Source: EURLEX
Language: en
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# 52011SC0880

**COMMISSION STAFF WORKING PAPER Annual Report 2011 on the European Union's development and external assistance policies and their implementation in 2010 /\* SEC/2011/0880 final \*/**

  

TABLE OF CONTENTS

1........... DELIVERING ON COMMITMENTS.......................................................................... 6

1.1........ Policy development and priorities.................................................................................... 7

1.1.1..... Progress on the MDGs................................................................................................... 7

1.1.2..... Policy developments....................................................................................................... 9

1.1.3..... Focus on poverty.......................................................................................................... 12

1.2........ Making cooperation work better................................................................................... 14

1.2.1..... European Consensus on Development
and the future of EU development policy............. 14

1.2.2..... Mainstreaming of cross-cutting
issues............................................................................ 15

1.2.3..... Coherence between development and
other policies...................................................... 18

1.2.4..... Aid effectiveness and co-financing................................................................................. 20

1.3........ Working with partners in a
changing environment........................................................... 22

1.3.1..... Cooperation with the donor
community......................................................................... 22

1.3.2..... Cooperation with international
organisations.................................................................. 22

1.3.3..... Cooperation with non-state actors
and local authorities.................................................. 24

1.4........ Outlook for 2011......................................................................................................... 24

2........... IMPLEMENTATION: GEOGRAPHIC
OVERVIEW................................................. 27

2.1........ European Neighbourhood and the
Middle East.............................................................. 28

2.1.1..... The European Neighbourhood and
Partnership Instrument............................................. 28

2.1.1.1.. Introduction.................................................................................................................. 28

2.1.1.2.. Aid effectiveness and donor
coordination...................................................................... 30

2.1.1.3.. Working towards the MDGs......................................................................................... 31

2.1.1.4.. Implementation............................................................................................................. 32

2.1.1.5.. Monitoring.................................................................................................................... 39

2.1.1.6.. Outlook........................................................................................................................ 41

2.1.2..... Middle East.................................................................................................................. 44

2.1.2.1.. Introduction.................................................................................................................. 44

2.1.2.2.. Aid effectiveness and donor coordination...................................................................... 45

2.1.2.3.. Working towards the MDGs......................................................................................... 46

2.1.2.4.. Implementation and results............................................................................................ 46

2.1.2.5.. Outlook........................................................................................................................ 48

2.2........ The ACP region and Overseas
Countries and Territories (OCTs).................................. 48

2.2.1..... Sub- Saharan Africa..................................................................................................... 49

2.2.1.1.. Introduction.................................................................................................................. 49

2.2.1.2.. Aid effectiveness and donor
coordination...................................................................... 50

2.2.1.3.. Working towards the MDGs......................................................................................... 52

2.2.1.4.. Implementation and results............................................................................................ 54

2.2.1.5.. Monitoring.................................................................................................................... 57

2.2.1.6.. Outlook........................................................................................................................ 59

2.2.1.7.. Introduction.................................................................................................................. 60

2.2.1.8.. Aid effectiveness and donor
coordination...................................................................... 60

2.2.1.9.. Working towards the MDGs......................................................................................... 61

2.2.1.10................................................................................................. Implementation
and results     61

2.2.1.11............................................................................................................................. Outlook     63

2.2.2..... Caribbean.................................................................................................................... 63

2.2.2.1.. Introduction.................................................................................................................. 63

2.2.2.2.. Aid effectiveness and donor
coordination...................................................................... 64

2.2.2.3.. Working towards the MDGs......................................................................................... 65

2.2.2.4.. Implementation and results............................................................................................ 66

2.2.2.5.. Monitoring.................................................................................................................... 68

2.2.2.6.. 0utlook......................................................................................................................... 69

2.2.3..... Pacific.......................................................................................................................... 70

2.2.3.1.. Introduction.................................................................................................................. 70

2.2.3.2.. Aid effectiveness and donor coordination...................................................................... 71

2.2.3.3.. Working towards the MDGs......................................................................................... 72

2.2.3.4.. Implementation and results............................................................................................ 73

2.2.3.5.. Monitoring.................................................................................................................... 76

2.2.3.6.. Outlook........................................................................................................................ 77

2.2.4..... All ACP Programmes................................................................................................... 77

2.2.5..... Overseas Countries and Territories
(OCTs).................................................................. 84

2.2.5.1.. Introduction.................................................................................................................. 84

2.2.5.2.. Implementation and results............................................................................................ 85

2.3........ Asia and Central Asia................................................................................................... 86

2.3.1..... Asia............................................................................................................................. 86

2.3.1.1.. Introduction.................................................................................................................. 86

2.3.1.2.. Aid effectiveness and donor
coordination...................................................................... 87

2.3.1.3.. Working towards the MDGs......................................................................................... 88

2.3.1.4.. Implementation and results............................................................................................ 89

2.3.1.5.. Monitoring.................................................................................................................... 94

2.3.1.6.. Outlook........................................................................................................................ 95

2.3.2..... Central Asia................................................................................................................. 96

2.3.2.1.. Introduction.................................................................................................................. 96

2.3.2.2.. Aid effectiveness and donor
coordination...................................................................... 97

2.3.3..... Working towards the MDGs......................................................................................... 97

2.3.3.1.. Implementation and results............................................................................................ 99

2.3.3.2.. Monitoring.................................................................................................................. 102

2.3.3.3.. Outlook...................................................................................................................... 103

2.4........ Latin America............................................................................................................. 104

2.4.1.1.. Introduction................................................................................................................ 104

2.4.1.2.. Aid effectiveness and donor
coordination.................................................................... 105

2.4.1.3.. Working towards the MDGs....................................................................................... 106

2.4.1.4.. Implementation and results.......................................................................................... 107

2.4.1.5.. Monitoring.................................................................................................................. 110

2.4.1.6.. Outlook...................................................................................................................... 112

3........... IMPLEMENTATION: THEMATIC
OVERVIEW.................................................... 114

3.1........ Thematic programmes................................................................................................. 115

3.1.1..... Investing in people...................................................................................................... 115

3.1.2..... Non-State actors and local
authorities in development................................................. 117

3.1.3..... Migration and asylum.................................................................................................. 119

3.1.4..... Environment and sustainable
management of natural resources including energy............ 120

3.1.5..... Food security............................................................................................................. 123

3.2........ Democracy and Human Rights.................................................................................... 125

3.3........ Stability...................................................................................................................... 134

3.3.1..... Crisis response and preparedness............................................................................... 134

3.3.2..... Global and regional trans-border
challenges................................................................. 135

3.4........ Nuclear Safety............................................................................................................ 139

3.5........ Humanitarian assistance.............................................................................................. 142

3.5.1..... Introduction................................................................................................................ 142

3.5.2..... Implementation of humanitarian aid.............................................................................. 142

3.5.3..... Humanitarian assistance policy.................................................................................... 144

3.5.4..... Disaster preparedness................................................................................................. 145

3.5.5..... Civil protection........................................................................................................... 145

3.6........ Macro-financial assistance.......................................................................................... 145

4........... MANAGING AID FOR RESULTS.......................................................................... 146

4.1........ Monitoring and evaluating
projects.............................................................................. 146

4.1.1..... Results-oriented monitoring......................................................................................... 147

4.1.2..... Evaluations................................................................................................................. 154

4.1.3..... Integrating lessons from
monitoring and evaluation....................................................... 159

4.2........ Toward better aid delivery.......................................................................................... 160

4.2.1..... Developments in aid delivery
modalities and channels................................................... 160

4.2.2..... Budget support........................................................................................................... 162

4.2.3..... Blending of grants and loans........................................................................................ 164

4.3........ Progress in aid management........................................................................................ 166

4.3.1..... Progress on qualitative issues in
aid management.......................................................... 166

4.3.2..... Simplification of procedures........................................................................................ 167

4.3.3..... Cooperation with international
organisations and other donors...................................... 168

4.4........ Visibility and communication....................................................................................... 170

5........... FINANCIAL ANNEXES.......................................................................................... 171

5.1........ Introduction to financial tables..................................................................................... 171

5.2........ Financial tables........................................................................................................... 173

Introduction

All
developments described in this 2011 Annual Report reflect the situation as of
31 December 2010. The Report does not cover the significant changes that
occurred in 2011 following the political developments notably in the Southern
Mediterranean region and in other areas of the world.

The year 2010 was a crucial one for the
world economy. Recovery from the global economic and financial crisis has been fragile
and uneven. This reflects the asymmetric recovery paths, plus the different
timing and intensity of fiscal consolidation and structural reforms adopted by
the countries most affected. Uncertainties about the sustainability of
long-term growth are another source of concern. In 2010, advanced countries
(the United States, Japan and Europe) returned to modest growth. The more
dynamic emerging and transition economies in eastern Europe, Asia and Latin
America (Russia, China, India, Brazil) have proved more resilient to the
crisis. Despite some positive signs, most low-income countries continued to
experience major socio-economic constraints in 2010 as a result of the
persistent negative impact of the crisis and the volatility of world commodity,
energy and food prices. Many developing countries are finding it harder to
adjust their economies, to exploit new trade and economic opportunities and to
meet the Millennium Development Goals (MDGs).

In 2009-2010, unemployment and poverty
levels increased, affecting another 120-150 million people worldwide. Young
people and school-leavers have been particularly hard hit by the downturn and
the current slow recovery, which creates few jobs and leads to migratory flows
and the development of the informal or “black” economy. National social safety
nets are overstretched, while programmes to reduce fiscal deficits are being
implemented by cutting social, health and education budgets. Income inequality
also increased, calling into question current pro-poor and redistributive
public policies in both advanced and developing countries.

In 2010, the European Union took important
decisions on development policy, always with a bearing on the MDGs. The
European Commission finalised a green paper on inclusive growth and sustainable
development[1],
a green paper on direct budgetary support[2]
and a Communication on Africa-Europe 2020[3].
Furthermore, the EU launched a reflection in September 2011 on EU strategic
partnerships with emerging economies and on the role of Europe in the world.
The mid-term review of the Country Strategy Papers suggested ways to meet new
needs and challenges in EU planning. During the year, the EU plan of action on
gender equality and women's empowerment in development (2010-2015) provided the
Commission, the European External Action Service (EEAS) and Member States with
a tool to reinforce EU coordination on gender equality in development
cooperation.

Progress on global development also
means tackling the impact of climate change and protecting the
environment. At conferences in Nagoya (Japan) and Cancun (Mexico), the
EU worked with developing partners on new international regimes for
biodiversity and climate change, with forests a core theme in both. On these
occasions, the EU provided detailed information on its financial support for
biodiversity and climate change.

In terms of institutional developments,
2010 was the first year of the Barroso II Commission and saw the creation of
the EEAS under Catherine Ashton, High Representative of
the Union for Foreign Affairs and Security Policy and Vice-President of the
Commission. These Lisbon Treaty reforms together with the availability of
adequate financial resources and tools will reinforce the EU’s status as main
international actor and supporter of global development.

INSTITUTIONAL CHANGES AT EU LEVEL

The Lisbon Treaty contained big changes for EU foreign policy,
including overseas development. It established two new posts: the President of
the European Council, who will cooperate with the current rotating Council
Presidency, and the High Representative for Foreign Affairs & Security
Policy/Vice President of the Commission (HR/VP). The President of the European
Council ensures the external representation of the Union on issues concerning
the Common Foreign and Security Policy (CFSP), without prejudice to the role of
the High Representative. The HR/VP is tasked to ensure the consistency and
coordination of the Union’s external action and to be responsible within the
Commission for its external relations responsibilities and, as HR, to chair the
Foreign Affairs Council and to conduct the CFSP. The European Commission
ensures the EU's external representation on all issues other than the CFSP.
These institutional innovations should improve the framing of development and
foreign policies and ensuring a more effective EU external voice and
representation in international fora, including the G8 and G20.

The
European External Action Service has been created, as of 1 January 2011, under
the authority of the HR/VP. It combines human resources from the Commission,
the Council and the national diplomatic services of Member States. The role of
the EEAS is to assist the High Representative in fullfilling her various
mandates as well as the President of the European Council, the President of the
Commission and the Commission in the exercise of their external relations
functions. Besides its headquarters in Brussels, the EEAS also includes EU Delegations
around the world.

The Lisbon
Treaty has increased the scope for Member States to cooperate with third
countries using a more flexible approach (known as enhanced cooperation or
‘variable geometry’). The Lisbon Treaty also allows for more cooperation on
security and defence. It has also raised the co-decision capacity of the
European Parliament, which will improve Parliament's relations with the Council
and the Commission and EU institutions' accountability to citizens. It will
also strengthen the legitimacy of European actions in areas including overseas
development and external relations, making EU foreign policy more focused and
coherent, with more flexibility and better coordination. The Treaty foresees a
unified EU external representation in international fora as a longer-term
objective.

The Lisbon
Treaty puts fighting poverty and helping countries attain the MDGs at the core
of European external and development policies.

Achieving the
desired degree of coherence will require better coordination through permanent
dialogue and communication with Member States. In development terms, this means
a focus on key issues like increasing the volume of Official Development
Assistance (ODA), aid predictability and aid delivery synchronisation, as well
as joint programming, better international coordination, greater aid
effectiveness and an efficient division of labour among donors. It should also
mean more synergies between grants and loans, and more coherent EU policy
dialogues with third countries and international financial institutions.

EU enhanced
cooperation among Member States will contribute to better management of
European development assistance and more effective external policies.

1.
DELIVERING ON COMMITMENTS

The EU annual policy objectives for 2010
included a proposal for an EU action plan in the run up to the 2015 MDG Summit
and work to ensure aid efficiency, accountability and consistent synergies
between development policy and policies such as migration, security, climate
action and energy, food security, access to health-care and education.

1.1.
Policy development and priorities
1.1.1.
Progress on the MDGs

In 2000, leaders of 189 countries committed
their nations to a new global partnership, focused on eight Millennium
Development Goals (MDGs) to reduce extreme poverty with a deadline of 2015 for
achieving a series of targets: (1) eradicating extreme
poverty and hunger, (2) achieving universal primary education, (3) promoting
gender equality and empowering women, (4) reducing child mortality rates, (5)
improving maternal health, (6) combating HIV/AIDS, malaria, and other diseases,
(7) ensuring environmental sustainability and (8) developing a global
partnership for development.

Five years from the 2015 deadline, 2010 was
a key year for the MDGs. On 20-22 September, the UN High-Level Plenary Meeting
on the MDGs assessed progress and called for redoubled political and financial
commitments to faster progress on all MDGs.

Examples of EU contributions since 2005 to reaching the Millennium
Development Goals

Assisting 24 million people with social transfers related to food
security (MDG1)

Enrolling nine million children in primary education (MDG2)

Connecting 31 million households to better drinking water (MDG7)

Constructing or maintaining 36 000 km of road (MDG8)

Progress has varied significantly between
MDGs and between regions, countries and population groups. Progress has been
good on reducing global poverty and on other goals such as universal primary
education, gender equality in primary education and access to water. However,
1.4 billion people still live in extreme poverty and several MDGs are seriously
off-track. This is particularly the case for improving maternal health where
almost no progress was made, while prospects for access to sanitation are
bleak. Sub-Saharan Africa in particular has fallen behind on all MDGs.

In April 2010, the Commission issued a set
of concrete proposals for EU action to help developing countries achieve the
MDGs by 2015. The Communication "A 12-point EU action plan in support of
the Millennium Development Goals"[4]
proposed a comprehensive approach that addresses the
policy and financial dimensions. It sought to focus first
on those countries most off-track and most in need, particularly those in
situations of fragility. It was accompanied by five staff
working papers which analysed progress on the MDGs, financing for development,
aid effectiveness, aid for trade, and a 2010-2013 policy coherence work
programme.

The Commission
also made a series of policy proposals on food security[5], global health[6] and tax and development[7]. It published other thematic
papers on education[8]
and on gender[9]
which all fed into the Commission comprehensive approach to the MDGs (for more
information and references, see 1.1.2).

The Council Conclusions on 14 June[10] gave the EU an ambitious
common position ahead of the UN MDG Summit. The EU position included actions to
increase ownership by developing countries of the development process. It also
highlighted aid efforts, improving the impact of policies, mobilising more and
predictable financing for development, and using development resources more
effectively.

The EU took an active part in the process right
up to the outcome document adopted at the UN. It engaged in dialogue with key
international partners, particularly the African, Caribbean and Pacific (ACP)
countries with whom a joint political declaration on the MDGs was adopted in
June. This demonstrated the shared commitment to reach the MDGs and the
convergence of views on ways to accelerate progress.

The European Commission also announced, at
the UN Summit a €1 billion MDG Initiative to spur the policy dialogue on
MDGs with ACP countries and to support those furthest off-track.

Overall, MDG commitments were made by both
developing and developed countries, creating a new momentum. On average,
developing country governments raise about ten times more revenue from domestic
sources than they obtain in ODA. The potential, therefore, for mobilising more
domestic resources is considerable in most developing countries. There is scope
for helping developing countries to improve their capacity to raise more
revenue. The Commission's efforts in this field will be strengthened by its
Communication on tax and development and ongoing work on budget support.

Follow up of the 12-point action plan

The EU has started to implement the 12-point action plan to support
the Millennium Development Goals. Given that it cannot do everything
everywhere, the plan focuses on off-track countries, including those in
situations of conflict and fragility.

On Official Development Assistance, all
donors need to contribute to the common goal on the basis of fair global and internal
EU burden-sharing. The Commission has worked to share
information by updating EU donor profiles. It is also preparing its ODA report
to the European Council. As part of this process, an EU report on financing for
development is being drafted and will contribute to Council discussions later
in 2011.

Every euro set aside for development has to be used effectively. One
priority is mutual accountability. In October 2010, the Commission published a
Communication on mutual accountability and transparency[11] based on joint work with
Member States at technical seminars. Another Communication on the progressive
synchronisation of EU and national aid programming cycles is planned for the
second half of 2011.

Mobilising the domestic resources of partner countries is crucial
for development and for establishing relations of confidence and trust between
citizens and their governments. This is why the Commission is working on a
partnership with the African Tax Administration Forum through regular contacts
at expert level. To promote revenue transparency and
domestic accountability, it supports the activities of
the Extractive Industry Transparency Initiative (EITI).

The EU is committed to supporting the expansion of the private
sector in partner countries. In November 2010, the Commission concluded a study
on the role of the private sector in development. In the same month it took
part in the EU-Africa Business Forum in Tripoli.

Actions in other policy areas not directly linked to overseas
development can have an impact on developing countries and development goals. The
EU is leading the way in what is termed policy coherence for development (PCD).
In October 2010, the Commission worked with the OECD to promote PCD at
international level. The EU’s current PCD work programme 2010-2013 includes
consultations on a Communication on the future of trade policy, and an impact
assessment of the reform of the EU’s agriculture and fisheries policies.

1.1.2.
Policy developments

Attention in 2010 focused on core MDG areas
such as health, education and gender equality. Policy documents were adopted in
each field and were part of the EU contribution to the UN's MDG high-level
event in September 2010.

Health

An open consultation on global health
issues, and an intensive debate with EU Delegations, Member States' experts and
stakeholders led to a Communication on the EU role in global health[12] in March, followed by Council
conclusions. This new EU policy framework addresses health challenges in
developing countries in a number of ways:

·
enhanced governance at global and national
levels;

·
fairer distribution of EU health aid through
focused support for countries in greatest need;

·
the application of aid effectiveness principles;

·
stronger national health systems and a
health-for-all approach at country level;

·
ensuring coherence between the objectives of
global health and other policies, such as trade and financing, migration,
peace-keeping and security, food security and climate change.

This Communication also responds to the
findings and recommendations of a 2008 report by the EU Court of Auditors on EU
support for health in sub-Saharan Africa.

The EU policy on global health was
presented to the World Health Assembly, and discussed at the Brussels
conference on global health in June. It contributed to EU inputs on global
health in the G8, in the UN global strategy for women and children's health, at
the replenishment conference of the global fund to fight AIDS, tuberculosis and
malaria, as well as at the UN MDG summit. The year ended with a roundtable at
the annual European Development Days event which discussed concrete
opportunities to advance the EU commitments on global health. These included
more use of health sector budget support, synergies with global actors such as
the US in the framework of the EU-US dialogue on development policy, and
engagement with Brazil and other emerging and developing economies to discuss a
global health framework at the 2011 World Health Assembly.

Education

The February 2010 staff working document on
more and better education in developing countries[13] emphasised the importance of
good-quality basic education as a foundation for further learning, the balanced
development of the whole sector and the creation of appropriate links to other
sectors. It focused on the need for strengthening EU joint work, increasing EU
financial support, broadening the financing base for education, and
concentrating action on countries with the greatest need.

The Education for All (EFA) – Fast
Track Initiative (FTI), where the Commission is a board member,
contributed actively to reforms to reinforce the country focus, to cater better
for the needs of fragile states and to improve decision-making, mutual accountability
and FTI fund management. Teaching issues were a special focus for the
Commission through the international task-force of teachers for EFA, a
voluntary global alliance of EFA partners working together to address teacher
needs in terms of policies, capacities and financing. The Commission co-chairs
the task-force with Indonesia and is its main funder. Work by the task-force
helped strengthen cooperation with UNESCO, a task-force member and host to its
secretariat.

The Commission was actively involved in the
Task-Force for Innovative Financing for Education, led by France. The
Commission also reinforced contacts with the Association for the Development of
Education in Africa to promote policy dialogue in education between donors and
African partners. A successful side event at the EU-Africa summit of November
2010 launched EU support for the Nyerere Programme, an intra-African mobility
programme for students and academic staff, prepared in collaboration with the
African Union.

The Commission supported the initiative of
the G20 development working group to draw up a multi-year action plan for
development. The human development pillar of this plan will concentrate on
employment-related skills and the creation of internationally comparable skills
indicators and enhanced national employable skills strategies.

Gender

The goal of equality between women and men and the promotion of
women's rights are of fundamental importance for the EU. However, despite
substantial progress over the last few decades, women and girls still make up
the large majority of the world's poorest. They are under-represented in
governments and decision-making bodies, have fewer opportunities within the
labour and financial markets. Sexual and reproductive health and rights are still
neglected or denied in many countries and gender-based violence remains a
widespread global phenomenon.

