 2003, the difference is 
explained  by  the  very  high  level  of  commitments  of  the  European  Development 
Funds (EDF) in 2003 (which resulted from the late ratification of the 9th EDF, and an 
unusually large number of actions which were delayed until the new finance became 
available).  In  2004,  commitments  from  the  budget  (€  4.268  billion)  once  again 
reached record levels. Payments reached €6.211 billion, a substantial increase on the 
previous  year  and  almost  a  billion  euros  higher  than  in  2002,  reflecting  better 
performances both for the budget and for the EDF.  

9 

http://europa.eu.int/comm/development/body/tmp_docs/guidelines_principles_good_practices.en.pdf 

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Resources  managed  by  EuropeAid:  Official  Development  Aid  (ODA),  Official  Aid 
(OA) and other10.  

EuropeAid - Evolution of Regional breakdown 2001-2004. Commitment - € Million)

Thematic

ACP

South Africa

Mediterranean

Asia

Latin america

NIS

The Balkans

2004
2003
2002
2001

-

500

1.000 1.500 2.000 2.500 3.000 3.500 4.000

The 
Balkans
705 

658 

620 

663 

2001

2002

2003

2004

NIS

426 

432 

504 

504 

Latin 
america
301 

333 

342 

312 

Asia

407 

575 

558 

611 

Mediterra
nean
709 

South 
Africa
121 

762 

782 

1.003 

124 

127 

135 

ACP

Thematic

Total

1.927 

2.125 

3.769 

2.648 

972 

993 

985 

1.039 

5.568 

6.002 

7.687 

6.916 

10 

These figures do not include resources managed by other DGs, such as ECHO, ECFIN, FISH, etc.  

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EuropeAid - Evolution of Regional breakdown 2001-2004. (Payments - € Million)

Thematic

ACP

South Africa

Mediterranean

Asia

Latin america

NIS

The Balkans

2004
2003
2002
2001

-

500 

1.000 

1.500 

2.000 

2.500 

The 
Balkans
845 

619 

425 

510 

2001

2002

2003

2004

NIS

402 

384 

396 

359 

Latin 
america
152 

182 

290 

314 

Asia

383 

455 

470 

526 

Mediterra
nean
488 

South 
Africa
99 

707 

700 

1.125 

119 

118 

116 

ACP

Thematic

Total

1.779 

1.922 

2.345 

2.464 

806 

861 

872 

797 

4.954 

5.249 

5.616 

6.211 

What conclusions can we draw from these figures?  

•  Firstly, the improved overall performance has been achieved while the process of 
devolution was taking place – the management of aid in the field has contributed 
considerably to speeding up commitments and disbursements; 

•  Secondly,  the  speed  of  delivery  is  still  improving  –  the  ratio  of  payments  to 
turn 
the  Commission 

commitments  shows 
commitments into action in the field, in a shorter time;  

increasingly  able 

that 

to 

is 

•  Thirdly, our flexibility for responding to unexpected crises and unforeseen needs 
is diminishing – no longer can unused resources in one area of the Union’s budget 
heading  for  external  actions  be  used  to  meet  needs  in  another,  because  all  the 
funds available are being used. 

In  Africa,  Caribbean  and  Pacific  (ACP)  countries,  commitments  just  missed  their 
target  in  2004  because  conditions  in  two  countries  were  not  sufficient  for  the 
commitments  to  be  approved.  However,  forecasts  suggest  that  all  the  available 
allocations in the European Development Fund for ACP countries will be committed 
by  2007.  Payments  from  the  EDF  again  reached  record  levels  in  2004.  In  the 

EN 

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Mediterranean programme (MEDA), progress was impressive, with a 22% increase 
in commitments and a 60% increase in payments. Commitments and payments also 
rose  (6%  and  20%)  in  the  CARDS  programme  for  the  Balkans  and  in  the  Asia 
programme  (9%  and  12%).  In  the  Eastern  Europe  and  central  Asian  countries 
covered by the TACIS programme, while the commitments maintained the high level 
reached in 2003, payments fell due to the late signature of financing agreements by 
several  partner  countries.  In  Latin  America,  payments  improved  again,  but 
commitments declined slightly. 

POVERTY FOCUS 2002-2004

50%

40%

30%

20%

10%

0%

43,1%

32,7%

37,9%

26,7%

11,2%

10,4%

32,0%

21,6%

10,4%

2000

2001

2002

44,5%

35,8%

8,7%

2003

43,7%

33,4%

10,3%

2004

LDC

OLIC

LDC+OLIC

2000-2003 EC reporting to DAC (following the same method: LDCs/LICs country specific 
2004 Provisional figures Annual Report exercise

LDC : Least Developed Countries

OLIC : Other Low Income Countries

Spending on the low-income and least developed countries went up again, to about 
€2.9 billion. As a percentage of total payments, it fell slightly, but remains at about 
45%. 