In June 2010, the Commission and Member States
adopted the EU action plan on gender equality and women's empowerment in
development (2010-2015)[14].
Through a series of activities and through policy dialogue, this action plan aims to accelerate the
achievement of the MDGs and to improve the EU's work to advance gender equality
in developing countries.

The action plan also aims to reinforce EU coordination with partner
countries regarding gender equality policies to increase their impact on the
ground. For example, it intends to place gender equality issues systematically
on the agenda of political and development policy dialogue with partner
countries and to prioritise in-country civil society participation, capacity
building and advocacy.

Food security

Developing countries account for 98% of undernourished people with
an average level of undernourishment of 16%. This is down from 18% in 2009, but
still well above the MDG1 target of 10%. Food insecurity gravely affects
human development, social and political stability and progress towards the
MDGs.

In March 2010, the European Commission
adopted two new EU policy frameworks to help developing countries address the
issue of food security, in both emergency[15]
and long-term situations[16].
The objectives are to ensure progress toward achieving Millennium Development
Goal related to the elimination of poverty and hunger (MDG 1), and to maximise
the effectiveness of humanitarian support in crises where food insecurity
threatens lives. Food security implies food availability, access to food and the
quality of food. The Commission promotes an environmentally friendly and
sustainable agricultural model, adapted to the reality of developing countries
and markets, and able to make food available, accessible and of adequate
nutritional quality. It therefore concentrates on enhancing the productivity of
smallholder farmers and the resilience of rural communities, supporting governance
improvements for food security, and strengthening assistance mechanisms for
extremely vulnerable population groups.

In November, the Commission launched a public debate (via a Green
Paper) on how the EU can best support developing countries' efforts to speed up
progress towards the MDGs. The Green Paper identified agriculture and food
security as possible priority areas.

Throughout 2010, the EU worked closely on food security with a
number of actors, including the three Rome-based UN agencies (the FAO, the
International Fund for Agricultural Development, and the World Food Programme)
and the US, under the EU-US development policy dialogue. The EU also
contributed to further promoting food security governance at the global level
by contributing to the reform of the committee on world food security and by
supporting the implementation of the food security agenda in the context of the
G8 and G20 (in particular the L'Aquila food security initiative).

In December 2010, following its Mid-Term
Review, the Food Security Thematic Programme was updated and a new Multiannual
Indicative Programme for 2011-2013 was adopted with an overall budget of €750
million (see chapter 3).

Culture

The year 2010 was important for recognising
culture as an essential component of development policy. Following the Brussels
international colloquium "Culture and Creativity as Vectors for
Development" in April 2009, the Spanish EU presidency and the Commission
co-organised a major event in Gerona (4-6 May 2010). There, ministers and
high-level officials from EU, ACP, Latin American and Mediterranean countries met
with professionals and cultural institutes to translate the Brussels
achievements into an action agenda. The Gerona conclusions highlight the urgent
need to incorporate the cultural dimension into the MDG process (and all
anti-poverty initiatives), as well the importance of taking concrete steps to
improve donor coordination, create practical tools to raise awareness and adopt
an integrated EU strategy.

The European debate was rapidly taken up at
international level, thanks mainly to close and effective cooperation with
UNESCO. One result of this cooperation was a statement on the importance of the
cultural dimension in development cooperation in the outcome document of the
MDG summit in September 2010 and the subsequent adoption of a UN resolution on
culture and development, opening the way for a high-level event before the end
of the MDG process.

Coordination between EU institutions, Member
States and international organisations advanced through the dialogue with the European
Union National Institutes for Culture (EUNIC). A debate was launched with the
European Parliament about the role of culture in EU external relations and
potential staffing implications for coordinating the EU effort on cultural
cooperation and diplomacy on the ground.

1.1.3.
Focus on poverty

As a result of the global financial crisis,
it will take years to restore jobs, cut fiscal deficits and reduce foreign
debt. Some MDG goals may be compromised unless there is more decisive progress.
According to the UNDP and World Bank, many countries will not be able to meet
the MDG objectives by 2015, especially the poverty-related indicators.

An established positive correlation exists
between economic growth, reforms, political stability/good governance, and
effective poverty alleviation strategies. The developing world has sought to
pursue these targets throughout 2010. The ongoing rapid growth in China, India,
Brazil, and other emerging economies has been impressive. Yet new challenges
need to be addressed such as environmental degradation, climate change, food
security and energy efficiency. These factors will impact on GDP and incomes
per capita in coming years.

All EU partners in eastern Europe and the
Caucasus which are covered by the European Neighbourhood and Partnership
Instrument (ENPI) are now classified as middle-income countries (MICs). While
poverty in the region has been reduced, social inequality and exclusion are
still increasing at country and regional levels. Regional needs remain
significant. The Republic of Moldova[17],
although now reclassified as a low-middle income country, remains the poorest
country in Europe. Mediterranean countries covered by the ENPI also have to
cope with poverty (all of them, apart from Israel, belong to the MIC category).
Because of the existence of informal as well as formal redistributive channels,
more budgetary and fiscal discipline is needed. Most Mediterranean countries were
trying to introduce reforms during 2010, but at a high social cost.

In this difficult context, EU assistance
through the ENPI focuses on job creation, improving the investment climate,
good governance, developing social infrastructures and support for
administrative, economic and social reforms. The most difficult social
situation remains that of the occupied Palestinian territory where, despite
humanitarian assistance, the socio-economic indicators did not improve in 2010,
leaving more than 30% of the Palestinian population still living in poverty.

There has been an impressive reduction of
absolute poverty in Asia, led by China, India and most countries of southeast
Asia. However, poverty is still widespread in India and other countries like
Afghanistan, Bangladesh, Cambodia, Laos, Myanmar/Burma, Nepal, North Korea, Pakistan,
Papua New Guinea and Timor-Leste. Economic growth has led to considerable
income and regional disparities, including inequalities between rural and urban
populations. Development levels in southeast Asian MICs vary greatly. In these
areas, EU cooperation through the Development Cooperation Instrument (DCI) focuses on capacity building, social
infrastructures, energy efficiency, land management, climate change, food
security, environmental protection and trade integration. All these actions
have spill-over effects on poverty alleviation strategies at regional and
country level.

Central Asian transition countries enjoyed
significant growth rates over the past decade but have been considerably
affected by the recent crisis. They felt the impact of weaker markets for their
commodity exports. The worst-affected were Kyrgyzstan and Tajikistan – poor
countries hit by lost remittances from citizens working abroad – and
Kazakhstan, faced with a banking crisis. Turkmenistan and Uzbekistan were less
affected and benefited from the fiscal income and external surpluses generated
by gas and oil exports. Overall, in the region growth rates fell, poverty
levels roses and the urban/rural divide widened. To help meet these challenges,
EU assistance focuses on raising living standards, developing the social sector
and providing a social safety net. It also seeks to improve the rule of law and
public governance.

Progress in economic and social reform
during the 1990s and early 2000s ensured prolonged economic growth for Latin
America. Poverty levels in the region fell significantly. However, an average
of 40% of the Latin American population still lives in poverty and income
inequality remains. EU programmes under the DCI support the fight against
poverty by promoting social cohesion and supporting regional integration. More
recently, the EU policy dialogue broadened to include economic competitiveness,
trade, migration, environment/energy/climate change, governance, and
sustainable development. This is particularly the case for countries like
Argentina, Brazil, Chile, Mexico and Uruguay, among the upper MICs.

The EU has changed its approach to
development policy, making it more innovative. It considers innovative
financing mechanisms so as to guarantee sustainable growth and inclusive,
“smart” development. Boosting entrepreneurship, enhancing good governance,
developing social infrastructures and supporting the private sector have become
the main drivers of EU developmental programming. This influences poverty
reduction very positively. The Commission intends to expand further innovative
financing in external action so as to optimise the leverage potential of the EU
budget.

Developed and developing countries will
need to act more quickly to reach the MDGs in five years' time. Now the
question is how to ensure that the development policy of the EU and its
member states has the greatest possible impact in attaining its objectives. At
a time when the credibility of aid is under pressure, demonstrating this
increased impact is more important than ever for maintaining political and
public support for development assistance.

1.2.
Making cooperation work better
1.2.1.
European Consensus on Development and the future
of EU development policy

The European Consensus on Development[18], which marks a milestone in
the history of EU development cooperation, expresses the will of the European
Union and its Member States to make a decisive contribution to poverty
eradication and the Millennium Development Goals. It sets out for the first
time a common EU vision on development based on more aid, better aid, improved
policy coherence and a focus on Africa.

In 2010, the EU undertook several major
policy initiatives to further implement its common vision on development. In
April, the Commission issued a comprehensive set of proposals on EU action to
help developing countries achieve the MDGs by 2015 (see section 1.1.1).

After its fourth College to College meeting
with the African Union Commission, the European Commission adopted in June 2010 a communication on future EU-Africa relations in the lead-up to the
third EU-Africa summit in Tripoli in November. On that occasion, leaders from
both continents confirmed their commitment to the Africa-EU Joint Strategy by
adopting the second action plan (2011-2013) covering its eight thematic
partnerships and underlining their will to strengthen cooperation on global
challenges.

The Commission launched several
consultation initiatives in 2010 to generate a broad reflection on the future
of EU development policy, in the light of the challenges and opportunities in a
fast-moving international context and of the EU’s new institutional framework.
Consultations launched at the end of 2010, included a Green Paper on EU
development policy in support of inclusive growth and sustainable development
(see section 1.2.2) and one on the future of budget support. The latter aimed
to draw lessons from more than a decade of providing budget support and invited
views and evidence on both the opportunities of this tool and the ways to
improve its quality, value for money and impact (see Chapter 4).

The
future of EU development policy

The Green
Paper "EU development policy in support of inclusive growth and
sustainable development" explored ways in which EU development policy
could be a catalyst for building developing countries' own capacities to
generate inclusive and sustainable growth and mobilise their economic, natural
and human resources in support of poverty reduction strategies. It considered
the possible development of partnerships for inclusive growth involving the
public and private sectors and looked at climate change and energy policies as
possible drivers of sustainable development as well as the role of agriculture
in achieving food security and boosting growth.

The results
of this consultation will feed into the Commission's policy proposals during the
course of 2011, including a Communication on modernising European development
policy.

The Commission services also launched a
public consultation on the future of financial instruments for external
relations. The objective was to gather ideas and opinions on a wide range of issues such as the added value of EU financial intervention
in some areas, the options for new forms of cooperation and delivery mechanisms
with partner countries, as well as the efficiency, impact and visibility of EU
external cooperation.

The results of these consultations will
contribute to the debate over whether the European Consensus or EU development
policy in general needs updating in order to reflect better new development
realities which have emerged since its adoption in 2005.

As for policy research, the second edition
of the European Report on Development (ERD) was issued in December 2010. Drawn
up under the lead of the European University Institute with extensive input
from European and African researchers, it focused on social protection as a key
tool to reduce poverty and vulnerability and to stimulate inclusive development
and pro-poor growth in Sub-Saharan Africa, The ERD 2010 also made a number of
policy recommendations on how the EU could enhance and improve its support in
that region[19].

1.2.2.
Mainstreaming of cross-cutting issues

The Commission is committed to
mainstreaming certain cross-cutting issues in all its activities as agreed in
the European Consensus on Development. These are the promotion of human rights, democracy, good
governance, and the rights of children and indigenous peoples, gender equality,
environmental sustainability and combating HIV/AIDS.

Democratic governance

Governance is at the
core of the EU’s development strategies and is a recurrent subject in policy
dialogue with partner countries. The EU has adopted a broad approach to
governance, putting the emphasis on the state's ability to serve the citizens.
Participation, inclusion, transparency, accountability and anti-corruption are
essential components of the EU's approach.

Governance is crucial
for a sound investment climate, good public finance management, reducing
corruption, improving revenue collection for development, and strengthening
institutions which improve domestic accountability and contribute to political
stability. Governance is also essential for sector development and efficient
service delivery. While recognising that improving
democratic governance is an internal process in each country, the Commission is
determined to address democratic governance both as a specific policy area and
as a cross-cutting issue. It has made progress in
addressing governance at sector level through initiatives like communication
and awareness raising, sector-specific support and guidance, and the pilot
applications of the approach presented in the Commission's reference
document on "Analysing and Addressing Governance in Sector
Operations"[20].

Anti-corruption

To fight
corruption effectively, the Commission depends on communication and the flow of
information to its own operational staff and close cooperation with other
donors and stakeholders. A set of initiatives is being implemented to develop
operational tools and support for field work. The Commission is part of a joint
initiative with Transparency International, the UNDP and other stakeholders to
make more efficient use of existing corruption assessment and measurement
tools, through the development of a web-based gateway. The Commission
cooperates with the Anti-Corruption Thematic Group at the World Bank, the UN
Office of Drugs and Crime (UNODC) and the US State Department in a new
initiative to reduce and prevent corruption by strengthening the institutional
and operational capacities of national anti-corruption authorities.

The
European Commission is a member of the anti-corruption team of the OECD/DAC.
The team focuses on: (i) joint guidance for implementing the UN Convention
Against Corruption, (ii) integrating anti-money laundering in development
assistance and monitoring the Accra Agenda for Action commitments on asset
recovery, and (iii) identifying ways to deal with international drivers of
corruption at country level.

Moreover,
the Commission is party to a memorandum of understanding with other donors and
the International Organisation of Supreme Audit Institutions (INTOSAI) to
develop capacities of Supreme Audit Institutions in aid
recipient countries.

Several
working relationships with civil society organisations are also in place for
supporting citizens in the daily challenges posed by
corruption, notably through legal advice and seeking to achieve systemic
changes.

Children’s rights

The first draft for most items in the
"Comprehensive toolkit to address child rights in European development
cooperation and external relations" came from UNICEF. The toolkit sets out
to support the work of partner countries, delegations and other relevant actors
and stakeholders.

In 2010, 17 projects addressing the
participation of children were shortlisted from a call for proposals (out of
866 concept notes received). Another call for proposals on child labour
generated a total of 661 responses. These projects will address the issue of
providing positive incentives for the sale of products made without using child
labour.

Gender

Gender equality and women’s empowerment is
one of the five principles of EU's development policy. EU activities
include capacity-building in developing countries, support for women's
organisations and disseminating information on gender equality through
guidelines, best practices and greater awareness.

In June 2010, the Commission and Member States
adopted the EU action plan on gender equality and women's empowerment in
development (2010-2015)[21]
which aims to improve the EU's work to advance gender equality in developing
countries.

Under the action plan, gender equality is
systematically included in political and policy dialogues with partner
countries to raise awareness and encourage change. It also proposes training on gender equality for staff in the EEAS and relevant Commission
services, including all Heads of EU Delegations. The action plan also intends
to make sure that gender equality issues are part of
the annual and multi-annual planning process and to apply internationally
accepted standards such as the "OECD Gender Equality Policy Marker",
to track aid devoted to this issue.

The EU also continued to raise gender
equality and women’s rights in political and human rights-related dialogues
with partner countries. These initiatives are now framed in a coherent and
coordinated way in the EU guidelines on violence against women and girls and
combating all forms of discrimination against them.

The EU maintained its effort to protect
women in conflict and post-conflict situations, and to enlist women’s full
participation in conflict-prevention, peace-building and reconstruction
processes. It implemented the EU comprehensive approach to UN Security Council
Resolutions 1325 and 1820 on women, peace and security. Indicators were adopted
by the EU Council in July to track implementation across member states and
institutions as well as among Common Security and Defence Policy (CSDP)
missions.

On the tenth anniversary of UNSCR 1325, the
EU and the Belgian Council Presidency organised a high-level event in September
on ensuring women’s participation in peace and security.

Building gender capacity, developing
methodological tools and improving coordination and collaboration with the main
actors on gender issues are priorities. Online courses were available for EU
staff, governments, donors and representatives of multilateral and civil
society organisations.. The role of ‘gender focal person’ has been created in
practically all EU delegations, whose tasks include the mainstreaming,
supporting and monitoring of all activities concerning gender equality and
women's empowerment.

Environment,
including climate change

In 2010, the
Commission and the Member States produced the first draft of an environment
integration strategy which will be submitted for public consultation in early
2011. The results will be incorporated into an
ambitious EU wide strategy, to be presented to the EU Council by late 2011.

The Commission continued earlier work on
the application of the "Guidelines on the Integration of
Environment and Climate Change in Development Cooperation"[22] to address
environment and climate change as cross-cutting issues. Efforts were
made to promote harmonised approaches between development partners on how to
integrate environment and climate change mitigation and adaptation in
development programmes. Several internal ex-post studies were conducted to
assess the integration of environment and climate change in development
cooperation, and to evaluate the efficiency and the effectiveness of the tools
and methods used (environmental integration indicators study, and strategic
environmental assessment review). In collaboration with member states, the
Commission has developed a methodological tool to help assess, establish and
implement a programme-based approach in the environment and natural resources
sector. Finally, it also carried out a study on environmental fiscal reform
with a view to promoting the concept of green taxation and budgeting.

An intensive
programme of staff training and information seminars on environment and climate
change mainstreaming, carried out in Brussels and in partner countries, were
attended by more than 400 participants in 2010.

The Commission also started mainstreaming climate change in all EU
regional investment facilities through the creation of specific Climate
Change Windows in each facility, allowing more informed investments in, and
tracking of, climate change-related projects funded by the EU, the EIB and
other European finance institutions through these facilities. They cover both
public and private investments in strategic areas like transport, energy,
environment, water, sanitation and forests.

Culture

Both the
international seminar in Gerona, Spain (May), and the UN summit on the MDGs
(September) stressed the cross-cutting and horizontal nature of the cultural
dimension of development. No effective aid programme is possible without proper
consideration of the cultural dimension, whatever the sector. A case in point
is the cooperation strategy for the reconstruction and development of Haiti,
where cultural implications are to be taken into account within all sectors.

1.2.3.
Coherence between development and other policies

The European Union is a major global actor.
Its policies have therefore a major potential impact on developing societies
and economies. The Lisbon Treaty requires the European Union to take into account
in all its policies of the objectives of development cooperation.

Better coherence of development policies
means identifying possible joint efforts by the EU and its developing country
partners, providing benefits for both. The Commission applies this principle in
the Communication "Tax and Development - Cooperating with Developing
Countries on Promoting Good Governance in Tax Matters"[23]. The proposals include helping
developing countries committed to the principles of good governance in tax
matters to enhance their regulatory and administrative capacities in tax
matters, and identifying tax mechanisms, and more transparent accounting
practices for multinational enterprises, notably in the mining sector.

Another approach is the relaxation[24] of rules of origin for
countries benefitting from the EU’s general system of preferences (GSP), which
grants privileged access to the EU market for exports from developing
countries. While easing the rules will help all GSP beneficiaries, it is
particularly important for the least developed countries (LDCs), which qualify
for additional concessions. For them, the new rules of origin in the textile
and clothing sector no longer require individual LDC to both spin the yarn and
weave the cloth.

Another important initiative in this areas
is the comprehensive study launched by the Commission to assess the impact of
EU production, consumption and trade in both food and non-food commodities on
deforestation and forest degradation. The objective of this study is to
identify the policy reforms needed at EU and national level.

In some instances, EU policies have to bear
in mind the legitimate interests of EU citizens, as when setting animal and
plant health norms which may cause difficulties for exports from developing
countries.Creating greater coherence between EU policies and development
objectives may mean helping developing partners to adjust export capacities to
new norms, where necessary and feasible.

The EU also supported, through the Seventh Framework
Programme for Research and Development (FP7), cooperation between researchers
in Europe and developing countries. Since the start of FP7 in 2007 €356 million
has been granted to researchers in developing countries to participate in
collaborative projects with European researchers.

These are examples of how the EU is
bringing about greater coherence between non-developmental policies and
development objectives. To take account of these objectives in a systematic
manner, the EU has put in place mechanisms to guide EU decision-makers and to
monitor progress in policy areas with potential impact on development
objectives.

The Commission issued a work programme on
policy coherence for development for the period 2010-2013[25] in April. It covers five broad
areas:

·
trade and finance - to raise the chances of developing countries to obtain maximum
benefit from their integration into the world economy;

·
food security -
to support an environment where developing countries can mobilise their own
resources, particularly in fishing and agriculture;

·
climate change -
to help developing countries to adapt to climate change and reduce CO2
emissions while preserving environmental balance and biodiversity;

·
migration - to
bring about better coordination between migration and development by reducing
the risk of "brain drain", by making migrants’ remittances cheaper
and safer, or by facilitating circular migration;

·
security - to
give more consideration to links between security and socio-economic
development when planning and implementing security operations.

The PCD work programme is conceived as a
tool for all EU institutions and Member States, to guide their decision-making
across the broad range of decisions that affect developing countries'
opportunities. The Commission, for its part, will focus its PCD work on the
initiatives identified in the work programme. Through interservice
consultations and impact assessments (including trade sustainability
assessments) it will ensure that development objectives are taken into account and reconciled with other EU objectives.

As in 2007[26]
and 2009[27],
the Commission will issue a comprehensive report in autumn 2011 on progress
towards greater coherence of its policies with development objectives.

Although a global player, the EU is not the
only one whose actions significantly affect developing countries. Efforts by
the EU alone to bring more coherence to its policies would not be effective and
sustainable without efforts by other major developed countries or emerging
economies. The EU supported the UN General Assembly Resolution "Keeping
the promise: united to achieve the Millennium Development Goals" of 22
September 2010 which called for increased efforts at all levels to enhance
policy coherence for development[28].
The EU also supports efforts by the OECD to spread the concept and best
practice of policy coherence for development beyond OECD members, and welcomes
the determination of G20 members to pursue development- oriented policies.

1.2.4.
Aid effectiveness and co-financing

The EU worked hard in 2010 to meet its
commitments to implement the internationally agreed aid effectiveness agenda.
With the next UN high-level forum scheduled for the end of 2011 in Busan, South
Korea, the EU focused on outputs at three levels:

(1) At international level, with the
working party on aid effectiveness (WP-Eff) of the OECD development assistance
committee (DAC) to develop the approach and deliverables for Busan. The
European Commission contributed to the outputs for increasing aid effectiveness
at country level, e.g. on use of country systems, division of labour among
donors, technical cooperation, aid transparency and accountability, and
monitoring the Paris Declaration[29].
To reach this objective, the Commission provided active support to the
OECD-WP-Eff co-chairs during the "focus country missions". The
objective was to support a limited number of volunteer countries (Ecuador,
Ghana, Indonesia, Mali) to accelerate the commitments.

(2) At EU level, with the 27 Member States
and the Commission to implement the operational framework on aid effectiveness[30], adopted in 2009. The EU added new chapters to this framework on
cross-country division of labour and on mutual accountability and transparency.
The consolidated operational framework is a unique set of commitments to
strengthen the implementation of aid effectiveness principles going beyond the
commitments of the Accra Agenda for Action. It was agreed that the EU and its
Member States will further explore the possibility of using the Transparent AID
(TR-AID) system. TR-AID is an EU donors' coordination tool developed by the
European Commission with the primary objective of facilitating the sharing of
aid funding data amongst EU donors.

The EU is responding to calls by partner
countries and non-state actors to make its aid delivery more transparent and
accessible in line with agreed standards. To gather evidence on aid
effectiveness, the Commission launched a number of studies whose results will
be available in 2011 and 2012. There is also work in progress to create a
database containing information on aid by all EU Member States, designed to
improve the division of labour.

Aid effectiveness is an essential tool for
achieving the MDGs. To speed up production of joint EU country strategy papers
and multiannual programmes, the Commission is preparing a proposal to
synchronise EU and national programming cycles at partner country level and
based on partner countries' strategies and their programming cycles.

The Commission coordinates positions on aid
effectiveness both with member states and between the EU and international
partners like OECD/DAC, UN and G8. This will be of particular importance in
2011 as the EU prepares its position for Busan.

The EU and the US are committed to work
together to strengthen aid effectiveness at the global and partner country
level. The Joint Statement at the EU-US summit of November 2010 identifies
in-country division of labour, transparency and accountability as areas where
the EU and the US will develop a common work plan. The aim is to start
implementing the action plan in selected partner countries before the end of
2011.

(3) At Commission level, 2010 was the year
for meeting priority targets on aid effectiveness. The Commission adopted an
operational document proposing ten high-impact actions for 2010[31] which addresses three main aid
effectiveness priorities: division of labour, use of country systems, enhanced
technical cooperation. This document which outlined responsibilities across the
Commission lists a set of actions with strict deadlines to demonstrate concrete
and measurable results. First lessons can already be drawn from this exercise:

·
Division of labour among donors to reduce aid
fragmentation is a strategic tool to implement the aid effectiveness agenda.
But it is still a slow process with no real political steer. The current
attention given at Commission level to specific country cases seeks to remedy
the situation.

·
The Commission has analysed country-by-country
the four points related to the use of country systems as the first option for
channelling bilateral assistance. These are: internal constraints, scope for
increasing budget support, scope for increasing decentralised management, and
reasons for not using country systems. Based on this analysis, the Commission’s
performance is on target, with 50% of government-to-government support being
provided through country systems.

·
Action to reinforce
capacity building and make technical cooperation more effective has been widely
mainstreamed at EU headquarters and at Delegation level. Monitoring and
tracking tools for quality criteria are starting to deliver satisfactory
results.

For more
information, see chapter 4.

1.3.
Working with partners in a changing environment
1.3.1.
Cooperation with the donor community

The Commission continued to strengthen its
cooperation with traditional donors and new emerging partners. The main
achievements under the EU-US Development Dialogue in 2010 were an agreement on
joint roadmaps for cooperation on food security, climate change and the MDGs as
well as the selection of pilot countries for food security and climate change.
The 2010 EU-US Summit gave the dialogue an additional mandate in the field of
aid effectiveness. In April the first annual policy dialogue with Japan on
development was held.

The Commission participated actively in the
development-related work of the G8 during 2010. This included drawing up the
first G8 accountability report to monitor development related commitments since
2005. At the G8 Muskoka summit in June, the Commission pledged an additional
€50 million for the mother-and-child health initiative. At the Seoul summit in November, G20 leaders endorsed the Seoul
Development Consensus for Shared Growth, which gives development a new growth-oriented
approach. G20 members agreed a multiyear action plan to address key bottlenecks
to growth, particularly in low-income countries. This is the first ever joint
initiative on development to involve emerging and advanced economies. The EU
strongly supports the G20 agenda which will help developing countries build the
capacity to achieve and maximise their growth potential.

New donor countries – such as China,
Russia, Brazil and some Arab states – have joined the donor community, bringing
additional resources, as well as new approaches and values. The Commission
funded a China-DAC study group on infrastructure in September, bringing
together Chinese, African and DAC experts and officials to discuss development
policy.

Engagement with the private sector is also
being seen as increasingly important for development outcomes.

1.3.2.
Cooperation with international organisations

United Nations

Throughout 2010, the Commission continued
its contacts, cooperation and dialogue with the UN and its agencies, funds and
programmes. This cooperation has developed into a mutually beneficial
partnership with individual UN bodies and the UN system as a whole as part of
an international policy agenda.The Commission has continued to project EU
policy priorities and values in its dealings with the UN. This goes hand in
hand with the Commission’s increased presence and input in policy-making and
debates at UN institutional fora, conferences and conventions. The Commission
supports UN efforts to promote system-wide coherence and to increase UN
effectiveness, including in its country-level operations.

In 2010, the Commission represented the EU,
in the work of the main bodies of the UN, including the General Assembly and
the UN Economic and Social Council.

The successful Millennium Development Goals
summit in September was the key UN event in 2010. It produced a new commitment
on the part of many government leaders to the MDGs and how they can be
achieved.

For the first time in a General Assembly
plenary, the EU was represented by the Commission President , who announced the
EU MDG initiative allocating €1
billion in support of MDGs.

OECD

Close cooperation with the OECD on
development issues continued throughout 2010. While the Commission benefits
from the OECD’s analytical and statistical work on development, it tries to
make sure that EU priorities and values are appropriately reflected in the
OECD’s work. In 2010, the Commission helped draw up the
new mandate of the Development Assistance Committee and the definition of
development goals within the OECD. At the DAC senior level meeting, the
Commission pushed for the implementation of the aid effectiveness agenda,
modernisation of development financing and progress on the MDGs.

International
financial institutions

Cooperation
between the European Commission and the international financial institutions
(IFIs), namely, the World Bank (WB), the International Monetary Fund and
regional development banks continued to operate well in 2010.

WB and IMF

The Development
Commissioner attended the spring and annual meetings of the WB and IMF in
Washington in April and October 2010. He addressed the joint WB/IMF Development
Committee on the main agenda items: a) the resilience of developing countries
to the economic crisis and the role of the WB, b) the International Development
Association's role in assisting developing countries and its focus on results,
and c) progress on WB governance reform.

In 2010, the
reform of IFI governance and capital increases for the WB and the African
Development Bank (AfDB) remained the object of international attention. During
the negotiations, the EU supported a bigger say for
developing and transition countries in the IFIs and supported efforts to ensure
the multilateral development banks are sufficiently capitalised.

The Commission encouraged
and participated in regular coordination meetings among the European
representatives of the member states on the boards of the IFIs and encouraged
the adoption of common European statements.

European Investment Bank (EIB)

In the past, the EU has guaranteed EIB
financing outside the EU under the so-called EIB external mandate which defines
maximum guaranteed amounts and policy objectives. Following a mid-term review,
the Commission submitted a legislative proposal[32] in 2010 to revise the mandate
for the remainder of the current financing period to 2013. The main features of
the proposal are to extend the financing mandate in favour of climate change
projects with an additional €2 billion
and to develop EIB regional operational guidelines to better reflect EU
regional strategies in the implementation of EIB activities.

Regional Development Banks (The African
Development Bank)

The tripartite
partnership on Africa between the World Bank, the African Development Bank and
the European Commission was jointly and
comprehensively reviewed in 2010. The review recommended a shift towards a
high-level policy dialogue, with a flexible agenda to respond to changing
priorities. Implementing review findings begun and will continue in 2011.

The Commission maintained strong bilateral
ties with the AfDB, including regular meetings at senior management level. The
Commission also continued to fund the production and distribution of the AfDB's
annual publication, the African Economic Outlook[33], through cooperation at
high-level launch events, as with the Belgian EU Presidency in July.

1.3.3.
Cooperation with non-state actors and local
authorities

Non-state actors (NSAs)
and local authorities (LAs) remain essential partners in EU development and
external policy. Cooperation in 2010 continued on the definition of development
strategies and their role as implementers of development policy actions.

Besides the regular
in-country consultations, at EU delegation level on geographic and thematic
operations, a substantial dialogue with NSAs and LAs took place at headquarters
level on several key policy issues. These included aid effectiveness, policy
coherence for development, financing for development, the future of European development
policy.

The Commission also
launched a structured dialogue in March on the place of NSAs and LAs in EU
external and development policy. This exercise, which will end in May 2011,
seeks a common understanding on the strategic role of NSAs and LAs and the
effectiveness of their involvement[34].

Implementing the strategy defined in the
Commission’s 2008 Communication on local authorities as actors for development[35] continued with, for example,
the release of the atlas of decentralised cooperation in July[36]. Preparatory meetings were
held ahead of the next ‘Assizes of decentralised cooperation’ scheduled for
March 2011 and work continued on the portal of decentralised cooperation that should be operational during the first
quarter of 2011.

The EEAS will become
part of channels of communication with NGOs and other relevant civil society
actors in the field of development. These will be particularly relevant
regarding EU relations with emerging economies in Asia and Latin America, and
EU efforts to stabilise fragile states, support inclusive, sustainable growth
and achieve the MDGs.

1.4.
Outlook for 2011

In the main, a lot has been done towards
achieving the MDGs by the 2015 deadline. However, there are significant
regional differences, with Asia out in front and Sub-Saharan Africa lagging
behind on many indicators. Some MDGs – notably child mortality and maternal
health – are seriously off-track. The pace must accelerate if all MDGs are to
be reached in 2015.

New challenges are complicating an already
difficult situation. The economic crisis and earlier spikes in food and fuel
prices have hit developing countries hard. Climate change and energy, plus
political and security issues are also impacting on their ability to reach the
MDGs. Furthermore, citizens and politicians in the EU and other donor countries
question the rationale for more development aid at a time when domestic
austerity measures are beginning to bite. Together, these additional challenges
have created a new context for EU development policy in 2011 and beyond.

Alongside the new challenges, the creation,
as of 1 January 2011, of the European External Action Service and the merger of
the former Commission Directorates-General for Development and EuropeAid into a
single Directorate-General for Development and Cooperation – EuropeAid offers
opportunities for more policy coherence, particularly at the point where
development, security and foreign policy converge, and between policy-making
and implementation

The public consultation on EU development policy ends in January
2011. The results will form part of the input for a Communication on
modernising EU development policy to be issued in late 2011. It will outline
the framework for EU development policy until 2020. During 2011, the Commission
will also present its proposals for the EU’s multiannual financial framework
for the period 2014-2020. The legislative proposals for the financial
instruments for external action will be presented towards the end of 2011.Moreover, the Commission is exploring the
possibility to create an EU Platform for external Cooperation and Development
designed to foster EU coherence, effectiveness, efficiency and visibility in
external financing, by combining respective strengths of the Commission, the
EIB and other Bilateral and Multilateral Finance Institutions.

Several other Communications will be
published later in 2011. A Communication on EU budget support will propose an EU
vision of a support that more effectively and efficiently contributes to the
development objectives of partner countries. A Communication
on enhancing growth and investment in developing countries will define the
enabling framework and the financial tool-box to address the main barriers to
business competitiveness and new investment, notably through inclusive and
sustainable joint ventures involving public and private actors.

The Commission will also issue the EU
development finance accountability report in the spring of 2011. This report
will present EU progress on the international financing for development agenda
and identify ways to get the EU back on-track to reach its 2015 targets for
ODA. It will also cover tax governance and EU fast-start climate finance for
developing countries. The EU played a facilitating role at the 16th
Conference of the Parties to the UN framework convention on climate change in
Cancun. The Cancun event adopted a balanced package of decisions – the
"Cancun Agreements". They represent another important step towards
building a comprehensive and legally-binding framework for climate action for
the period post-2012, when the current Kyoto climate protocol expires. 2011
will concentrate on the follow-up to the Cancun conference. This includes the
further implementation of the EU commitment to provide €2.4 billion of
fast-start funding for developing countries. This money will support adaptation
and mitigation to climate change, as well as capacity building and transfer of
technology. In line with Cancun, adaptation will be prioritised for the most
vulnerable developing countries, especially the LDCs and small island
developing states (SIDS).

The Commission will continue its intensive
climate outreach activities at bilateral and regional level. It will also
further implement the dialogue and support components of the Global Climate
Change Alliance. These dialogue and outreach activities will contribute to a
common vision between developing countries and the EU for achieving a sound
climate agreement at the Durban (South Africa) climate conference at the end of
2011. Following Cancun, the EU will implement the agreement on reducing
emissions from deforestation and degradation (REDD+). This includes sustainable
management of forests, improving forest governance and enhancement of forest
carbon stocks. The Commission will also continue to implement the EU's disaster
risk reduction strategy.

The EU will further assess its fair share
in the long-term climate funding commitment to developing countries of $100
billion per year by 2020. The Commission played a constructive and lead role
alongside the member states at the 10th
Conference of the Parties to the UN convention on biological diversity
in Nagoya. The Commission will in 2011 start implementing the Nagoya agreements
on biological diversity (including access and benefit sharing of genetic resources)
and continue work on the EU's environmen­tal integration strategy.

Policy coherence for development will be a
major undertaking for the Commission in 2011, with the continued implementation
of the PCD work programme 2010-2013 and the publication of the third EU report
on coherence. This will examine coherence between development aid and other EU
policies in five broad areas (see section 1.2.4). The policies concerned
include trade, agriculture, fisheries, energy, environment, immigration and
transparency of international financial flows.

The third edition of the European Report on
Development (ERD) will focus on the complex development challenge of
sustainable management of natural resources. The Report will be issued by the
end of 2011.

Following-up recent key events will be
important, notably the UN MDG summit of September 2010 and the third Africa-EU
summit in Tripoli in November. Implementation will begin of the joint Africa-EU
strategy’s second action plan (2011-2013), which was adopted in Tripoli.
Building on the progress of the past three years, joint efforts will be made to
deliver swiftly concrete results on the eight thematic areas of the action
plan, as well as to strengthen the political relationship.

Two key international development events will
take place in 2011. The fourth high-level forum on aid effectiveness (HLF4)
will take place in Busan, South Korea from 29 November to 1 December. The
performance of donors and partner countries in implementing the effectiveness
agenda will be assessed against the commitments contained in the Paris
Declaration and the Accra Agenda for Action. The forum will also decide on
future options for raising aid effectiveness. Busan will be a multi-stakeholder
event bringing together up to 2000 participants from 150 countries. It is
important that the EU and its Member States maintain an ambitious agenda for
HLF4. They will prepare a common EU position.

The fourth UN conference on the least
developed countries takes place in Istanbul in May 2011. The EU common position
will emphasise EU contributions, highlight LDC responsibilities and call for
supporting action from emerging economies. The EU input will be based on three
priorities: ensuring a favourable environment, achieving inclusive and
sustainable growth, and tackling vulnerability.

The EU will continue to strengthen its
cooperation with traditional and emerging donors. It will in particular
continue building its engagement with the US via the EU-US development
dialogue. The main challenge for 2011 will be to achieve concrete results in
the fields of food security and climate change in selected pilot countries. There
will be an annual ministerial meeting of the EU-US development dialogue and a
second development policy dialogue with Japan.

The EU will increasingly support the role
of the emerging economies in providing development assistance, including
South-South and triangular cooperation. In particular, the Commission will make
efforts to turn the work programme on trilateral cooperation agreed with Brazil
and mainly Portuguese-speaking African partners into concrete projects in 2011.
The Commission will participate actively in the follow-up activities of the G20
summit in Seoul via the development working group, including on the wider
agenda of growth with resilience and to further promote cooperation on
development with China and Africa.

2.
IMPLEMENTATION: GEOGRAPHIC OVERVIEW

This chapter presents the EU's external
assistance in the main geographic regions.

The geographic instruments are:

·
the European Neighbourhood and Partnership
Instrument (ENPI),

·
the European Development Fund (EDF),

·
the Development Cooperation Instrument (DCI),

The European Development Fund is the main
source of financing for EU assistance to Sub-Saharan Africa (except South
Africa), the Caribbean and the Pacific regions (ACP). The EDF is separate from
the EU budget, which finances external assistance to other geographic areas and
the thematic aid programmes.

This report does not cover the Common
Foreign and Security Policy (CFSP)[37]
or the Instrument for Pre-Accession (IPA)[38].
A short section of this report is dedicated to humanitarian assistance[39].

Some figures and data are used to
illustrate this chapter but detailed financial information can be found in the
Annexes.

2.1.
European Neighbourhood and the Middle East
2.1.1.
The European Neighbourhood and Partnership
Instrument
2.1.1.1.
Introduction

The European Neighbourhood Policy (ENP)
offers 16 of the EU’s southern and eastern neighbours[40] closer political association,
enhanced trade and economic inte­gration, greater mobility and assistance in
secto­ral reforms. The aim of the ENP, as set out in its strategic documents,[41] is to build, together a
prosperous, secure and stable neighbourhood on the basis of shared values and
common interests.

A Commission Communication taking stock of
the European Neighbourhood Policy[42]
and the fourth set of ENP progress reports were presented in May 2010. They
noted significant progress in several key areas, particularly in the economic
field, but not enough on democratic reforms and human rights, as already
stressed in previous reports. The reports demonstrated the clear benefits that
the EU brings to its neighbours. For five years, the EU has been delivering
more trade, more aid, more people-to-people contacts and far deeper cooperation
with its neighbours on the whole range of economic, political and sectoral
reforms. The partnership has advanced significantly in areas like transport,
energy, environment and climate change, research, health and education. ENP
funding increased by 32% in the current financing period (2007-2013) and will
reach over €2 billion annually by 2013.

In July 2010, the EU Council invited the
High Representative and the Commission to review the future implementation of
the ENP. A series of consultations have since taken place with member states,
partner countries, the European Parliament, academic experts and civil society
organisations. This reflection will provide guidance for a strategic review of
the ENP in 2011.

While the EU has already concluded Association
Agreements or Partnership and Cooperation Agreements with most (13 out of 16)
ENP countries. In October 2010, the EU invited Syria to sign an association
agreement. Four rounds of negotiations on a framework agreement with Libya were
held and the Commission decided to open an office in Libya in 2010, the last
ENP partner where it did not have such a presence. As
regards Belarus, the EU reaffirmed its readiness to deepen bilateral relations,
depending on progress towards respect by Belarus for the principles
of democracy, human rights and the rule of law. Negotiations
on an Association Agreement with Ukraine continued, expanding more recently to
include the creation of a Deep and Comprehensive Free Trade Area. Negotiations
on an Association Agreement were launched with Armenia,
Azerbaijan,, Moldova and Georgia.

The EU and most ENP partners continued to
implement jointly agreed bilateral ENP Action Plans or – in the case of Ukraine
– the association agenda, with objectives including political and security issues,
trade and economic matters, environmental concerns, integration of transport
and energy networks, scientific and cultural cooperation, people-to-people
contacts etc.

Relations between the EU and Russia are based
on the wide-ranging strategic partnership, distinct from the ENP. The seventh
round of negotiations with Russia on a new bilateral agreement was concluded in
December. Cooperation and dialogue with Russia were
also taken forward in the context of the four so-called Common Spaces.

The four dimensions of EU-Russia cooperation[43]:

1. The Common Economic space, covering economic issues and the
environment;

2. The Common space of freedom, security and justice;

3. The Common space of external security, including crisis
management and nuclear non-proliferation;

4. The Common space of research and education, including cultural
aspects.

An intensive dialogue on drugs was
maintained with Russia in 2010 through regular contacts and meetings. In
parallel, negotiations were launched on an agreement with Russia on drug
precursors (chemicals used to manufacture drugs).

Besides reinforcing bilateral relations through the ENP, the EU also
actively promotes regional and multilateral cooperation through initiatives
such as the Union for the Mediterranean, the Eastern Partnership, the Black Sea
Synergy, and the Northern Dimension.

In the southern neighbourhood, the first
Summit at heads of state/government level took place with Morocco in March in
Granada (Spain), in the context of implementing its “Advanced Status” with the
EU. Efforts to reinforce the institutional capacity of
the Union for the Mediterranean (UfM) eventually led to the full
establishment of the UfM Secretariat in Barcelona, including legal statutes,
annual work plan, staff regulations and operational budget. A planned UfM
summit was postponed twice: first in June and
then in November. UfM sectoral ministerial meetings did take place
in 2010, dealing with water, tourism, trade, labour, employment, economic and
financial affairs.

As regards the eastern partners, work took
place to launch preparatory activities for comprehensive institution building
(CIB) actions. CIB seeks to strengthen a limited number of core institutions
which are central in preparing for and implementing future association agreements
including deep and comprehensive free trade areas. CIB also includes visa
liberalisation as a long-term goal. A budget of €173 million has been set aside
for the six partner countries, through their 2011-2013 national indicative
programmes. The four thematic platforms of the Eastern Partnership have set up
panels on integrated border management, the fight against corruption, public
administrative reform, environment and climate change, trade and SMEs.

Black Sea Synergy continued to develop. Its major achievement was
the launching of the first Black Sea sector partnership, on the environment.

The Northern Dimension is a framework for
cooperation between the EU, Iceland, Norway and Russia. The EU contributed to
its development with the launch of the partnership on transport and logistics plus the
creation of a new partnership on culture.

The EU cooperation agenda with all ENP coun­tries and Russia is
funded through the European Neighbourhood and Partnership Instrument. The ENPI
supports a wide range of cooper­ation activities through 15 country programmes,
three multi-country programmes[44],
and its cross-border cooperation component[45].
It also provides the bulk of EU financial support to the Palestinian Authority.