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Sectoral Breakdown EuropeAid 2004.

Other/unspecified; 
150M€ ; 2%

Non ODA/OA; 250M€; 
4%

Social infrastructure 
and services; 
3.180M€ ; 46%

Emergency 
assistance; 206M€ ; 
3%

Action relating to 
debt; 5M€ ; 0%

Commodity aid and 
general programme 
assistance; 809M€ ; 
12%

Multisector / 
crosscutting; 963M€ ; 
14%

Production sectors; 
424M€ ; 6%

Economic 
infrastructure and 
services; 929M€ ; 
13%

Commitment in € Million
All resources managed by EuropeAid in 2004. (ODA/OA/Non ODA/OA)

A high proportion of the new commitments (over one third) went to specific projects 
giving  support  for  social  infrastructure  and  services,  including  basic  health  and 
education.  Nevertheless,  sound  economic  policies  are  probably  the  most  powerful 
engine  for  the  reduction  of  poverty,  and  the  increasing  focus  on  assistance  in  the 
form of budget support is set clearly within this framework, often linked to sectoral 
reforms to support the social services. 

In relation to achieving the MDGs, Africa has been referred to as “the epicentre of 
the crisis”. While there were grounds for optimism during 2004 – poverty rates are 
falling  in  several  countries,  and  access  to  healthcare  and  education  is  widening  – 
severe  problems  of  poverty,  conflict  and  instability  remain,  and  the  Commission 
continued  in  2004  to  seek  new  ways  to  increase  the  impact  of  its  co-operation, 
consolidating African-led solutions to the continent’s problems by funding the Africa 
Peace  Facility  and  the  Water  Facility,  and  continuing  to  take  the  lead  on  budget 
support.  

In Asian countries, 11 projects with a total value of € 180 million committed during 
2004  will  support  the  fight  against  poverty,  for  instance  the  Economic  and  Social 
Relaunch project in Cambodia (€ 25 million), the Poverty Reduction Support Credit 
in Vietnam (€ 20 million), and sector support for basic education in Indonesia (€ 20 
million). In fact, the Commission is contributing to improving access to education in 
eight  Asian  countries,  particularly  for  girls  and  disadvantaged  groups  of  children 
such  as  those  from  minority  groups,  those  with  disabilities,  and  street  children. 
Concerning  universal  access  to  quality  health  care,  which  is  a  key  aspect  of  the 

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MDGs,  projects  worth  over  €  100  million  are  helping  countries  either  to  develop 
sector  reforms  to  improve  health  care  delivery,  or  (in  countries  emerging  from 
conflict  such  as  Afghanistan  and  Timor  Leste)  to  ensure  basic  health  services  to 
poorer sections of the population. 

In  regions  such  as  the  Mediterranean  and  Latin  America,  where  the  majority  of 
countries  are  considered  as  being  in  the  middle-income  category,  it  is  nevertheless 
the  case  that  their  present  level  of  development,  sometimes  combined  with  weak 
economic  growth,  demographic  pressures,  economic  reforms  and  controversial 
governance  require  interventions  which  focus  on  the  fight  against  poverty  and 
improving  governance.  In  this  context,  support  is  provided  for  instance  to  primary 
education in Nicaragua and primary health systems in Bolivia. Several projects aim 
at empowering the poor and specific disadvantaged groups. The MEDA programme 
aims  to  promote  sustainable  economic  and  social  development  by  eradicating 
poverty  in  the  region.  Prospects  for  better  regional  co-operation  and  improved 
economic  growth  increased  in  2004  with  continuous  progress  in  the  trade 
negotiations towards creation of the free trade zone  with  the Mediterranean  region, 
and new and promising poverty alleviation initiatives focused on decentralised local 
development  have  been  launched.  Similarly,  new  initiatives  in  favour  of  the 
strengthening of democracy, Human Rights and a major involvement of civil society 
are also being developed. A good example of such projects in Latin America is the 
ongoing  reform  of  the  Justice  System  in  Peru  or  region-wide  introduction  of  food 
security  programme,  which  contributes  to  the  reinforcement  of  gender  equality 
through  giving  land  tenure  to  women,  as  well  as  improving  the  functioning  of  the 
regional institutions. 