The Neighbourhood Investment Facility
(NIF), financed under the ENPI inter-regional programme, remained fully
active in 2010. During 2008-2010, the NIF supported 35 projects in transport,
environment, and energy as well as social and private sectors with NIF grants
totalling €260
million. This helped to mobilise €9.4
billion of investment from international financial institutions.

2.1.1.2.
Aid effectiveness and donor coordination

Efforts towards greater aid effectiveness, including better
donor coordination, intensified in 2010 as EU Delegations drove the pace of
work, consolidating their leadership of the aid
effectiveness agenda on the donor side. The Delegations consolidated their pro-active role in promoting the division of labour
and burden-sharing among donors, while seeking more partner government ownership
and leadership of the aid process. Good progress is reported from Moldova,
which was chosen as one of the pilots for the EU Fast Track Initiative on the
division of labour and where a newly-created EU donor coordination network
should bring positive results.

Work to strengthen partner government ownership of EU aid
programmes pushed ahead. Efforts to implement the EU's backbone strategy for
technical cooperation also helped to improve partner government ownership. In
Ukraine, a new framework for government-donor working
groups was agreed, based on the priorities of the ENP association
agenda. This also contributed to a closer alignment of donor support for
government priorities and helped donors to coordinate their positions on a wide
range of policy issues like public procurement and the provision of
international experts.

In many ENPI partner
countries, the EU Delegations ensured progress on the aid effectiveness agenda
by setting up and running donor-government working groups as in Georgia and
Egypt. In Egypt, the government went on to establish a mutual accountability
mechanism with the donor community. The EU Delegation to Egypt coordinates EU
donors in this process through a task force on aid effectiveness. In the
occupied Palestinian territory, 12 EU sector strategies have been developed in
cooperation with the Palestinian Authority under a specific EU-led donor group,
where the EU Delegation acts as secretariat and facilitator. This marks
significant progress on the division of labour and will facilitate joint or
coordinated programming in the future.

Emphasis on sector
budget support helped the EU to align its aid to partners' sectoral strategies.
This meant that more than 50% of aid to all ENPI
countries in 2010 was channelled through country systems in line with the Paris
Declaration and the Accra Agenda for Action. Furthermore closer coordination
among EU donors resulted in several joint programmes co-financed by the EU and
its Member States in the ENPI region. This helped cut transaction costs for
both partner countries and donors. This was the case in Morocco where joint
programmes in several areas such as education, health and water treatment were financed. Moreover these joint programmes made it
possible to delegate the implementation to member state agencies (like GIZ of
Germany for a water programme in Jordan). Similarly, some EU Member States have
transferred funds to the Commission to implement. This is the case in the
occupied Palestinian territory for instance where considerable EU Member State
funds are channelled through the PEGASE mechanism which supports the running
costs of the Palestinian Authority.

2.1.1.3.
Working towards the MDGs

In 2010 a large part of ENPI resources were
devoted to the social sector with many programmes aimed directly or indirectly
to eradicate extreme poverty and
hunger.

Examples of efforts at
poverty reduction (MDG1) include a programme to support economic recovery in Lebanon and one on poverty alleviation
through local development in Jordan. Programmes
contributed towards MDG1 in Georgia by providing immediate relief and housing
to internally displaced persons and in Moldova by giving special support to the
most vulnerable people in order to cope with the effects of increased energy
prices.

According to the UN's
MDG Monitor[46],
MDG goals in the areas of universal primary education (MDG2), reduction of
child mortality (MDG4) and improvement of maternal health (MDG5) are very
likely to be achieved by 2015 in the EU's southern neighbourhood region. Continuous progress towards achieving the MDGs can also be
observed in the eastern neighbourhood region, where MDG1 and MDG2 have already
been achieved.

With the successful
implementation of education programmes in Algeria, Egypt, Jordan and Morocco
plus health-reform programmes in Algeria, Egypt and Syria, these MDG goals
remain key targets of EU support in the ENPI south region. As for HIV/AIDS (MDG6), examples of cooperation include a programme
to develop a national HIV/AIDS strategy in Libya. EU support to the health sector in Moldova has also started reversing the global incidence of
tuberculosis by 21% and of HIV by 13%. In the occupied Palestinian territory,
disbursements are made through the Pegase mechanism to vulnerable Palestinian
families, targeting particularly maternal health (MDG5).

The EU also works to
meet the goal of ensuring environmental sustainability (MDG7) with the
successful implementation of programmes to improve drinking water, waste water
management and sanitation in Algeria, Egypt, Jordan, Morocco, the occupied
Palestinian territory and Syria. It also implements programmes aimed at energy
efficiency and renewable energies in Jordan, Tunisia and Ukraine. Gender equality (MDG3) remains a key challenge in the EU's southern neighbourhood region. The EU has been active mainly through the regional
programme on gender equality and civil society. In the eastern neighbours, EU support has brought progress
and chances are high of achieving this goal by 2015.

Towards a Mediterranean solar plan

In October 2010, a three-year project financed
by the EU started: "Paving the Way for the Mediterranean Solar Plan
(MSP)". The project aims to improve the conditions for an increased use of
renewable energy, in particular solar energy, across all the Southern Mediterranean
Partner Countries. The focus is on combining renewable energy with energy
efficiency and savings. The project aims to harmonise the legislative and
regulatory frameworks, strengthen institutional capacity, improve knowledge
transfer and capacity building in renewable energy technologies, and improve
the business climate. It will support and coordinate activities among various
stakeholders, targeting for example ministries in charge of energy, finance,
and social affairs, industry, the research community, and International
Financing Institutions.

2.1.1.4.
Implementation

In 2010, new ENPI funding for southern and
eastern neighbours totalled €1.807 billion. Of this, 71% is being provided
through bilateral programmes, 21% via regional and inter-regional programmes,
and 8% via cross-border cooperation initiatives. A large share of bilateral
assistance was provided through budget support operations which continue to be
an important tool to support reforms in the region.

In 2010, 14 new budget support operations
were approved in the ENPI region for an overall value of €589 million. A
total of €427 million went to nine new operations in southern partners (Algeria,
Egypt, Jordan, Morocco, Tunisia) while €162 million were committed to five
operations in eastern partners (Armenia, Georgia, Moldova, Ukraine). The 2010
budget support commitments represent 31% of all ENPI commitments and 44% of all
bilateral commitments.

In the ENPI region, the new budget support
programmes are largely sector-based and aim to support reforms in the education, water and agricultural sectors, while
also contributing to strengthening border management and public financial
management (PFM). Dialogue on PFM issues is being improved for budget
support programmes and for the follow-up to the public expenditure and financial accountability (PEFA)
diagnosis which has been completed or is underway in all countries, as well as
via technical assistance programmes. The use of
budget support in Lebanon and Syria was also being explored at the end of 2010.

Twinning is another mechanism for
supporting eastern and southern neighbours. Twinning operations bring together Member
States' public sector entities with counterparts in neighbourhood countries in
a wide range of fields. They are effective in transferring knowledge, expertise,
and EU practice. They remain important in EU-supported efforts to build
capacity and give partners greater access to the EU’s single market.

In the area of
research, a cross-thematic call for proposals was published in 2010 through the
7th Framework Programme (FP-7) with €22 million dedicated to
cooperation with Mediterranean and Black Sea countries. It focuses on the
effects of natural and man-made pressures on the Mediterranean and the Black
Sea as a result of natural and human activities, and on wind energy.

Bilateral cooperation

In the eastern partnership region, programme implementation
is well underway and annual action programmes were adopted in 2010.

The launch of association agreement negotiations with Armenia
in mid-2010 confirmed the need to provide support to the government in key
sector reforms. The result was a multisector budget support operation
concentrating on public finance management including public sector
transparency, and areas related to the deep
and comprehensive free trade area. Additionally, the 2010 programme
will enhance dialogue with civil society and help the Armenian media to report
more professionally on political and other events. The comprehensive
institution building memorandum of understanding was signed in late 2010,
paving the way for institutional reform plans in the first half of 2011. Moreover 2010 saw a big increase in twinning operations in
transport, statistics, competition and environment.

In Azerbaijan, continued support went on the energy
and justice sectors. EU funding also focused on strengthening
the capacity of the administration to develop and implement reforms already
foreseen in the main areas of cooperation. The
twinning mechanism was used extensively in various sectors of the EU-Azerbaijan
action plan. Eight new twinning contracts were negotiated in 2010 in
agriculture, employment and social affairs, health, finance and trade, while
others were under preparation.

In Belarus, the 2009 annual action
programme focusing on quality controls, especially norms and standards for food
safety was signed in mid-2010. The programme also deals more than previously
with energy efficiency. The programme priorities have since been subject to
review following political developments linked to presidential elections in
December 2010.

EU assistance to Georgia in 2010 had
a positive impact in a variety of sectors, including public finance management,
criminal justice, human rights, food safety and continued assistance to
internally displaced persons (IDPs). For example, 8 231 flats for
IDPs have been rebuilt or renovated and new infrastructure has been created,
including pumpong stations for drinking water supply and the construction of
roads in villages in the military conflict zone.

EU budget support has also helped the
Georgian authorities to identify shortcomings in the management of public
finances. The 2010 assistance programme continues support for the reform of
public finances, inter alia, by establishing a modern framework for debt
management and an evaluation system for public expenditure. Further support
will seek to reduce regional disparities within Georgia and to stimulate
regional development.

Community centres for conflict-affected groups in Georgia

In Georgia, EU funding enabled the setting-up of several community
centres for conflict-affected communities. These centres bring together
long-time residents and internally displaced persons in the towns of Gardabani,
Tskaltubo, Zugdidi, Poti and Gali to facilitate their socio-economic
integration. All the towns are affected by past conflict. But looking to the
future, local leaders have created gathering places for citizens and government
to address problems and create opportunities for all. Art, dance, computer and
language classes are offered. Other projects include renovating kindergartens
and hospital wards and laying out playgrounds and sports fields. These
activities had a positive long-term impact especially on young people who
started to work together and linked up in a web forum. Additionally the community
groups were transformed into NGOs, which will ensure the continuity of the
projects.

Important progress was achieved in Moldova
in the social and health sectors. Support in the health sector brought about an
increase in state funding, the rehabilitation of primary health care centres
and an increase in the number of these centres. It also brought about a fall in
the incidence of tuberculosis (by 21%) and HIV (by 13%). This was made possible
through financial support of more than €30 million, which had a positive effect
on the fiscal deficit and overall macroeconomic stabilisation. Twinning
operations increased during 2010, supporting reforms in competition policy,
intellectual property rights and public procurement.

In Ukraine, new
sector programmes for border management and the judiciary were approved in
2010. A sector programme to support the ambitious public administration reform
initiated by the government is under preparation, together with the
comprehensive institution building programme under the eastern partnership.
Besides sector reform support, technical assistance was provided for capacity
and institution building in a wide range of fields which come under the
EU-Ukraine association process. Twinning projects have increased and cover the
sectors of justice, statistics, civil service reform
and the social sector.

In 2010, EU support for Russia continued
to foster reforms and development in higher education, in particular through
the EU Tempus and Erasmus Mundus programmes. Continued support went to
EU education centres which are expected to meet the demand for more information
and to create a better understanding of the European Union and its
institutions.

In 2010, a particular success was achieved
in the environmental sector, where the construction of a sludge incinerator in
St Petersburg has been completed and already reduces the pollution of the
Baltic Sea. Moreover support to Russia contributed to reform the judiciary, for
instance through free legal counsel and human rights training for over 700
judges and prosecutors.

In the Maghreb, budget support was introduced in Algeria for the first time in 2010,
building on previous support in the water and sanitation sector and following
an assessment of eligibility. This mechanism is
proving to be a catalyst for a more intense policy dialogue, including on PFM
issues. The first five twinning operations were approved in sectors such as
environment, finance and trade.

Algeria uses TV broadcasts to save water

In Algeria, a national communication plan
including TV and radio coverage was launched to raise awareness on saving
water. The EU has also funded four laboratories equipped to analyse
micro-pollutants. In addition, 45 decrees related to the law on water have been
drafted, out of which 25 have already been published and 150 people have been
trained in water management issues. An integrated information system and a
national plan for water are being finalised. People in Algeria now have greater
access to water and the quality of it has significantly improved, the campaign
has also led to a change in public understanding concerning water conservation
issues.

In Libya, the EU remained active in
the field of health and HIV/AIDS during 2010. The sixth phase of the Benghazi
action plan supported the implementation of a Libyan national HIV/AIDS
strategy, assisting Libyan efforts to improve the quality of health care for
people living with HIV and AIDS and developing approaches to reduce the risks
of infection. The EU also stepped up its cooperation with Libya on migration,
in order to increase the effectiveness of border and migration management,
while raising the standards of treatment of migrants and protecting their
fundamental rights.

The 2010 programme for Morocco focused
on poverty alleviation and socio-economic development, supporting two
high-priority government strategies. One is to increase access to basic social
services and foster economic development of populations in remote areas. The
second is to support reform of the Moroccan agricultural and rural sector,
including the protection of natural resources. This support complemented
previous EU support in the field of basic education and literacy.

EU cooperation with Tunisia focused in
2010 on the water sector, supporting Tunisian public policy on water management
for rural and agricultural development. Particular attention was paid to
sustainable development, through different programmes on energy management,
environmental actions by enterprises and awareness-raising on environmental
issues. In addition, Tunisian efforts to foster growth and keep macroeconomic
and financial indicators in balance were supported, in order to favour the
economic and trade integration of the country. The
programme for Tunisia is currently being reviewed
in order to take into account the latest
political developments in the country.

The EU continued its extensive cooperation
with Egypt in 2010, supporting efforts to improve the life of the
citizens through reforms and investments in key services. Initiatives included
support for the water sector designed to strengthen institutional structures
and promote more efficient use of water resources, while protecting public
health and the environment. The EU also cooperated in a major wind farm project
that will produce clean renewable energy, thus limiting greenhouse gas
emissions. Additional funds in the ongoing research, development and innovation
programme will help to facilitate Egypt's move towards a knowledge-based
economy. Support for justice reform will strengthen capacities and target the
juvenile justice system and the fight against trafficking in human beings.

During 2010, EU programmes in Lebanon
supported the government’s reform agenda in high- priority sectors, such as security, policy planning, infrastructure and agricultural
development. These programmes built on ongoing EU actions in the country.

In Syria, the EU continued its focus
on the modernisation of the health sector and launched in 2010 a new programme
with the ILO and the UNDP to help reform the social protection systems. A joint
EU-EIB action also focused on improving water, waste and wastewater
management. During 2010, the EU continued to support the Syrian government's
moves towards a social market economy with one programme for the modernisation
of the industrial sector and another for vocational training.

EU support for Jordan focused on
improving public financial management, in particular to achieve a better match
between the planning and execution of the state budget. This was complemented
by a pro­gramme to improve water management, a crucial sector in a country with
one of the lowest levels of water availability per capita in the world.
The EU also continued to support the Jordanian decentralisation process which
fosters local economic development, and strengthens the capacity of the central
and decentralised state structures, as well as of non-state actors, to improve
the governance of the country. EU support has
positively contributed to the regulatory reform process, including in relation
to privatisation. Impact can be seen on the daily life of Jordanian citizens
(easy access to telephones, competition among operators, etc), and at the
institutional level – for instance with the creation of the Civil Aviation
Regulatory Commission and the establishment of a Master's Degree course in
regulation from which the first students graduated earlier this year.

In Israel, the focus of cooperation
was on promoting the approximation of Israeli norms and standards to those of
the EU using the twinning instrument, with two projects completed in data
protection and urban transport. Implementation of a twinning project on equal
opportunities began in 2010.

The substantial aid provided to the occupied
Palestinian territory (€427 million in 2010) was channelled mainly through
the PEGASE mechanism, covering recurrent expenditures of the Palestinian
Authority, as well as technical assistance and equipment for the Palestinian
reform and development plan and public infrastructure development. Included in
this assistance was support for the private sector in the West Bank and Gaza
and to Palestinian institutions in East Jerusalem in the health, education and
social sectors. The EU also continued to support UNRWA (the United Nations
Relief and Works Agency) in all its fields of operations.

Helping the poorest and most vulnerable
Palestinian families

Through PEGASE, the European Union provides
significant amounts of direct financial support to the Palestinian Authority
(PA) for the sustained delivery of basic public services in the West Bank and
Gaza. Part of the funding goes towards social allowances for the poorest and
most vulnerable Palestinian households, through the PA's cash transfer
programme. An average of 50 000 families are directly reached by the scheme.
The allowance is paid quarterly and can be claimed in 47 bank branches
throughout the occupied Palestinian territory.

Through this mechanism, the EU has a direct and
immediate impact on the well-being of the Palestinian population and on the
capacity of the PA to continue providing essential public services to its
citizens. By the end of 2010, over €113 million had been distributed through
the most vulnerable Palestinian families (VPF) programme.

Regional cooperation

The programmes for
regional cooperation complement bilateral assistance and tackle challenges
affecting the ENPI region. The launch in 2009 of the Eastern
Partnership (EaP) and in 2008 of the Union for the Mediterranean (UfM) created
new frameworks for regional cooperation, enhancing the existing programmes.
Five regional programmes were launched in 2010: "East-Invest",
"Air quality governance in the ENPI East countries", "Eastern Partnership
culture programme", "Supporting participation of eastern partnership
and central Asia cities in the Covenant of Mayors" and "Paving the
way for the Mediterranean solar plan". These increased the number of
programmes now under implementation to more than 70.

In 2010, within the eastern neighbours,
a series of seminars and meetings took place at regional level, on
issues corresponding to the areas of work of the platforms: good governance,
democracy and stability, economic integration, energy security and contacts
between people. Five of the six EaP flagship initiatives were launched in
2010, and some are under implementation, touching issues such as border
management, support for small and medium-sized enterprises,
and environmental governance.

Under the EaP, the energy cooperation
programme remains a top priority, with the INOGATE programme along with
environment. In 2010 the Covenant of Mayors initiative generated a €5 million
project. The social and human dimension also remained important with the launch
of the first eastern partnership culture programme with a budget of €12
million.

The positive experiences of Med-invest for
the southern countries inspired the launch of a similar programme, East Invest,
targeting support to the SME sector in eastern partnership countries.

Regional cooperation with southern
neighbours in the UfM process is on track with the establishment of the
Barcelona secretariat in 2010 and the adoption of a 2011 budget of around €3
million. UfM priorities are on sustainable development, especially environment
and water management, as well as on energy and social and civil affairs. In the
sector of training and education, the EU provided support to the
Euro-Mediterranean University (EMUNI). The pilot inter-regional programme
launched in 2009 (sustainable urban development – CIUDAD), gave rise to 21
grant projects involving the 16 ENP beneficiary countries and three EU
countries with a high degree of cross-regional experience. Numerous projects
are the continuation of activities that began in 2008 and 2009, concerning
governance (Euromed police, Euromed migration) as well as the economy (Agadir
agreement) transport (Euromed aviation project II), social, cultural and human
dimension (Euromed audiovisual III, Euromed heritage IV and, Euromed youth IV).

Regional development with Egypt's south Sinai Bedouins

In the southern Sinai, where the majority of the population are
rural Bedouins, an integrated regional development programme is improving
living conditions and protecting cultural and natural resources. The project
supports the provision of basic social services through infrastructure such as
water supply, sanitation and solid waste. It also provides grants to local
Bedouin communities. Thirty-five Bedouin women in the area of the Saint
Catherine monastery have been trained to make and market herbal medicines. A
further 500 Bedouin women have been trained in traditional Bedouin handicraft
skills thereby preserving cultural heritage and enabling them to contribute to
family income. Support is also provided for diversified and sustainable tourism
development. The €64 million programme started in 2007 and will end in 2011.

Regional cooperation programmes resulted in
concrete improvements in a great variety of sectors in the ENPI countries. For
instance in the occupied Palestinian territory, a short film funded under the
regional information and communication programme contributed directly to
preventing violence against women. The film also tackled the sensitive issue of
incest and other sexual abuses. Within 24 hours of the screening, 14 cases of
sexual abuses had already been reported to the police and in less than a month,
the films became an educational documentary.

Inter-regional
dimension

The inter-regional operations support both
the southern and eastern regions with activities that can be managed more
efficiently and flexibly at inter-regional level. It includes two
institution-building instruments originally created for the EU enlargement
process. These are the Technical Assistance and Information Exchange Instrument
(TAIEX)[47]
and the Support for Improvement in Governance and Management (SIGMA)[48]. TAIEX aims to foster
political and economic cooperation in a number of areas, primarily the
approximation, application and enforcement of EU legislation. SIGMA is a joint initiative of the OECD and
the EU, assisting partner countries to install governance and administrative
systems. At present SIGMA is active in ten neighbouring countries: Armenia,
Azerbaijan, Egypt, Georgia, Jordan, Lebanon, Moldova, Morocco, Tunisia and
Ukraine. It works mainly in the following sectors: legal framework, civil
service and justice, public procurement, financial control and external audit.

The inter-regional
dimension includes the Neighbourhood Investment
Facility. The NIF combines grants with loans provided by European finance
institutions for big infrastructure projects as well as for small and
medium-sized enterprises. It is funding regional and multilateral projects such
as the Mediterranean Solar Plan or the Horizon 2020 initiative for de-polluting
the Mediterranean. Additional projects under the Eastern Partnership and the
Black Sea Synergy Process are also supported.

Better water and sanitation systems in Moldova

This water and sanitation programme is working
to improve the water supply and sewage collection and treatment systems in the
Municipality of Chisinau for its 800 000 inhabitants while reducing its
environmental impacts.

The programme requires a full feasibility study
to assess the existing water and sanitation system, identify deficiencies, and
short- medium- and long-term technical solutions. The study also deals with
ways of cutting the use of chlorine and its negative impacts on the population.
It will produce an environmental impact assessment plus an economic and
institutional assessment of the public operator and its clients. The study will
feed in the decision to go ahead with the rehabilitation and extension of the
water supply and sewage collection.

The total cost of the programme is €59 million.
Of this, €3 million are grants from the Neighbourhood Investment Facility
covering the cost of the feasibility study. The investment will be co-financed
in the framework of the NIF by the European Bank for Reconstruction and
Development (EBRD), KfW Development Bank in Germany, the European Investment
Bank (EIB) and a contribution from the beneficiary.

The
inter-regional programmes Tempus IV and Erasmus Mundus II are part of a
strategy for promoting education and training in partner countries. Tempus IV aims at modernising and reforming higher education
systems and institutions in the partner countries, while Erasmus Mundus
promotes student and staff mobility amongst participating institutions. From
the 2009 call for proposals Tempus IV funded 64 projects for a total value of
€39.4 million. A total of 450 proposals were received. Of the 64 successful
applications, 18 came from institutions in ENPI countries. The fourth call for
proposals for Erasmus Mundus launched in 2010 for the academic year 2010-2011
resulted in a total of 1880 exchanges of students and teaching staff, with the
majority coming from ENPI countries.

Cross-border cooperation overview

Cross-border cooperation programmes are
another ENPI tool to enhance cooperation between EU Member States and partner
countries situated at the external border of the European Union. Since 2009, 13
programmes are operational. Financing agreements were signed with all partner
countries with the exception of Morocco for the Mediterranean Sea Basin
programme and Russia and Azerbaijan for the Black Sea Basin programme.
Programmes seek to develop the cross-border economic,
social and environmental potential of participating
countries or to improve the standard of living and
welfare of their citizens. Other priorities aim at people-to-people cooperation
in the social, educational, cultural and scientific sectors.

The main challenge in 2010 was to finalise the first calls for
proposals launched by all the programmes and to start project implementation.
Together, the 13 programmes received 2 173 applications for a total
available budget of €239.2 million, illustrating the big interest among
applicants for this type of cooperation. Partner countries are lead applicants
in 520 projects representing 26% of the total number of applications. In addition to standard projects, large scale cross-border
investment projects of strategic importance are supported. Eight ENPI CBC
programmes have decided to implement large-scale projects. To date, 13
investment projects have been submitted for approval to the Commission for a
total of €63 million.

How cross-border cooperation reduces infant
mortality and infant disabilities

The high level of infant mortality in the first
year of life and of infants with disabilities is a major health problem for
Hungary and Ukraine. The ENPI CBC Hungary-Slovakia-Romania-Ukraine Programme is
implementing a project called the 'European Cradle', worth €500 000 to
fight infant mortality in Hungary andUkraine. The project aims to improve
diagnostic techniques and staff qualification in children's hospitals. It seeks
to increase the number of infants who recover after hospital treatment, to
reduce postnatal infectious diseases and to lower the percentage of infant
birth traumas through institutional and people-to-people cooperation.
The regional children's hospitals will create communication channels
between Hungarian and Ukrainian target groups on modern methods of medical
treatment that should lead to the introduction of new Ukrainian-Hungarian
initiatives on health care.

The EU provides technical support to the
ENPI CBC programmes by financing two projects (Regional Capacity Building
Initiative and INTERACT ENPI). In 2010, the RCBI continued organising partner
search forums and training for potential applicants and started providing
assistance to beneficiaries. The RCBI project will run until the end of 2012.
INTERACT ENPI continued to offer a platform where all ENPI CBC stakeholders are
able to share experience and good practices. Technical meetings were organised
on Infrastructure projects (Large Scale Projects), financial and audit issues
as well as monitoring and evaluation.

2.1.1.5.
Monitoring

EU assistance projects are subject to
external and independent results-oriented monitoring (ROM) in addition to the
regular and rigorous project monitoring carried out by EU delegations. The ROM results
in 2010 confirm that most cooperation projects in the ENPI region are
effective. Projects monitored more than once show a marked improvement over
time, suggesting that re-monitoring is a useful tool for getting better
results. As in earlier years, projects
with serious deficiencies in relation to one or more of the ROM criteria were
the object of particular attention and follow-up scrutiny.

ROM: a quick explanation

The ROM system measures projects against five
criteria. These are relevance, efficiency, effectiveness, impact and
sustainability. The criteria are those set by the OECD’s Development Assistance
Committee. Projects are then classed in four categories:

i.Very good performance

ii. Good performance

iii. Performing with problems

iv. Not performing: major difficulties

The Commission has been using the ROM system
since 2000. Full explanation and presentation of results are found in Section 4
of this report.

Overall 372 projects (304 bilateral
projects, 68 multi-country projects) with a total value of € 1.13 billion
were monitored. The positive ROM results from the previous years for the region
were confirmed by a satisfactory overall average score of 2.84 (out of 4),
marking a slight improvement on the 2009 score (2.82).

The majority of
monitored operations (70%) were in the social infrastructure and services and
economic infrastructure and services sectors. Both sectors showed a good
overall performance. The productive sector (agriculture, industry, etc.) score,
although lower, is also still generally satisfactory. The
cross-cutting/multi-sector areas performed least well. These include the
majority of multi-country/regional programmes, which on average tend to score
lower than bilateral projects, due to difficulties faced in generating national
ownership, policy support and financial viability for this type of complex
cooperation. However, the overall scoring of ENPI south regional programmes is
affected by a small number of programmes with serious difficulties.

High average scores for relevance suggest
that the projects are well-embedded in clear strategic frameworks. This further
indicates that consultation of partners in the project preparation process has
improved. In addition, the use of calls for proposals allows for a
demand-oriented approach involving civil society organisations.

Generally, most challenges relate to efficiency.
Commonly there is scope for improvement in the management of projects by
implementing organisations. Some projects are delayed due to adverse external
hostile conditions (e.g. in the occupied Palestinian territory or the southern
Caucasus) and thus face difficulties in achieving the planned results. In
addition, efficiency scores are significantly lower for large multi-country
infrastructure projects which are by nature harder to implement, especially as
some involve the entire ENPI region.

Finally, findings reveal difficulties in
sustaining the results of various projects, often because of institutional
shortcomings in partner countries in follow-up activities once external
assistance has ended.

Table 1 ENPI – Very good and good ROM scores per evaluation criteria 2008-2010 (%)

Table 2 ENPI – Monitoring results per
ODA sector

2.1.1.6.
Outlook

At the bilateral level, preparations for
the 2011 annual action programmes are on schedule for all ENPI countries.

In the Eastern Partnership region, work
will begin in selected partner countries in 2011 on reforms under
the comprehensive institution building programme. At the regional
level, implementation of flagship initiatives will continue. In addition
to the initiatives begun in 2010, new actions to support energy efficiency,
energy security, disaster response and air quality governance will get off
the ground. In Georgia, support to IDPs, previously provided
through three distinct special measures, will continue as a sector policy
support programme.

In the ENPI south region, the EU signed a
memorandum of understanding with all partner countries, except the occupied
Palestinian territory and Israel, for national indicative programmes covering
the period 2011 to 2013. For most countries, existing cooperation priorities
were confirmed but some changes were introduced to respond to recent
developments.

In the Maghreb,
the EU will explore the possible expansion of sector reform support via the
national budget in Algeria, accompanied by increased support to public finance
management reform. In the case of Libya, the EU adopted in 2010 its first
country strategy for the period 2011-2013, including the areas of health, trade
and private sector development, public administration reform and migration. The
main focus of EU-Morocco cooperation in 2011 will be on bridging the legal and
institutional gap with the EU. Cooperation with Tunisia will focus on economic
integration and trade, including direct support to enterprises and to the
research and innovation sector. Enhancing the employability of young people
remains a priority for the EU.

The focus of
cooperation with Egypt in 2011 will be on energy and trade reform plus other
programmes to support social and local development in the areas of family
empowerment, de-mining, and upgrading informal sectors of the economy. EU
cooperation with Syria will continue to focus on the social sectors. The
EU will increase its support for the modernisation of the private sector in the
context of moves towards a social market economy. New areas of cooperation will
also be explored, such as more support for civil society organisations and the
modernisation of the judicial system.

In the case of the occupied Palestinian
territory, the 2010 programme was a transitional one
which paved the way for more focused and less ad-hoc
support in the future. A new Palestinian national plan
for 2011-2013 will form a basis for identifying EU support actions in the
coming years.

On the regional
level, support for the energy sector will intensify in the eastern
neighbourhood. Sustainable urban development and in particular the
participation of cities from the European neighbourhood region in the Covenant
of Mayors will continue to be a priority. In the social and cultural field, the
first youth programme for the eastern countries will be launched in 2011. In
the southern ENPI countries, regional programmes will focus on energy and
climate change, building on the positive experience gained in the eastern
neighbourhood.

2.1.2.
Middle East
2.1.2.1.
Introduction

In the oil-rich Middle East with its
majority of high-income countries, the Development Cooperation Instrument (DCI)
covers only three countries – Iraq, Iran and Yemen. The diversity of these
countries and their situation are reflected in the specific approach the EU has
adopted for each one.

The national elections which took place in
March were the main political event in Iraq in 2010. The EU deployed an
election assessment team to survey and report on the elections, so as to
enhance the transparency of the electoral process and demonstrate the EU’s
commitment to supporting democracy in Iraq. Since 2005, the EU has spent more
than €80 million on support for the democratic process. Although the March 2010
election event itself was a success, the close result of the vote, leaving the
two major blocks with nearly the same number of votes, made the formation of a
new government a difficult task. Despite the absence of a new government, security
in Iraq improved further during 2010. This enabled the EU to continue moving
from emer­gency reconstruction activities towards long-term capacity-building.
Medium-term activities will therefore concentrate on the sustainability of
Iraq’s institutions, on strengthening the capacity of
Iraq's governance structure and rule of law system and on providing more and better-quality basic services (health,
education, water and sanitation).

In parallel, the platform for future EU-Iraq relations was considerably broadened
in 2010, with the signing of a memorandum of understanding on energy
cooperation in January, the inauguration of the draft Partnership and
Cooperation Agreement to be signed in 2011, and the adoption in November of the
first multiannual Strategy Paper for assistance to Iraq (€58.7million for
2011-2013). Together, these three mutually-agreed documents will form the basis
for close cooperation between Iraq and the EU in a number of areas, from trade
and economic relations to academic exchanges and development support. This
should pave the way for the implementation of an increasing number of
initiatives, initially between government institutions, and later between
businesses and civil society on both sides.

Given Yemen’s continuing
instability, the EU adopted its ‘comprehensive approach’ (October 2009),
pulling together actions by the EU, its Member States, and key international
partners in a shared agenda for development, and economic and political reform.
It committed €18 million for two programmes on
fisheries and on the rule of law and human rights and devoted another €15
million to a peace-building partnership programme. Support was also provided
through the EU’s food facility. Active engagement in
the multilateral ‘Friends of Yemen’ process during 2010 reflected the EU’s
desire to work with Yemen and all its partners to halt economic decline and
social and political unrest. The new National
Indicative Programme for 2011-2013 foresees a 35% increase in funding (DCI),
with a total of €71 million for the period.

EU cooperation activities in Iran
remained limited to non-sensitive areas (anti-narcotics, Afghan refugees) and
were channelled through non-state actors. As part of EU public diplomacy
efforts, Persian-language (Farsi) TV broadcasts started in October 2010. A
further round of UN – previously EU – restrictive measures in 2010 was adopted
as part of the dual track strategy to persuade Iran to enter a dialogue on its
nuclear energy programme.

2.1.2.2.
Aid effectiveness and donor coordination

The European Commission places great
emphasis on coordination among aid donors as part of an Iraqi-owned strategy,
and is therefore a major participant in all coordination efforts. In the past,
donor coordination in Iraq was handled by the International Reconstruction Fund
Facility (IRFF) for Iraq, a multi-donor trust fund which is now being phased
out. Donors and international organisations are presently moving towards
bilaterally funded, but coordi­nated, programming and management. The Iraq
partners' forum facilitates the exchange of information on individual
initiatives and efforts to agree on common approaches. However, coordination
work in Iraq is challenging, in view of the enormous needs of the country and
the continuing difficult security situation. On the EU side, nevertheless, the
regular development counsellors meetings, chaired by the EU delegation in
Baghdad, ensures coordination and information exchange at local level among all
EU Member States present on the ground. The joint strategy paper 2011-2013 for
cooperation with Iraq, issued jointly by the EU, Italy and Sweden (plus Germany
at a later stage) at the end of 2010, was an important step to improve the
collaboration process.

Yemen is a signatory to the Paris Declaration
and is committed to applying the aid effectiveness principles in its economic
development. It has created an aid harmonisation and align­ment unit inside the
ministry of planning and international cooperation and has taken an active part
in all recent related fora. However, as in other areas, ownership of the
coordination work is hampered by the lack of capacity in Yemeni institutions.
Donors tend therefore to complement formal coordination instances, which are
still weak, with informal ad-hoc meetings, in view of the small number
of international donors present in the country and the close relationship
between them. Due to the lack of capacity, implementation units have been set
up separate from state institutions, which gives rise to ownership and
sustainability problems. The EU actively supports government efforts to improve
their ownership capacity of cooperation programmes. For each programme, the EU
carefully examines with the government the implementation setup required and
the means to maximise ownership of the programme by the beneficiary
organisations and to ensure sustainability of results once the programme is
closed.

2.1.2.3.
Working towards the MDGs

Iran, Iraq and Yemen are making some
progress towards achieving the MDGs by 2015, although this is uneven across the
three countries.

In Iran progress has been good on most
indicators, with the main challenges remaining in the areas of gender equality
and HIV/AIDS. A third area requiring stronger efforts remains environmental
sustainability.

In Iraq the main challenge is to improve
the qual­ity of life of the population, in the midst of the continuing
political instability and insecurity. Recognising this, almost half Commission
assistance to date has been allocated to basic services such as education,
health, infrastructure and water and sanitation. But in present circumstances
it is hard to obtain reliable and regular MDG data. However, in a medium-income
country like Iraq and in view of its potential, progress in these goals will be
closely linked to improvements in the political and security situation in
coming years.

In contrast, Yemen represents the biggest
single development challenge in the Middle East. It is a country of deep-rooted
tradition endowed with limited resources, scarce water, limited arable land and
fast declining oil reserves. It is the only poor country in a rich Gulf region,
ranked 133 out of 169 countries in the 2010 UNDP Human Development Index.
Nearly 45% of the population live on less than $2 per day. Progress has been made
in some areas, such as primary education, but child and maternal mortality are
still very high although improving, while gender inequality is one of the
highest in the world. EU support to Yemen concentrates on direct action on
poverty reduction and progress towards the MDGs in three main areas: food
security, health and good governance. Important improvements have been achieved
in recent years, but most baselines are, and will remain, relatively low.

2.1.2.4.
Implementation and results

EU reconstruction aid to Iraq since 2003
totals over €900 million. The bulk of the assistance has concentrated on two
main areas: support for good governance and the political transition process;
and the delivery of basic services to the population. For security reasons, EU
sup­port was principally channelled through the International Reconstruction
Fund Facility for Iraq from 2004-2007. From 2008 onwards, the EU and other
donors decided to phase out the IRFFI, in recognition of the gradual
normalisation of the situation and the need to focus on bilateral programmes.

In 2010, the EU focused on the continuing
improvement of health services and the living conditions of internally
displaced people and Iraqi refugees in neighbouring countries. It also provided
targeted support to high-level education and financed a call for proposals for
NGO-implemented projects. The implementation of ongoing projects continued on
target throughout the year. The signature of a financing agreement with the
government in August covering the 2009 special measure for Iraq has allowed the
EU to start implementing the two major actions, both in the area of education.

EU support was
instrumental in organising the crucial elections of 2009 and 2010. In the area
of human rights, the EU is funding a programme which has allowed the physical
and psychological rehabilitation of hundreds of torture victims, the
organisation of regular visits to monitor living conditions in prisons
throughout the country, and the creation of legal aid centres for the
population.

Given the lack of
dialogue with the government of Iran, EU assistance in 2010 continued to be
implemented exclusively through thematic projects by Iranian and European
non-state actors. Two new contracts were signed with NGOs in 2010 and four
others were to be signed at the beginning of 2011.

Cooperation with Yemen is based on two main priorities. One
is to assist the Yemeni government to promote good govern­ance, with
sub-priorities in the justice and human rights sectors. The second seeks to
strengthen the government’s capacities to fight poverty, in the areas of food
security, health, fisheries and local development. In 2010, the Commission
approved funding for projects in fisheries and human rights and the rule of
law. The fisheries programme will try to carry out a much-needed assessment of
fish stocks and expand the capacities of local communities to better manage the
fishing activities. The human rights and the rule of law programme will focus
on targeted support for the civil registry, very ineffective for the moment in
Yemen, and a call for proposals from civil society for projects to strengthen gender equality and respect for human rights.

The results
obtained by the different programmes are uneven. Cooperation with Yemen is
totally implemented through a project approach with little local ownership. One
particular success has been the pilot project on the introduction of conditional cash transfers to
families depending on school attendance of their children, especially girls. The new law regulating the social welfare fund
(passed with EU support) is allowing social protection to reach the poorest. A
new pilot project on the introduction of conditional cash transfers to families
depending on school attendance of their children, especially girls, is also providing
its first and encouraging results.

Irak: Restoration of the Al-Askari Shrine

The Al-Askari Shrine in Samarra, one of the most
important pilgrimage centres for Iraq’s Shia community, was bombed in 2006 and
2007, destroying the minarets and dome of the mosque and unleashing a wave of
violence across the country. The EU allocated €4 million to UNESCO under the UNDG
Iraq Trust Fund for its restoration. This included cleaning the site,
protecting ornamental elements, and classifying and storing architectural
material. Training was also offered for Iraqi architects and engineers to
enhance national capacity to perform such tasks on other damaged cultural and
religious sites. This successful project has led to the Al-Askari Shrine once
again becoming an active site of worship in Iraq. It is also a symbolic example of peace and reconciliation in
Iraq, since it is an important Shia place of worship in a city with a large
Sunni majority.

2.1.2.5.
Outlook

In view of its growing involvement in the
development of Yemen, the European Union decided in 2008 to upgrade its
presence in Yemen to full Delegation status, doubling its operational personnel
in the proc­ess. This upgrade was to be completed at the beginning of 2011,
when the management of cooperation will be devolved to the Delegation. It comes
at an opportune moment, in view of the increasingly complex regional security
context and the economic difficulties the country faces. This situation has led
the EU to increase its support to Yemen, through a 35% increase in the average
amount of the Annual Action Programme for the coming three years, compared to
the 2007-2010 period. This increase will allow additional support for good
governance and for the health, social welfare and economic development sectors.

With the approval at the end of 2010 of the
first EU Joint Strategy Paper for Iraq (covering the period 2011-2013), the EU is reinforcing its relations with Iraq, moving towards regular and
strategic development cooperation. The country has a
rich and diverse resource base, and the effective and effi­cient utilisation of
these resources can lay the foundation for sustainable growth. The key role for
the EU as part of the international commu­nity is to
continue supporting Iraq in mobilising its own
resources to improve the welfare of its people and rebuild its infrastructure.
Future EU assistance will, therefore, concentrate on
the sustainability of Iraq’s institutions, the improvement of the management
capacity of the civil service, and boosting the provision and quality of basic
services.

2.2.
The ACP region and Overseas Countries and Territories
(OCTs)

The EU has been supporting ACP countries
and OCTs for more than 50 years – the longest-lasting EU partnership with outside
countries. The ACP group consists of 79 countries, all of whom except Cuba have
signed the ACP-EU Partnership Agreement, also called
the Cotonou Agreement: 48 African states, covering all
of Sub-Saharan Africa, 15 states in the Caribbean and 15 in the Pacific.

The Cotonou agreement was signed in June
2000 and took effect in April 2003. It runs until 2020, and is revised every
five years. The second revision was completed in 2010. The official signing
ceremony took place in Ouagadougou, Burkina Faso, on 23 June and the revised
agreement came into force on 1 November.

The second revision adapted the partnership
to changes which have taken place in recent years: the growing importance of
regional integration, the interdependence between security and development,
challenges such as food security, HIV/AIDS, and the sustainability of
fisheries. In addition, it addresses climate change as a major item for the
EU-ACP partnership, alongside the new trade relationship and the role of
economic partnership agreements to boost economic development and integration
into the world economy. The revised agreement increases recognition of the role
of national parliaments, local authorities, civil society and the private
sector. Finally, it covers aid effectiveness and the role of other EU policies
in development, including the EU’s commitment to enhance the coherence of its
policies.

The EU programmes and projects in the ACP
region and in OCTs are financed from various sources. The bulk of the financing
comes from the European Development Fund (EDF). Other funding comes from the
EU’s budget to support South Africa, sugar and banana producing countries,
Greenland, and to finance global thematic programmes (see chapter 3).

The 10th EDF became operational on 1 July 2008 with funds progressively committed
since then. Global EDF
commitments in 2010 reached €2.66 billion. By the end
of 2010, around 52% of the 10th EDF had been committed, putting the
Commission well on track to meet the target to commit the entire resources of
the 10th EDF by the end of 2013. Payments under the EDF reached a record high of €3.32 billion in
2010, compared to €3.13 billion in 2009.

During 2010, the Commission approved 50
annual action programmes for ACP countries. Of these, 39 were financed from the
EDF (including six regional programmes). Another 11 were support measures for
Sugar Protocol countries, financed from the EU budget for a total of €152
million. Here too payments reached a record level of €102 million. In
2010, €143.7 million from the EU budget were committed to South Africa, and
€27.9 million to Greenland.

2.2.1.
Sub- Saharan Africa
2.2.1.1.
Introduction

The third Africa-EU Summit was held in
Tripoli (Libya) on 29-30 November. Leaders from the two continents assessed the
progress achieved so far and agreed on the way forward, adopting the Tripoli
declaration and the second action plan for 2011-2013. The summit theme,
"Growth, investments and job creation" focused on ways to create more
and inclusive growth.

The Summit declaration stated that the
Joint Africa-EU Strategy (JAES) remains the appropriate framework for
continent-to-continent relations. The JAES action plan builds on the
achievements obtained to date and focuses on activities with a regional,
continental or global dimension, which provide added value and new initiatives
to deliver more concrete results.

The JAES remains a strong people-centred
partnership. This approach was reflected in the run-up to the summit: 15
side-events were organised to discuss various aspects of the partnership. At
events such as the parliamentary pre-summit, the business forum, the youth
summit or the first intercontinental civil society forum, stakeholders debated
ways to deepen the cooperation between the two continents and to improve the
strategy. The result of their discussions was presented to African and European
leaders.