b) Results, effectiveness and impact 

A results-oriented monitoring (ROM) system is operated by the Commission, based 
on  regular  visits  by  independent  experts  to  ongoing  projects  and  programmes.  In 
2004, the system covered 117 countries, and reports were produced on 1100 projects 
with a total value of approximately € 7.6 billion. Projects and programmes are given 
scores  against  internationally  agreed  criteria.  The  findings  show  that  projects  and 
programmes monitored in 2004 performed on average ‘according to plan’ or better, 
for all criteria. In fact, the results indicate that about 90% of projects are delivering 
the results intended, notwithstanding timely adjustments which may be needed for a 
minority  of  projects.  The  emphasis  on  quality  in  the  preparation  of  projects  and 
programmes  should  ensure  that  the  improvements  in  scores  against  all  criteria  are 
sustainable.  

The  best  results  are  achieved  in  relation  to  effectiveness  and  impact.  The  first, 
tentative  signs  of  efficiency  gains  due  to  devolution  have  been  confirmed,  and  the 
fact that reports from ACP countries score less highly than other regions may be due 
in  part  to  the  fact  that  devolution  has  only  just  been  completed  in  many  of  these 
countries, in addition to the generally difficult conditions in many of these countries. 
Further  work  is  under  way  on  the  methodology  of  the  system  to  derive  more 
comparable and precise conclusions.  

The results by sector indicate that relevance, effectiveness and impact are strong in 
relation  to  projects  in  the  macro-economic  and  social  sectors,  and  although  food 
security  projects  did  not  score  as  highly  overall,  the  scores  against  these  three  key 

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criteria were also good. This has implications for an assessment of the contribution 
of these projects towards achieving the MDGs. 

While routine evaluations of completed projects and programmes are managed by the 
geographical  services,  a  central  Evaluation  Unit,  accountable  to  the  Commissioner 
responsible  for  External  Relations,  issues  guidelines  to  improve  evaluation 
methodology and conducts evaluations related to strategies, sectors and themes. The 
texts of completed evaluation reports are made public on the evaluation section of the 
EuropeAid website11. In 2004, 12 evaluations were completed and 13 were ongoing; 
in  addition,  two  joint  evaluations  (the  first  on  co-ordination,  complementarity  and 
coherence, the second on budget support) were also under way. 

c) Long-term perspective  

While too much emphasis cannot be put on the results of a single year, the evidence 
so  far  is  that  the  reforms  launched  in  the  year  2000  are  having  a  strongly  positive 
effect.  Five  years  on,  it  is  time  to  assess  the  results.  At  the  end  of  2004,  the 
Commission started a process of reflection on the implementation and impact of the 
Development  Policy  Statement  (DPS)  and  its  relevance  in  the  light  of  substantial 
changes  that  have  taken  place  both  within  the  Union  -  primarily  the  latest 
enlargement  -  and  outside  its  borders,  including  the  emergence  of  an  enhanced 
relationship  with  the  neighbouring  countries  through  the  European  Neighbourhood 
Policy,  the  acceleration  and  broadening  of  globalisation  beyond  purely  trade  and 
economic  issues,  the  increasing  international  consensus  on  the  Millennium 
Development  Goals  and  the  rising  of  security  concerns.  It  was  thus  decided  that  a 
public debate was due in order to clarify the role of development policy in the wider 
context  of  the EU external action and to fully deploy its potential as the privileged 
policy instrument for addressing the root causes of poverty and inequality.  

Secondly,  the  programming  process  can  be  improved  in  the  light  of  the  mid-term 
reviews. As with other donors, there is a constant and continuing need to develop our 
capacity  to  improve  complementarity  and  integrate  cross-cutting  issues  such  as  the 
roles of gender equality, conflict prevention and the environment in development, in 
addition to newer themes like security, migration and asylum. The reviews were an 
important opportunity to fine-tune the programmes, and noted the following areas in 
which improvements should be made: 

– 

– 

– 

strengthening  the  assessment  of  performance  against  indicators  (although 
indicator frameworks have been improved, the basis often remains weak); 

developing closer links with the initial strategy documents; and 

improving complementarity with other donors. 

11 

http://europa.eu.int/comm/europeaid/index_en.htm 

EN 

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Thirdly, the EU will need to continue to play an active part in the drive to harmonise 
procedures internationally, and to maintain the momentum of efforts to translate this 
into  action  at  the  country  level.  The  indicators  and  targets  developed  in  2004  and 
adopted by the November 2004 Council are useful, but a greater effort is needed by 
all donors to make sure that they are actually applied. 

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