Prior to the summit, work continued within
the eight thematic partnerships of the JAES (peace and security; democratic
governance and human rights; trade, regional inte­gration and infrastructure;
MDGs; energy; climate change; migration, mobility and employment; and science,
information society and space). By 2010, the work done under the JAES reached
full speed and the implementation of the first action plan advanced
successfully.

This work
resulted in an increased political and policy dialogue between the two
continents at various levels. For example, the EU and the African Union Peace
and Security Council held their third joint consultative meeting, while the
partnership on democratic governance and human rights launched an EU-Africa
platform for dialogue. A high-level meeting on energy which was held in
September in Vienna led to the adoption of a declaration and a road map.
African and European leaders also decided to launch the Africa-EU Renewable
Energy Cooperation Programme to provide the basis for renewable energy cooperation.

In parallel, concrete projects were also
launched or pursued in all eight thematic partnerships. The long list of
projects includes action against small arms and light weapons, a travelling
exhibition on African art, the ACP observatory on migration, the Nyerere
programme, the Caprivi electricity interconnector, the east Africa submarine
cable system, the popularisation of science and technology, and the promotion
of public participation.

2.2.1.2.
Aid effectiveness and donor coordination

In 2010, the Commission continued efforts
to strengthen aid effectiveness in Africa. The EU Council conclusions on the
operational framework for aid effectiveness adopted in November 2009 created
momentum to strengthen the work conducted at field level in many countries.

The level of donor coordination varies from
country to country. The large number of development partners present in some
countries can make coordination difficult. In countries where only a few
partners are present like the Central African Republic, the Commission plays a
leading role in several sectors simultaneously in order to advance coordinated
reconstruction and peace-building activities. In the context of the Fast Track
Initiative on the division of labour in the ACP group, the Commission is lead
facilitator in Ethiopia, Mali, Mozambique, and Tanzania.

In Tanzania, the EU Delegation
remains a driving force for better division of labour among donors, who between
them contribute around 30% to the national budget. Division of labour has
resulted in a streamlined donor matrix with a clear attribution of roles for
donors in each sector (lead donor, active donor, contributing donor). The EU
delegation also coordinated the EU work on a roadmap to implement the
operational framework on aid effectiveness. During 2010, the EU (Commission and
Member States) agreed on how to of support the government in its review of the
Tanzanian poverty reduction strategy paper (Mkukuta), and coordinated the EU
position on the draft text. Moreover, the Commission and three member states
(Germany, Denmark and Ireland) agreed to align more closely their general
budget support (GBS) activities.

In 2010, progress was made in Ghana towards
stronger local ownership of the development process, thanks to the Ghana
government’s aid policy and strategy which sets out how it wants to organise
its relationship with the donor community. The Ghana Joint Assistance Strategy,
signed by 16 development partners in 2007, expired in December 2010. A 2009
independent review of the strategy concluded that it had been useful in pushing
the aid effectiveness agenda forward. Within the EU framework, discussions are
under way on the need for a new joint partner's strategy for Ghana that should
include the government and all partners on the content and the modalities of
assistance. The joint programming process will also need to take account of
Ghana’s new status as a middle-income country and the roles of other donors,
traditional and non-traditional. The EU is considering implementing joint
programming, with the aim to be fully operational by 2014.

Ghana - economic growth and poverty reduction

Ghana’s recent growth performance and poverty reduction is
impressive. As a result, Ghana is considered to have achieved the MDG1 target
of halving extreme poverty by 2015 – the first
Sub-Saharan country to do so. The overall poverty rate declined
substantially from 51.7% in 1991-1992 to 28.5% in 2005-2006, putting the 2015
target of 26% within reach. Similarly, the proportion of the population living
below the extreme poverty line declined from 36.5% to 18.2% over the same
period against the 2015 target of 19%.

The decline in poverty is clearly linked to significant improvements
in economic growth, which have been accompanied by increases in per capita
income over time. Yet, the impact of economic growth has been uneven, widening
big gaps between the rich and poor. Poverty remains predominantly concentrated
in the three deprived regions (Northern, Upper West, and Upper East).

In Ghana, 70% of annual payments from the EU
come in the form of EU budget support. General budget support has increased
over the years and progressed from sector targets to the multi-donor budget
support (MDBS) initiative which underpins the second Ghana poverty reduction
strategy.

The Commission has now set up an MDG-contract of €175 million
available for countries that show reliable policies aimed at reaching MDG
targets.

Another positive
example of greater aid effectiveness is Rwanda. The government is actively
delivering on the Accra Agenda for Action commitments through strong leadership
and management of its aid programme. The Commission supports this approach and
in July it signed up to the first government-led donor division of labour
agreement. According to this agreement, any given donor
may only be active in three different sectors. For the Commission, the main
sectors will remain transport, agriculture, and justice.

The Commission aligns its activities with country policies as
much as possible in order to reduce transaction costs, strengthen government
ownership and thus add to the sustainability of aid programmes. For example, €62.8 million (more than 75% of EU aid to Rwanda) was channelled
through budget support in 2010. Several projects are managed directly by the
Rwandan government via the "substantial decentralised mode", where
country procedures are used instead of those of the Commission. These projects
are implemented in the form of government-managed multi-donor basket funds.
They include support for water and sanitation, statistics, and public finance
management. There is a strong sense of mutual accountability in Rwanda. While
development partners assess the government’s performance in implementing its
development strategy, the government assesses donor performance by means of a
"donor performance assessment framework". The Commission ranks
high in this assessment: it met 17 of the 23 targets and was thus amongst the
top three partners in Rwanda.

Its work in Ghana, Tanzania and Rwanda,
shows that the EU, in the various regions of Africa, is committed to implement
on the ground the principles of aid effectiveness and the Accra Agenda for
Action. The efforts of the Commission, EU Member States and beneficiary
countries are of paramount importance to increase the impact of the aid, and
will continue.

Throughout the year, the Commission
continued to promote its results-based approach to budget support with
disbursements being conditional on progress towards poverty reduction targets.
A move towards a more systematic approach to assessing the impact of budget
support through regular evaluations was also launched with pilot joint
evaluations in Mali, Tanzania and Zambia.

In Malawi, the joint donor annual review
was informed of the strong progress in child mortality and maternal mortality,
particularly in rural areas. This reflects the scaling up of service delivery
and improved procurement and storage of vital medical supplies that has been
facilitated through budget support funds and underpinned by accompanying
reforms to public financial management and service delivery systems. Child
immunisation coverage against measles reached a high of 88% in 2009 while the
skilled attendance for mothers in child birth also increased significantly from
45% in 2008 to 52% in 2009.

2.2.1.3.
Working towards the MDGs

Although many countries around the world
are advancing towards the MDGs, a number, mostly in Sub-Saharan Africa, still
lag behind in some areas. They need to move fast if they are to attain the MDGs
by 2015. Whereas poverty has decreased since 1999 in Sub-Saharan Africa, it
remains significant and still affects more than 50% of the population[49]. The recent food, economic and
financial crises have made things worse. According to the World Bank, an
additional 64 million people in the world, principally in Sub-Saharan Africa,
were left in extreme poverty during 2010 because of the crises. The donor
community, including the Commission and its Vulnerability Flex instrument (see
section 2.2.1.4.), was mobilised against the effect of the crises on developing
countries, and its impact on progress towards the MDGs.

Overall, hunger is decreasing in
Sub-Saharan Africa but not fast enough to achieve MDG1, largely because of high
population growth[50]
in the region. The EU has been active in fighting hunger in Africa via its food
facility and through specific food security projects. For instance, in 2010,
the European Commission approved €7 million to help over a million small farmer
families in Zimbabwe by improving crop and livestock production and market
access.

Major progress has been made in terms of
primary education in the ACP countries. However, although the enrolment rate in
Sub-Saharan Africa has shown a positive trend since 1999, it remains the lowest
worldwide. Furthermore, 30% of primary students drop out before their final
grade. In order to reach MDG2, it is estimated that the number of teachers
would need to double. Attaining MDG targets for gender equality in education
remains a challenge in Sub-Saharan Africa. This is why the EU has supported,
through education programmes over the past five years, the enrolment in
secondary education of around 85 000 female students in ten Sub-Saharan
countries.

In the health sector, infant mortality
rates have fallen substantially in Sub-Saharan Africa. Deaths among under-fives
in Eritrea and Malawi for instance have fallen each year by at least 4.5%.
Ethiopia, Mozambique and Niger have also shown impressive progress with an
absolute reduction of more than 100 deaths per 1000 live births since 1990.
However, some Sub-Saharan countries continue to have extremely high levels of
child mortality. Regarding maternal care, fewer than 50% of women received
skilled assistance during delivery. Large inequalities between women in rural
and urban zones for delivery assistance and antenatal care persist even if they
have narrowed over the last decade. The highest adolescent birth rates are
recorded in Sub-Saharan Africa where little progress has been achieved since
1990. Unmet needs for family planning remain high. One quarter of 15 to 49
year-old women, married or in union, wishing to use contraceptives do not have
access to them. Many EU interventions directly target health-related MDGs. For
instance, in 2010, the Commission committed €55 million to the project "EU
support to immunisation governance in Nigeria", which aims
at reducing child morbidity and mortality through better information and
knowledge about key institutions for routine immunisation.

An integrated approach to Guinea worm eradication in northern Ghana

In Ghana, guinea worm disease, a parasitic illness contracted
through drinking contaminated water, has affected populations for as long as
anyone can remember. Ghana is one of four remaining countries (all in
sub-Sahara Africa) where the disease still persists. The European Commission,
through its programme of water supply and sanitation, has implemented 236 water
schemes serving 147 916 people and reduced the annual number of guinea
worm cases from 3 358 to eight between 2007 and 2010. Thanks to this programme,
children fall sick less often and can actively participate in classroom
activities. Women and children are freed from the burden of fetching water;
families live in more hygienic environments and enjoy access and use of
improved sanitation facilities.

Sub-Saharan Africa is the worst affected
region in the world for HIV infections, representing, in 2008, 72% of all new
HIV cases. Eighty percent of the children who have lost one or two parents due
to AIDS are from this region. Although knowledge about HIV prevention is
fundamental, it is still significantly lower in most Sub-Saharan African
countries. However, countries like Rwanda and Namibia have registered a big
rise in knowledge levels in recent years. The Commission has been involved in
raising HIV awareness in Malawi and Mozambique via the use of trade corridors
as networks to provide testing, counselling and care services.

In terms of environmental sustainability
(MDG7), Africa continues to show the largest net losses of forest area
(together with South America), with a decrease of 3.4 million hectares per year
over the last decade. The EU actively combats deforestation, notably through
the Forest Law Enforcement, Governance and Trade (FLEGT) action plan. The plan
provides for the conclusion of FLEGT voluntary partnership agreements (VPAs)
with timber-producing countries that wish to eliminate illegal timber from
their trade with the EU. The first VPA was with Ghana. Agreements with
Republic of Congo, Cameroon and the Central African Republic are being ratified,
and negotiations were ongoing during 2010 with several other countries:
Liberia, Gabon and the Democratic Republic of Congo. The EU also supports
numerous programmes to protect biodiversity and ecosystems. For instance, in
November 2010, the Commission granted €17.4 million to the "Parcs de
l'entente" project to protect ecosystems covering Benin, Burkina Faso and
Niger.

The effects of climate change, notably
droughts, can seriously hinder the development of African countries. In 2007
the EU launched the Global Climate Change Alliance (GCCA) to prepare and adapt
to the effects of climate change. Under this initiative, in 2010, the EU
committed €13.7 million to Ethiopia and €10.2 million to Mozambique bringing to
eight the number of African countries benefiting from the GCCA together with
Mali, Mauritius, Rwanda, Senegal, Seychelles and Tanzania.

Regional programme for the sustainable management of coastal zones
of the countries of the Indian Ocean

Indian Ocean populations are highly dependent on marine and coastal
resources for their livelihoods. However, a growing population, overfishing,
mangrove removal and pollution have put pressure on these resources. Through
its programme, the European Commission had two objectives: reverse the negative
impact of these activities on the resources and economies of the countries
concerned, and promote the sustainable use of marine and coastal resources with
the direct involvement of local communities. The programme has led to
operational Integrated Coastal Zone Management (ICZM) institutions and organisations in Comoros, Kenya, Madagascar,
Mauritius, Seychelles and Tanzania. It has improved the capacity of partner
governments, NGOs and local communities to manage coastal resources effectively
and has enhanced sustainable livelihood opportunities for more than 100 coastal
villages. The programme has also brought better local infrastructure, waste
management and sanitation facilities to more than 20 coastal villages. It has
increased environmental awareness among children, young people, fishermen and
local communities thanks to 18 communication projects and a regional school
contest.

2.2.1.4.
Implementation and results

In 2010, the EDF committed €1.75 billion of
aid to Sub-Saharan Africa. Disbursements during the year amounted to €2.48
billion. In addition, major programmes benefiting Sub-Saharan Africa were
adopted in the framework of the intra-ACP annual action programme (see 2.2.4 below
"All ACP programmes").

During 2010 the Commission continued to
deliver budget support programmes to Africa for poverty reduction with a
continued strong focus on the MDGs. In close collaboration with the
International Monetary Fund, it also continued the efforts begun in 2009 to
combat the short-term fiscal impact of the economic crisis on the most
vulnerable countries through the Vulnerability Flex instrument.

In 2010, the level of new commitments under
budget support was €495 million[51].
Disbursements continued at a steady pace of €882.1 million from the EDF and
€140.6 million from the EU budget, bringing the total to €1.02 billion. The
V-FLEX instrument provided much-needed short-term support to allow countries to
maintain poverty focused programmes in the face of tighter fiscal constraints.
During 2010 additional V-FLEX resources were mobilised for 11 African countries
(Benin, Burkina Faso, Burundi, Cape Verde, Central
African Republic, Lesotho, Liberia, Malawi, DRC, Sierra Leone and Togo) to
bridge financing gaps they faced which could
potentially have undermined recent progress toward the MDGs. V-FLEX allowed the
respective governments to maintain progress in poverty reduction whilst
underpinning macroeconomic stability in an increasingly challenging
international environment. V-FLEX disbursements amounted to €161.5 million in
2010. Budget support disbursements were also made under the EU food facility in
DRC, Ghana, Mozambique, Rwanda, Tanzania and Togo.

Implementation of regional indicative
programmes under the 10th EDF is getting under way. In central
Africa, funds were committed for the first important programmes. The EU
continued its long-standing involvement in biodiversity in the region through
the ECOFAC programme ("Ecosystèmes Fragilisés de l'Afrique Centrale";
€30 million). The EU also adopted a support programme for peace and security
(€12 million) to increase the region's capacity to promote peace, security and
conflict prevention. Both programmes are implemented with the Economic
Community of Central African States.

In 2010, the EU contributed €45 million to
the support programme for the Economic Community of
the Great Lakes Countries (CEPGL). This programme aims to foster
dialogue between the three countries concerned (Burundi, DRC and Rwanda),
develop cross-border infrastructures and support the joint development and
management of the significant hydro-power potential of the Ruzizi river in
collaboration with other financing partners.

At country level, on top of EDF funding,
the EU adopted new projects and programmes financed from the EU budget. This
included €40 million for six Sub-Saharan countries (Republic of Congo, Ivory
Coast, Kenya, Swaziland, Mauritius and Zimbabwe) as part of the accompanying
measures for Sugar Protocol countries. Under the food facility, €121 million
were committed to support food security in Sub-Saharan African countries.
Tanzania benefited from a €32.4 million commitment in 2010, €20 million the
form of budget support and €12.4 via a call for proposals.

Improving food security in Ethiopia – The productive safety-net
programme

Chronic poverty and food insecurity remains a challenge in Ethiopia
where 35% of rural households live below the food poverty line. Most of them
are engaged in subsistence farming on small plots of degraded land where they
are extremely vulnerable to weather fluctuations. These factors limit their
capacity to meet fully their most basic consumption needs even in years when
rainfall is adequate.

The productive safety-net programme (PSNP) aims to achieve food
self-sufficiency for chronic and transitory food insecure households. Initiated
in 2005, the programme is helping the food-insecure population in about 300
woredas (districts) with 7.4 million beneficiaries in 2010, to preserve their
assets and build community assets which create more favourable environmental
conditions for increasing their production capacity.

In December 2010, the Commission committed an additional €58
million to the PSNP, bringing the total amount committed to the programme
to €241.3 million, 66% of which is actually disbursed.

The EU also continued its action in fragile
countries. As the biggest donor in the Central African Republic (CAR) with 10th
EDF funding of €137 million, the EU plays a leading role in sectors like
democratic governance, justice, security sector reform, infrastructure, public
financial management, and rural development. The CAR is a classic example of a
donor orphan, having received aid worth $178 million in 2007 compared with a
Sub-Saharan average of $470 million. The EU plays a major role, for instance,
in consolidation of democracy and in 2010 committed €9.5 million to support
the electoral process.

The fight against child trafficking in Benin

Child trafficking is a complex and sensitive issue in Benin, where
it is one of the worst human rights violations. It takes the form of internal
child trafficking, (with more than 67 000 children being exploited as
domestic servants or in informal businesses) or sent to neighbouring countries
(mainly Nigeria) as cheap manual labour. Benin is also an important transit
country in west Africa.

An EU-funded project (€3.5 million) is being implemented in Benin to
strengthen government institutions and civil society organisations dealing with
child trafficking. The goal is to provide immediate support to victims and to
address the root causes. By the end of the project, more than 5 000
children will have participated in various types of activities (training or
care).

In the governance sector, the EU action has
contributed to enhance participation of citizens in public life. For instance
in Malawi, the "National Initiative for Civic Education", which
benefited from an EU contribution of €8.9 million, facilitated citizens'
participation in democratic decision-making at community, district and national
level, and supported capacity-building of civil society organisations.

The EU has been very active in the
transport sector in Sub-Saharan Africa. It is estimated that the grants
provided by the EU since 2004 have helped build and rehabilitate more than
7 200 km of roads and maintain another 29 000 km. EU grants have
also contributed to improved road management capacities, lowering transport
costs and improving regional mobility.

In the domain of food security, the
Commission disbursed €14.9 million under the food security budget support
programme in the summer of 2010 for Niger, where over half the population was
in a state of food insecurity. This is estimated to have saved about
700 000 families from famine.

In the health sector, the project "Capacity building and clinical trials of new tuberculosis vaccines
in Africa" (€5 million) built capacity and facilities for clinical trials
of a leading new tuberculosis vaccine in South Africa and in Senegal. In the
case of South Africa, a digital X-Ray system was purchased, which has improved
the clinical capabilities and corresponding patient care. Clinical trials of
the new TB vaccine are now ongoing. In Senegal, all facilities for performing a
clinical trial have now been set up, including staff, offices, clinics,
laboratories and equipment. As a result, Senegal has become a leading clinical
trial site in Africa.

In the area of research, 66 projects were
financed following a €72 million call for proposals under the Seventh Framework
Programme (FP7). The focus was on water, food security and health, and required
cooperation between European and African researchers. Funding for the period
2007-2010 was also available for collaborative research in the following
sectors: HIV/AIDS (€83 million); tuberculosis (€65 million); malaria (€56
million). Neglected infectious disease and reproductive and maternal health
research were addressed. The European and Developing Countries Clinical Trials
Partnership (EDCTP)[52]
also got support.

Overall, despite the numerous positive
results observed at micro-level, the macro-results are less significant. In
situations of fragility, focus on stabilisation is crucial. Often, simply preventing
living conditions from worsening is a positive achievement. Several instruments
and programmes (governance programmes, Peace Facility, Instrument for
Stability, etc.) are in place to promote political stability.

Governance and institutional reform: support for the General Audit
Commission in Liberia

Liberia has had a General Auditing Office since 1972, with a mandate
to audit all government accounts. In 2005, the General Auditing Commission
(GAC) was created, as an independent body reporting to parliament, in order to
comply with international best practice. EU funding helped the GAC to
strengthen its capacity, increase accountability, transparency and efficiency
of public finance management, and ensure sustainable human resources management
systems. This project helped enact necessary financial reforms, prior to the
decision of bilateral and multilateral creditors to grant Liberia debt relief
of $4.6 billion in June 2010. It also led to the submission to the national
legislature of 37 audit reports over the period 2007-2010 and the establishment
of a quality assurance department and quality control manual within the
institution. Furthermore, 353 GAC staff attended local training courses.

The Commission worked to better equip West
African countries to tackle drug trafficking. Jointly with Europol, it
supported two cooperation platforms set up by EU Member States in Ghana (Accra)
and Senegal (Dakar). These platforms facilitate the exchange of information on
capacity-building projects in West Africa, and of operational information. The EU
continued to finance the 'cocaine route programme', under which major projects
like AIRCOP and SEACOP became operational. The Commission also supported EU
Member States' initiatives focused on combating drug trafficking along the
cocaine route, such as the Fontanot Group, and took part in their work.

2.2.1.5.
Monitoring

In 2010, 395 ongoing national projects and
eight regional programmes representing a total EU commitment of almost €2.4
billion were monitored in Sub-Saharan Africa. Another 65 completed projects (ex-post
monitoring) which received total EU funding of €542 million were monitored at
national level[53].

Analysis of the results reveals that 61% of
ongoing national projects are very good or good, 27% present problems and 12%
are experiencing major difficulties. Overall, 75% of projects monitored
received very good and good ratings for relevance and design. In terms of
efficiency, performance was less good, with 43% of projects monitored facing
problems and 6% revealing major difficulties in terms of input used and
implementation of activities. In aid effectiveness, 45% experienced
difficulties and 8% showed serious deficiencies, while on sustainability 41% experienced
problems. Inadequate risk management and weak adaptation capability are among
the factors that often hamper the achievement of project objectives. However,
despite this, potential impact remains very good or good for 70% of projects
monitored.

Sectors mostly concerned by external
monitoring were social infrastructure and services (182 projects monitored with
a total budget of €975 million) and economic infrastructure and services (49
projects worth €739 million). Sixty percent of social infrastructure projects
monitored received very good and good scores, especially in the fields of
health, education and water and sanitation. For example, the external
monitoring mission to Swaziland revealed how a capacity-building project based
on community support activities can effectively contribute to the reduce the
incidence of new cases of HIV/AIDS.

In the economic infrastructure sector,
delivery of aid was even more effective, with 65% of national ongoing projects
doing very well or well and only 6% facing major difficulties (the remaining
29% performing with problems).

Eight sector policy support programmes in Benin,
Ghana, South Africa and Mozambique representing a total EU commitment of €236
million were assessed. According to the external monitoring missions, none is
facing major problems. Four are performing with some problems and four are
doing well.

A particularly positive example highlighted
by the external monitoring mission is the support programme for
decentralisation reform in Benin, which aims at strengthening the capacities of
the municipalities in order to boost local development and improve the services
delivered to the population. Another example of a very well-performing budget
support programme is the legislative sector policy support programme in South
Africa. According to the external monitors, this programme is effectively
contributing to the process of deepening parliamentary democracy and developing
representative democracy.

Table 6 Africa- Very good and good ROM scores per evaluation criteria 2008-2010

Table 7 Africa- Performance of projects
per ODA sector (%)

2.2.1.6.
Outlook

As of 2011, the Commission will start
implementing the Banana Accompanying Measures (BAM), paid for from the EU
budget for the benefit of ACP banana producers Cameroon, Ghana and the Ivory
Coast, as well as seven Caribbean countries.

The EU will continue working at pan-African
level with the African Union, following the Tripoli summit of November 2010,
particularly on the Joint Africa-EU Strategy and its second action plan.

Mid-term reviews of the 10th EDF
country strategy papers will be finalised in 2011. They will focus on the MDGs
as part of the initiative launched by the European Commission at the UN summit
on MDGs in September 2010 with a funding pledge of €1 billion from the EDF.
Specific attention will be given to the most off-track MDGs: fighting poverty
and hunger (MDG1), child mortality and maternal health (MDGs 4 & 5) and
access to water and sanitation (MDG7).

The EDF will undergo a general performance
review in 2011. It will contain proposals for the EU’s multiannual financial
framework for 2014-2020 and the use of leftovers from the 9th EDF.

Following the Council decision allocating
€150 million from the 9th EDF to address the needs of the most
vulnerable population in Sudan[54],
the Commission should adopt in 2011 a special support programme to provide
assistance notably in the fields of food security/agriculture development,
basic services and democratic governance.

South Africa

2.2.1.7.
Introduction

Over the past 15 years, relations between
the EU and South Africa have grown steadily closer. Today, the EU and South
Africa cooperate on a broad range of political, trade and economic matters, as
well as on science and technology, environment and energy.

In recognition of South Africa’s role as an
emerging economy and as a key player in peace and security matters on the
African continent, the EU and South Africa entered a strategic partnership in
2007 and adopted a joint-action plan. During 2010, further steps were taken to
strengthen ties.

Progress was reviewed at the third annual
South Africa-EU summit in Brussels in September 2010. The summit expressed satisfaction
at the implementation of the joint action plan, as well as the various
high-level political dialogues which took place during the year. It also
discussed global issues and peace and security matters, in the light of South
Africa’s role as a leading player in Africa and potential bridge-builder,
notably in the international negotiations on climate change and the building of
an effective multilateral system (UN, G20, etc).

The EU and South Africa continued in 2010
their dialogue on peace and security with a view to develop­ing converging
approaches on conflict resolution issues. South
Africa and the EU have expanded cooperation and technical work to cover
migration, human rights, crime and justice, health, energy, higher education,
environment, science and technol­ogy, ICT, transport and customs and
statistics. Concerning space collaboration, the EU and South Africa continued
their work on extending the cov­erage of the European Geostationary Navigation
Overlay Service (EGNOS) to South Africa and on cooperation to extend coverage
of the global navigation satellite systems (GNSS) to South African airspace,
and setting up a Galileo ground station in South Africa.

2.2.1.8.
Aid effectiveness and donor coordination

The EU and its Member States are constantly
working to improve aid effectiveness, a key objective of the 2007-2013 South
Africa-EU joint country strategy. Alignment with South Africa’s national
development strategies has been assured by the joint South Africa-EU country
strategy (2007-2013), endorsed by the South African government, the Commission
and the 11 EU Member States active in providing development assistance to the
country. Under this joint strategy, all European partners agree to focus on the
same goals: promotion of pro-poor and sustainable economic growth,
capacity-building and provision of basic services for the poor, and good
governance.

The EU has also put in place donor
coordination mechanisms – the so-called EU+ working groups in health,
education, science/technology, employment and governance. These are platforms
where EU and non-EU partners exchange information and coordinate projects and
programmes in consultation with South African counterparts. The result has been
progress in terms of enhanced cooperation and division of labour (e.g. joint
programmes in land-reform, public service and youth empowerment, with several
EU partners).

A substantial move towards budget support
has also contributed to improve aid effectiveness through the use of national
procedures, quicker disbursement and increased ownership and predictability.

In the health sector, government-led
coordination is currently being taken to another level. For example, the
government is now leading regular strategic/technical meetings with development
partners in an effort to better align and harmonise their activities. The
parties involved are to sign a far-reaching aid effectiveness framework
agreement, reflecting a new outcome-based approach from the health department.

2.2.1.9.
Working towards the MDGs

Overall, South Africa has advanced towards
meeting MDG targets, especially in relation to poverty reduction and education,
while progress on health and HIV/AIDS has proved more difficult. According to
the latest MDG report submitted to the UN in September 2010, the population
living below $1 (at purchasing power parity) per day (MDG1) is estimated to
have halved compared to the 2000 level. This is largely due to the national
social grant system put in place in 2000 which contributed to improving the
revenue of the poorest part of the population. The EU is currently supporting
the national employment plan to enable net job creation and conse­quent
improvement of income indicators.

Although consistently high enrolment ratios
in primary education since 2002 are likely to enable South Africa to reach its
MDG2 target in 2015, the quality of the education system is a cause for
concern. The EU seeks to address this through its biggest-ever programme in
South Africa (the primary education support programme worth €122.7 million).

In the health sector, 2015 targets for MDGs
4, 5 and 6 are far from being reached with the HIV/Aids epidemic the leading
cause of under-performance. South Africa now has the largest HIV/AIDS treatment
programme in the world and the strong political commitment shown by the
government in 2010 gives hope that the spread of HIV can soon be reversed with
positive impact on maternal health and child mortality. The EU is the biggest
donor in the health and HIV/AIDS sector in South Africa and will put further
emphasis on strengthening primary health-care.

2.2.1.10.
Implementation and results

The 2010 annual action programme for South
Africa committed a total of €143.7 million as follows:

·
a primary health care programme (€126 million
sector budget support),

·
contributions to two regional (intra-ACP)
projects – Nyerere academic mobility scheme (€5 million) and science and
technology (€3 million),

·
a top-up of the Erasmus Mundus-II programme (€3
million),

·
a technical cooperation facility (€6.7 million).

The package follows the pattern of previous
years, delivering about 90% of new commitments in the form of sector budget
support. Disbursements rose to €113 million in 2010, compared to €106 million
in 2009.

South Africa – higher education HIV & AIDS

The €20 million higher education HIV & AIDS programme which
ended in March 2010 supported the department of higher education and training
and the 23 public higher education institutions (HEIs) in South Africa to meet
the challenges posed by the HIV/AIDS pandemic. Amongst the programme’s achievements
were the adoption of a national policy framework on HIV/AIDS in the higher
education sector, the development of a sustainable funding model for addressing
HIV/AIDS in this sector, the documentation of good practices with respect to
prevention, the piloting of an HIV/AIDS module for students, the development of
a workplace policy framework for HEIs, and the strengthening of on-campus
services (counselling and testing, HIV treatment etc) for students and staff.
Of particular significance are the results of a study on HIV prevalence amongst
23 000 students and staff undertaken by the programme, which now provides
a solid basis for future planning and resourcing.

The EU also supports regional cooperation
via programmes with the Southern African Development Community (SADC) and
contribu­tions to intra-ACP projects. For the government of South Africa,
regional trade and political cooperation remain priorities alongside greater
South-South cooperation. In this respect, it aims to take a more pro-active
development cooperation role on the African continent through the establishment
of a development partnership agency in 2011, to boost regional cooperation and
to improve donor coordination. Trilateral cooperation between the EU, South
Africa, and its African partners is envisaged in the South Africa-EU strategic
part­nership joint action plan.

South Africa - Creating jobs through local economic development

The €38.5 million KwaZulu-Natal local economic development support
programme (Gijima-LED) aims at improving the quality of life for the people of
KwaZulu-Natal. This province has the second largest provincial economy in South
Africa but also its highest unemployment rate. Between 2002 and 2010, 219
projects were supported through grant funding of €12.6 million which attracted
additional public and private investment of €16 million. Over 100 business
partnerships have been established, which contributed to the creation of
4 255 sustainable jobs. Women occupied more than 50% of these jobs. A
total of 1 064 people have been trained in aspects of local economic
development, while 10 018 people have been included in HIV/AIDS mitigation
plans. Sustainability of the programme has been secured by the provincial
government through a successor programme (Gijima LED II), which will be funded
completely through national and provincial public funds and private resources.

The country strategy for South Africa for
2007-2013 strongly focuses on employment creation and social services. The
shift to budget support, representing about 90% of all new commitments, is
highly appreciated by national authorities and has improved the quality of aid
delivery in various aspects, such as national ownership, substantial reduction
in administrative costs, predictability and focus on results. The 2009-2010
mid-term review concludes that EU aid delivery has made good progress by
concentrating on fewer but larger actions with bigger impact on national policy
priorities.

The critical sectors of education and
health services have been targeted over the last two years with new programmes
on primary education and primary health-care being approved in 2009 and 2010
(representing a total value of around €250 million). Their impact is expected
to be high in terms of improved learner performance in literacy/numeracy and
better access to antiretroviral treatment for HIV-positive pregnant women. Under
the employment programme, job creation activities and projects are gaining
momentum.

2.2.1.11.
Outlook

EU development cooperation policies will
continue to focus on employment and social services, targeting a significant
reduction in poverty gaps in the years to come. For the period 2011-2013, it
will concentrate on service delivery/public finance management, climate change
and sustainable development, as well as regional and pan-African cooperation
activities. The 2011 annual action programme provides for a national
development policy support programme, mainly using budget support and aimed at
strengthening key government priorities on poverty reduction as well as
cross-cutting issues such as public finance management and local service
delivery. More regional coop­eration activities are planned through a contribu­tion
to the Edulink programme for capacity development in higher education, and the
extension of the current legislative sector policy support programme to
regional activities. Support for South African participation in the Erasmus
Mundus programme will also continue.

2.2.2.
Caribbean
2.2.2.1.
Introduction

The EU strategy for the Caribbean is built
around a future vision founded on a history of shared values. It will exploit
to the full the opportunities contained in the Cotonou Agreement. In addition,
the commitment made at the EU-Caribbean Forum (CARIFORUM) meeting in Madrid
in May 2010 to develop a joint strategy demonstrates the shared wish for an
enhanced EU-Caribbean political partnership to meet a variety of challenges:

·
tackling economic and environmental
opportunities and vulnerabilities;

·
promoting social cohesion, and combating poverty
and HIV/AIDS;

·
promoting regional integration;

·
reconstructing Haiti;

·
fighting illicit drugs and tax fraud;

·
Optimising joint action in multilateral fora.

Further steps were taken to strengthen
donor coordination with bilateral and multilateral donors active in the region.
Information sharing has become more systematic and regular.

Following the January 2010 earthquake in
Haiti, the EU is participating actively in multi-donor efforts to rebuild the
country and is part of the Interim Haiti Reconstruction Commission, the body
charged with coordinating Haitian and international donor efforts.

All Caribbean countries have been affected
by the global economic and financial crisis. This may slow down pov­erty
reduction and reverse progress towards the achievement of the MDGs. Progress is
therefore mixed, but the MDGs remain at the core of the development process.
The 10th EDF regional programme supports regional integration and
complements the EU-Caribbean economic partnership agreement provisionally
applied since 2008 which defines trade relations between the EU and the
Caribbean. Significant progress was achieved in 2010 towards implementing the
regional programme. This is also the case for the 10th EDF country
strategies, signed at the end of 2008, which address both private and public
actors. Major sectors covered include governance and competitiveness, infra­structure
and interconnectivity, macroeconomic budgetary support and poverty reduction.
Other sectors explicitly covered are capacity-building related to the regional
programme for additional trade-related assistance accompanying the EPA, and
good governance in the tax area. In 2010, the 10th EDF mid-term
review process was completed as required under the Cotonou Agreement.

Systematic monitoring of all programmes is
ensured through a series of instruments. The joint annual reports, identify
contextual developments as well as progress in implementation. The mid-term
review is essential for monitoring cooperation with the Caribbean, and planned
along with ad-hoc evaluations like the impact evaluation of the regional
programme launched in 2010. They permit timely adjustments and modifications
with a view to ensure effectiveness, efficiency, coherence, relevance and
appropriateness.

2.2.2.2.
Aid effectiveness and donor coordination

The Commission remains committed to
strengthening donor coordination in the region. The
Commission sits on the steering committee of the Caribbean
Regional Technical Assistance Centre (CARTAC) and works closely with the
IMF, the World Bank, the UK’s Department for International Development (DfID),
and the Caribbean Development Bank on macro-economic and public finance
management issues.

Further progress was made in 2010 on the
division of labour among donors. The financial and economic crisis, which
severely affected eastern Caribbean countries, has led to increased
coordination with other donors and in particular the IMF. In the eastern
Caribbean, the Commission works closely with fellow donors on budget support
and public financial management. There are also close working relations with the
World Bank and UNDP on sub-regional social protection reform and with the FAO
on agriculture. Donor coordination on trade issues is effective and is becoming
increasingly important on issues related to drug trafficking and crime
prevention.

The Commission promotes donor coordination
with CARIFORUM. Financing for this is foreseen in the Caribbean institutional
strengthening programme. A donor meeting organised by the CARICOM secretariat
took place in December. The secretariat presented its strategic development
plan, the roadmap for regional integration and an overview of international
development partners engaged in regional cooperation activities.

Following the earthquake of 12 January 2010
in Haiti, the Commission and some EU Member States took part in an early
recovery assessment mission and in the post-disaster needs assessment which
contributed to the government's action plan for national recovery and
development. The Commission and other international development partners agreed
on a joint performance monitoring framework for budget support with the
government of Haiti. The framework includes performance indicators for
macro-economic and public finance management as well as a number of
poverty-related sectors.

Haiti – The aftermath of the earthquake

Dealing with the aftermath of January’s devastating earthquake was a
big priority in 2010. Immediately after the earthquake, the European Commission
took a series of emergency measures. Ongoing projects and programmes were
reviewed and adjusted where necessary. Some received extra funding to respond
to the new needs and priorities that emerged. New additional programmes were
put in place. Conditions for general budget support were re-assessed and
additional measures and guarantees put in place. Budget support
disbursements between January and September 2010 of €57.8 million allowed the
government to maintain critical spending, notably in health, education and
security. In the education sector, kits were distributed to help schools take
charge of the many additional pupils who moved from the capital, Port-au-Prince,
to other areas. School rehabilitation work got under way. Tenders were launched
for the rehabilitation of the remaining section of the main highway to Cap
Haïtien, and funds were made available to rebuild the premises of the "Centre
National d'Imagerie Géo-Spatiale".

2.2.2.3.
Working towards the MDGs

The global economic and financial crisis forced
some Caribbean countries to reduce priority expenditure as their economies
slowed down, and revenue fell, particularly from tourism and financial
services. This may affect poverty reduction efforts and slow progress towards
the MDGs. To mitigate this potential negative impact, the Commission allocated
funds from the 2010 budget of the Vulnerability Flex mechanism to Antigua &
Barbuda, Grenada and Haiti.

Over the past four years, the Commission
has been supporting education in the Dominican Republic through a €63.5 million
sector budget support programme. The objectives are
to improve access to quality basic education and to develop the effectiveness
and efficiency of the sector in line with the national efforts for social and
economic development. Some progress can be noted. Between 2007-2008 and
2009-2010 for instance, the number of five-year-olds enrolled in schools
increased from 68.3% to 75.4% while average scores in 8th grade mathematics
improved from 53.6 in 2007 to 55.8 in 2010. But more efforts are needed to
respond to persistent needs and to improve the country's performance at
regional level.

In the eastern Caribbean, despite good
progress in reaching most MDGs, more needs to be done especially on combating
HIV/AIDS and ensuring environmental sustainability. To support these countries,
the EU is investing in health, education, sustainable tourism, agriculture,
basic infrastructures, employment and growth, through several projects and
direct budget support.

Support for Guyana’s sea defences

The population of Guyana is mostly squeezed into the narrow coastal
strip between the Atlantic Ocean and the world’s largest remaining virgin
rainforest. Much of the coastal zone is at least half a metre below sea-level.
Almost all livelihoods, economic and agricultural activity are under threat of
flooding and climate change has increased this threat.

The coastal zone is protected by about 370 km of sea defences,
including an 80 km sea wall. Sea defences have been neglected since the 1970s
and most of the concrete walls are now 30-75 years-old. Mangrove and artificial
earth defences are threatened by natural erosion processes. Breaches in these
defences are a constant danger.

The EDF has funded a series of sea defence projects. The intention
has been to rehabilitate or reconstruct critical sections of the sea wall to
reduce immediate threats, and to create a more sustainable defence system which
can be better maintained. The EU is also supporting a programme for the
conservation of the mangrove forests that once stretched along the entire
coastline but have now been damaged by human interference and erosion.
Re-establishment of mangrove forests could potentially be a cheaper form of
coastal protection, and one which encourages biodiversity and contributes to
carbon capture.

In certain countries available data remains
insufficient to make an informed progress assessment. Often statistical
information does not go beyond 2007, posing problems for data collection and
analysis.

2.2.2.4.
Implementation and results

In 2010, €361 million was committed to the
Caribbean from the various cooperation instruments managed by the Commission.
Six annual action programmes totalling €127 million were approved under the 10th
EDF, as were nine other financial decisions worth €130 million. From the EU budget, six
countries (Barbados, Belize, Guyana, Jamaica, Saint Kitts and Nevis, and
Trinidad and Tobago) benefited from accompanying measures to diversify their economies and/or increase the competitiveness of
their sugar industries following the reform of the EU sugar market. In 2010,
these countries received €101 million in commitments.
In addition, a €3 million programme in Belize was financed from the thematic
programme for the Global Climate Change Alliance.

Budget support remains the most important
implementation modality in the region, accounting for 78% of all new programmes
approved in 2010. The traditionally-funded programmes cover private sector
development (8%), infrastructure (6%), sugar sector reform (5%) with the
remainder going to other sectors.

EDF payments in the Caribbean region,
excluding the OCTs, totalled €307.2 million in 2010. Caribbean countries received €29 million in 2010 from the special framework of assistance for traditional ACP suppliers of bananas.
These funds are helping local economies to diversify and are assisting the
seven beneficiaries (Belize, Dominica, Grenada, Jamaica, St. Lucia, St. Vincent
and the Grenadines and Suriname) to cope with changes in the banana market. €56
million was disbursed under the accompanying measures
for Sugar Protocol countries. In addition, €13.4 million went to Haiti under
the thematic programme for food security.

The Vulnerability Flex mechanism was also
mobilised in the region against the effects of the global financial and
economic crisis. The EU gave Grenada two V-FLEX grants in 2009 and 2010. The
funds were added to the private sector development, employment and growth
programme, and supported school meals programmes, public assistance to
vulnerable groups, and road improvements and maintenance.

Law and order in Jamaica

In Jamaica, the €33 million EU security sector reform programme
helps to fight crime and improve accountability within the security services. A
number of activities took place in 2010 bringing major results, such as
improved integrity within the Jamaica constabulary force and better
administration of justice in the country. The programme has proved to be an
effective means of helping the country in its efforts to reduce crime, maintain
peace and effectively deliver criminal justice.

Despite higher disbursements in 2010 and
some concrete results, budget support remains a challenge in the Caribbean. The
reason is that most countries in the region are middle-income countries where
budget support represents a much smaller share of national budgets than in other
regions This affects the actual leverage ability of EU assistance and the
justification for an in-depth policy dialogue between donor and recipient.
Constraints also relate to limited administrative capacities to deal with the
complex monitoring mechanisms that should be put in place in order to track
progress in the assisted sectors. This is particularly true of small islands,
which receive high per capita aid allocations which they are not always
able to absorb. In some countries, the absence of robust national and sector
strategies as well as the lack of firm ownership have also had a negative
impact.

In addition, tracking progress on an annual
basis in public finance management systems is more difficult in middle-income
countries where systems are often more advanced than in lower income countries.
In such situations the reform requirements in public finance management can be
less visible and may need more time to implement.

In helping neighbouring Haiti in the
aftermath of the earthquake, the Dominican Republic disbursed funds earmarked
for unforeseen emergency expenditure. To offset the impact on the Dominican
Republic's 2010 budget, the Commission accelerated approval of a new general
budget support programme with the first disbursement taking place in late 2010.

The 10th EDF Caribbean regional
programme pays particular attention to establishing a Caribbean single market
and economy, to achieving maximum benefits from the economic partnership
agreement, and to mitigating potential adverse effects from the resulting
adjustment process. In 2010 the Commission allocated €28 million in a follow-up
to a successful Caribbean regional private sector development programme which
ended in December. These regional private sector development programmes are
complementary to the budget support programmes in Dominica (€17 million) and
Grenada (€17.5 million) which focus on improving the business environment and
investment climate, and Barbados (€10.1 million) which targets international
business development.

Grenada – joint effort to attract outside investors

Ranked 100th in the World Bank Doing business
report in 2006/2007 Grenada needed major improvements in its business climate
to attract foreign investors. The biggest problem areas were property rights,
enforcing contracts and closing a business. The EU joined forces with the World
Bank to improve the situation.

In 2007, The EU launched a multi-year budget support programme in
Grenada to improve its investment climate and attractiveness to foreign
investors. The programme was accompanied by a World Bank technical assistance
loan signed in 2008. The joint EU and World Bank efforts are starting to show
results, as the 2011 Doing business report recognised by placing Grenada
among the top 10 best reformers in 2010.

2.2.2.5.
Monitoring

In 2010, 51 ongoing national projects and
eight ongoing regional programmes representing a total EU commitment of almost
€380 million were monitored in the Caribbean region. Seven national and one
regional completed project (ex-post monitoring) representing EU funding
of almost €38 million were monitored.

Analysis of the results reveals that 72% of
the monitored national ongoing projects performed well or very well, while 14%
presented problems and 14% encountered major difficulties. Overall, 86% of
projects monitored received very good and good ratings on the relevance and
design criteria. The good or very good ratings were 82% for impact and 73% for
sustainability.

The average performance
on the five DAC criteria improved in 2010 compared to 2009. However, some constraints persist in terms of efficiency (as 35% of projects
monitored face problems and 14% show serious deficiencies in terms of input
used and implementation of activities), and effectiveness (with 39%
experiencing difficulties in delivering results and 6% serious deficiencies).
Poor risk management and overambitious project formulations are the biggest
problems undermining the attainment of objectives.

At Regional level, six projects show a good
performance while two are performing with some problems. This good result may
be in part explained by the nature of the implementing partners, who include
the FAO, the Organisation of American States or CARIFORUM.

Sectors most concerned by external
monitoring were social infrastructure and services (21 projects monitored with
a total value of €114 million) and production sectors (16 projects and €82
million). Seventy-six percent of social infrastructure projects monitored
received very good and good scores, especially in the fields of health,
government and civil society and education. In the production sectors, delivery
of aid was even more effective, with 88% of national ongoing projects doing
well and 12% facing major difficulties. As in 2009, social projects performed
better than economic ones.

In addition to the above, three sector
policy support programmes (SPSP) in Montserrat, Trinidad & Tobago and
Jamaica were monitored, representing a total EU commitment of €5.5 million.
According to the monitoring report, the SPSP in Montserrat and Jamaica are
facing some problems. However the SPSP in Trinidad and Tobago, which supports
the education sector, is performing well. The external monitors found that the
programme strongly contributes to widening access to, and enhancing the quality
of, non-university tertiary education through its actions to modernise the
national training system, reduce gender disparities, train teachers, reform
school curricula and implement a system of public funding.

Table 8 Caribean- Very good and good ROM scores per evaluation criteria 2008-2010

Table 9 Caribean – Project performance
per ODA sector (%)

2.2.2.6.
0utlook

Building on growing experience with budget
support, the implementation capacity of local authorities should improve over
time. The more systematic use of the public expenditure and financial accountability (PEFA)
methodology to assess public finance management and the assessments undertaken
during the year provide the basis for enhanced dialogue on important public
finance management issues and improved monitoring frameworks. Further dialogue
guidance will nevertheless be needed, particularly on sector budget support in
areas like the private sector and trade development.

Under the accompanying measures for former
Sugar Protocol countries, an indicative amount of €252 million has been
allocated for Barbados, Belize, Guyana, Jamaica, St. Kitts and Nevis and
Trinidad and Tobago for 2011-2013. These substantial funds will further support
sugar sector reform, macroeconomic stability, employment and growth in those
countries with the exception of Trinidad and Tobago which is diversifying out
of sugar into other economic sectors. From 2011, the Commission will start
implementing the banana accompanying measures (BAM), which will benefit seven
Caribbean countries.

In Haiti, project implementation on the
ground should accelerate in 2011, after a year of post-earthquake technical
studies and tender procedures. The funds pledged by the Commission in response
to the disaster will be disbursed over the next two years, as projects move
forward.

Saint Vincent and the Grenadines and Saint Lucia - linking disaster
response with rehabilitation

Following the passage of Hurricane Tomas at the end of October, a
big concerted effort was made to ensure that all available and potential
resources were used to assist both St. Lucia and St. Vincent & the
Grenadines. The aim was not just to provide emergency relief, but also to help
both countries rehabilitate certain sectors like crop production, health, and
education.

Immediate emergency aid of €200 000 went to restore health and
sanitary conditions in St. Lucia and St. Vincent and the Grenadines. The aid,
implemented by the Pan-American Health Organisation (PAHO), was used to ensure
safe water supplies to health facilities, shelters and vulnerable households as
well as safe waste disposal and disease control activities.

The EU and some member states had also contributed over 25% of the
initial capital of the Caribbean catastrophe risk insurance facility (CCRIF).
The CCRIF announced shortly after the hurricane that it would provide $3.2
million to St. Lucia and $1.1 million to St. Vincent and the Grenadines.

A second emergency aid decision mobilised €1 million to support
operations by the French Red Cross (emergency relief items, shelter, safe water
and hygiene promotion) and the FAO (re-establishing production by small-scale
banana and other farmers). In St. Lucia, money from existing EU projects for
education and for the St. Lucia social development fund were reallocated to
allow immediate disbursement to the most affected communities. In St. Vincent
and the Grenadines an additional €600 000 was being used for
rehabilitation efforts: for school furniture, to assist the recovery of
small-scale farms, and for restocking of medical supplies.

2.2.3.
Pacific
2.2.3.1.
Introduction

Pacific island countries are among the most
seriously affected in the world by climate change. For some, it poses an
existential threat. Climate change has therefore taken centre stage in all
discussions between the Pacific island countries (PICs) and their main
international partners concerning assistance to the region.

The EU and the Pacific Islands Forum (PIF)
secretariat launched in December an EU-PIF initiative on climate change to
foster understanding and facilitate coordination in the international debate.
The aim is also to ensure that a fair share of international climate change
funding, including from the “fast start” initiative, is allocated to Pacific
countries and territories through more effective delivery methods that will
reinforce capacities, particularly for the smaller island states.

The Commission has accelerated the
assessment of the eligibility of Pacific countries for budget support. As a
result, five Pacific countries (Vanuatu, Solomon Islands, Samoa, Tonga and
Tuvalu) were eligible in 2010 for budget support which will improve their
absorption capacity and the effectiveness of climate change funding.

Fiji remains a concern, given the poor
progress in the return of democracy and the maintenance of public emergency
regulation. As a consequence, aid to Fiji remains suspended, with the exception
of €8 million allocated to support mitigation efforts for people living in sugar-producing
areas.

Tonga and Tuvalu qualified respectively for
an additional €5.5 million and €1.5 million from the Vulnerability Flex
instrument aimed at reducing the impact of the global financial crisis.

2.2.3.2.
Aid effectiveness and donor coordination

The framework for enhancing regional aid
effectiveness is the Cairns compact, adopted by Pacific Forum leaders in August
2009. It provides a more structured mechanism for dialogue, coordination and
reporting, with the ultimate objective to improve the quality of national
development strategies. The Forum secretariat is
primarily responsibility for taking forward implementation.

The
PIF 2010 report on aid effectiveness concludes that Pacific island countries
are slowly but steadily making progress in managing foreign aid more
effectively. Sector policy frameworks have been developed in some countries as
in in Samoa in the water and sanitation sector; or in Tonga with the energy
roadmap 2010-2020. Budget support is being used by the EU and the Asian
Development Bank in several countries (such as the Solomon Islands, Tonga,
Tuvalu). At regional level the Pacific Plan, adopted in October 2005 by the Pacific Islands Forum leaders, is the basis for the PICs'
regional cooperation and integration efforts.

The Commission continued its work to
strengthen donor coordination. Although very few EU Member States are
permanently represented in the region, dialogue is well-established with, for
instance, the French and/or British diplomatic missions in Fiji, Papua New
Guinea, Vanuatu and the Solomon Islands. The EU delegation in Nouméa
coordinates its activities with the Nouméa and Papeete offices of the Agence
Française de Développement (AFD).

Much
can still be done to reduce aid fragmentation,improve donor coordination, and
make best use of combined domestic and foreign aid resources. Scope for
improvement can be found in national policy frameworks, procurement rules,
public financial management, coordination of development partner missions and
better involvement of the non-governmental sector in policy planning.

Timor-Leste – Enhancing local ownership

The EU has been supporting a rural development programme which
promotes the concept of village development planning (VDP). This is a forum
that showcases people's participation in their own development, promoting local
governance in a true "bottom-up" approach. Ordinary people meet,
discuss, analyse, debate and agree on the kind of future they want for
themselves and their community. VDP started in 2008, as a pilot scheme in
four Sukos (villages) of the Covalima District in Timor-Leste. The
process was repeated after one year in the same Sukos, and then expanded
to another four villages. It comprises a common agenda and vision of
development for the community, drawn up by the villagers. It consists of
priority goals for the next five years. In addition, community action
plans were drawn up for community activities rather than
projects. Since projects often have a connotation of outside funding,
the reference to community activities changes the mindset of the villagers and
increases ownership of the actions undertaken.

2.2.3.3.
Working towards the MDGs

The Cairns Compact on Strengthening
Development Coordination in the Pacific[55] respond to Pacific leaders concerns that, despite high levels of
development assistance over many years, the Pacific region may not achieve the
Millennium Development Goals by 2015. To succeed, progress needs to be faster.

In 2010, the picture was mixed for several
MDGs, with some countries performing better than others on selected indicators.
Poverty reduction remains the most challenging, notably in Papua New Guinea and
Timor-Leste. Maternal health and environmental protection are also areas where
progress needs to be made.

Improvement of health services in the outer islands of the Republic
of Kiribati

The project, which came to an end in December 2010, improved access
to primary healthcare in 18 islands with a total population of about
47 000 people. The EU contributed €8.8 million to the construction of 18
health centres and 56 dispensaries, together with equipment, water and solar
energy, computers, radio communication equipment and sanitation. Through major
training programmes for healthcare professionals on the island the quality of
health services, both in terms of management and delivery, were improved.

Environmental sustainability (MDG7) is a
core preoccupation of the EDF-financed national and regional indicative
programmes. Access to safe drinking water and sanitation services is a focal
sector supported by EU programmes in several Pacific countries like the Cook
Islands, Kiribati, Samoa and Tuvalu. Sustainable and renewable energy
programmes are being supported in other countries such as the Northern Pacific
states, Nauru, Niue and Tonga.

Samoa – Water sector support programme

In 2010, Samoa received €4.4 million as part of the EU's water
sector support programme. Despite the adverse effects of the global economic
crisis and of the Tsunami which hit the country in 2009, the government managed
to maintain a sound macroeconomic framework and to continue improving its
public financial management. Significant progress was achieved by the
government and the Samoan Water Authority in particular, in reforming the
country's water sector policy and water resources management. With the help of
the EU programme, access to drinking water was increased to 88% of the
population and the number of primary schools and hospitals with acceptable
levels of sanitation facilities rose to 88% in line with the target.

The global economic recession has seriously
affected the small Pacific economies, resulting in increased budget deficits,
reduced flow of overseas remittances, and a contraction of exports. This is
likely to impact negatively on MDGs, even though governments have taken
measures to protect the population from the most negative effects of the
crisis, often with the help of donors.

Weak national statistical systems remain a
big challenge in most countries. This means a lack of comprehensive, recent and
quality data, notably on the MDGs. Statistical capacity-building is crucial for
successful aid programming and particularly for budgetary support. In Vanuatu,
overall global budget support was based on incorrect input data which resulted
in funds being withheld. Obtaining reliable data and indicators requires
further attention from the countries concerned along with support from
development partners.

Solomon Islands – Micro-projects

In the Solomon Islands, where more than 80% of the population live
in rural areas, the micro-projects programme aims to provide rural communities
with greater access to improved social services and sources of income. In 2008,
over 120 projects were completed, including the rehabilitation of village
schools and clinics, the installation of more than 104 water and sanitation
systems plus 60 other income-generation and livelihood projects. At the Kavua
water supply micro-project, visited by an EU team in April 2010, seven water
outlets had been installed in the village. The supply of water saved the
villagers a three km walk to clean water and therefore improved health.

2.2.3.4.
Implementation and results

The allocation of funds under the 10th
EDF is progressing well in most small islands states with commitment rates of
up to 90% or even 100%. Annual action programmes were approved in 2010 in areas
such as water and sanitation (Kiribati), support to non-state actors (Samoa,
Vanuatu and Timor-Leste) and rural development (Papua New Guinea and Timor-Leste).
Post-tsunami financial support was also approved for the Cook Islands, Samoa
and Tonga. By
the end of 2010, more than half of the countries had committed 70% or more of
their national indicative programme under the 10th EDF.

Kiribati – Water and sanitation for outer islands

Kiribati’s groundwater, its most common source of freshwater, is
increasingly threatened by saline water intrusion (mainly due to rising sea
levels and unsustainable management of water resources), increased pollution
and over-extraction. The available infrastructure to access groundwater is
often broken or in very poor condition. Rainwater harvesting can be an
efficient and sustainable complementary source of safe freshwater, but often
the catchment systems and storage facilities are inadequate. The EU water
support project, approved in 2010, seeks to address some of these issues. It
intends to design appropriate water and sanitation systems and increase the
volume of rainwater safely harvested and stored. An intensive community consultation
process should help to enhance knowledge and awareness among the population
with regards to water, hygiene and sanitation issues.

However, implementation and managerial
capacity remains weak in many countries. Limited institutional capacity is a
particular problem in Papua New Guinea where the EDF absorption rate was only
19% at the end of 2010.

During 2010, the Commission continued to
extend the provision of budget support in the Pacific region. In total, new
commitments of budget support amounted to €32 million in 2010 which
represents a substantial increase in both the amount and the number of
countries covered. Budget support disbursements in 2010 amounted to €19.5
million.

The impetus for considering greater use of
budget support in the region has mainly been driven by short-term actions to
offset the impact of the economic crisis in a number of countries. This
resulted in the provision of support under the V-FLEX instrument in Samoa,
Solomon Islands, Tonga and Tuvalu with a total value of €27.7 million. These
programmes were designed to allow the countries concerned to maintain their
public expenditure programmes in line with poverty reduction objectives whilst
at the same time supporting macroeconomic stability.

In
2010 the Commission approved support from the Global Climate Change
Alliance. A regional programme, to be implemented by
the secretariat of the Pacific Community, was allocated €11.4 million and a
national programme in the Solomon Islands €2.8 million. The
support aims at helping the country and the region to increase resilience to
climate change.

Overall, EDF implementation at regional
level advanced as planned with a 57% commitment rate of the 10th EDF
regional envelope (€95 million for 2008-2013) by the end of 2010. The regional annual action
programme approved in December 2010 provides support for trade and regional
integration (€30 million) and a technical cooperation facility
(€2 million) to finance external short-term expertise. The regional
integration programme will help increase Pacific island countries' capacity in
trade through improved technical capabilities, better customs management and
systems, and developing export potential in agriculture and forestry. Tourism
will also be developed. Four regional agencies, the Pacific Islands forum
secretariat (PIFS), the Secretariat of the Pacific community (SPC), the Oceania
customs organisation (OCO) and the South Pacific travel organisation (SPTO)
will implement the different components of the programme.

Rainwater catchments for outer islands

The Marshall Islands are benefiting from a multi-country project
which also covers Micronesia, Nauru, Tuvalu, Tonga, Solomon Islands, Papua New
Guinea and Palau, with a total EU contribution of €9.2 million. The
installation of 350 rainwater catchments (10 000-litre capacity) for
Majuro is ongoing. Installation of 173 rainwater catchments for the outer
islands has made progress as well. The project envisages the supply of a
further 250 rainwater catchment for Ebeye. The project has allowed the
Marshallese Environmental Protection Agency to train more than 20 people in
water quality monitoring in Majuro and Ebeye and has supplied the EPA
laboratory with test kits.

EU development cooperation with Fiji
remained subject to article 96 of the Cotonou Agreement. After the 2006
military coup, the EU suspended its assistance under the 10th EDF, and
no national indicative programme was signed. EDF cooperation is limited to a
few 9th EDF programmes and activities financed from the European
Instrument for Democracy & Human Rights (EIDHR) and the "Non state
actors and local authorities in development" thematic budget line of the
Development Cooperation Instrument. Fiji’s entitlement to benefit from the
accompanying measures for Sugar Protocol countries financed under the DCI was
cancelled in 2008 and 2009 in line with article 96. But concerns about the persistent and significant poverty levels,
particularly in rural areas, led the EU to approve a 2010
allocation of €8 million for direct support to
vulnerable populations in the sugar areas. The project will be implemented
through non-governmental organisations.

Timor-Leste – enhancing stabilisation through sustainable
reintegration of internally displaced persons

In 2009, as the Timor-Leste government closed its camps for
internally displaced persons, it became clear that many root causes of the 2006
crisis were not being addressed at a com­munity level. Although the immediate
danger was past, most factors of instability – land disputes, youth engage­ment,
demographic shifts, population pressures, conflict mediation – remained, with
little healthy discussion about them in Timorese society. Funded by the EU
Instrument for Stability and implemented by the International Organisation for
Migration, a project was set up to produce and broadcast an educational soap
opera to help promote this societal dialogue. For maximum impact it was
designed for a wide popular audience. The aim was to create a show with high
pro­duction standards, engaging characters, exciting stories and which reflects
the joys, humour and challenges of modern life in Timor-Leste.

To reach out to its largest demographic group, Timor-Leste's first
soap opera Suku Hali, was given a youth focus. The main story follows
two orphaned country brothers who migrate to the city in search of their
future, but find their new neighbourhood in turmoil following the recent return
of IDPs. The brothers’ bond is further tested by their inheritance of a
mini-van. For one brother it symbolises a future busi­ness, for the other it is
a means to easy money in the present if they sell it. How will they negotiate
the difference and save their relationship?

There are twenty 30-minute episodes of Suku Hali, in four
series: IDP Return and Reintegration, Elections and Democracy, History
and Reconciliation, and Alternatives to violence. Since October
2010, Suku Hali was broadcast twice a week on Timor-Leste’s national TV
and received an overwhelmingly positive audience response.

2.2.3.5.
Monitoring

In 2010, 41 ongoing national projects and
12 regional programmes representing a total EU commitment of €214 million were
monitored in the Pacific region. In addition, nine completed projects (seven
national and two regional) worth a total of €30 million were subject to ex-post
monitoring.

Analysis of the results shows that 56% of
ongoing national projects performed well or very well, 29% of the monitored
projects presented some problems, while 15% encountered major difficulties. In
general, 80% of projects monitored received very good and good ratings for
relevance and design, 68% for impact and 63% for sustainability.

According to the monitoring missions,
relevance and design of projects have considerably improved compared to 2009,
while effectiveness and impact fell slightly. Some contraints persist in terms
of efficiency (32% of projects monitored faced problems and 14% showed serious
deficiencies in terms of input used and implementation of activities).

The sector most concerned by external
monitoring was social infrastructure and services (with 25 projects monitored
for a total budget of €112.5 million). Of these, 72% received good marks.

Twelve regional projects were monitored, of
which nine were showing a very good performance or good performance, one was
performing with some problems and two are encountering major difficulties. As
an example, one project performing well is the Pacific regional initiative for
the delivery of basic education programme which is considerably contributing to
the increase of the institutional capacity to plan and implement basic
education projects at regional level. In addition, two sector policy support
programmes in Samoa and New Caledonia worth a total of €50 million were also
assessed. According to the monitors, both of them are showing a good
performance. In particular, the water sector support programme for Samoa is
showing how good coordination between technical assistance experts and
political decisions-makers can really make a difference.

Table 10 Pacific- Very good and good ROM scores per evaluation criteria 2008-2010

Table 11 Pacific- Project performance per
ODA sector (%)

2.2.3.6.
Outlook

The national and regional commitment rates
are comparatively high in the Pacific, except for Papua New Guinea. Internal
and external monitoring of projects confirmed that speed and quality of
implementation are generally good, albeit with variations between countries.
The relatively good performance by the Pacific ACP countries in terms of
quality and quantity has resulted in several of them being identified for an
increase in their 10th EDF national allocations. In half of those cases, the increase will
be used to top up the existing water and sanitation programmes. The other
countries with energy efficiency and renewable energy as core actions are
expected to seek an increase of the existing energy projects.

A number of Pacific countries have
expressed the wish to move or continue moving towards budget support. To help
them meet the eligibility requirements, the EU and other donors (IMF, Asian
Development Bank, Australia and New Zealand) will support actions to improve
public financial management systems and will review their public expenditure
and financial accountability.

2.2.4.
All ACP Programmes

The EU finances a number of programmes
covering potentially all ACP countries through the Intra-ACP envelope of the
European Development Fund (€2.7 billion for 2008-2013). In partnership with the
ACP group, the Commission identifies such programmes and implements some of
them. A number are implemented in partnership with the African Union, thereby
advancing some initiatives in the partnerships of the Joint Africa-EU Strategy
(JAES).

The ACP Observatory on Migration

On 25-27 October 2010, the ACP Observatory on Migration was launched
in Brussels. The occasion brought together more than 400 representatives from
ACP countries, European Union institutions, Member States, research institutes,
NGOs, and international organisations. Topics discussed included labour
migration, migration and development, forced migration and migration and
climate change.

The ACP Observatory on Migration has been created
by the ACP secretariat in partnership with the Commission, which provides
nearly €8 million in funding from its migration facility. It seeks to provide policy-makers, civil society and the public at
large with reliable and harmonised data on intra/inter national and regional
migration in ACP countries. It will establish a network of research bodies on
migration in all ACP regions. Activities started in 12 ACP pilot countries:
Angola, Cameroon, the Democratic Republic of Congo, Haiti, Kenya, Lesotho, Nigeria,
Papua New Guinea, Senegal, Tanzania, Timor-Leste and Trinidad and Tobago.

At the Tripoli summit in November, African
and European leaders reconfirmed support for the JAES by adopting a more
focused second action plan. A positive development is that specific funds
(initially €10 million) have been earmarked for improved delivery of the JAES
and its second action plan. This meets some of the shortcomings identified
during implementation of the first plan.

One of the eight JAES partnerships is the
partnership on peace and security, mainly financed through the African Peace
Facility (APF). A total of €300 million is available for the period 2009-2011.
The APF currently supports three capacity-build­ing programmes to strengthen
the African peace and security architecture from a budget of €37 mil­lion. The
first set of capacity-building programmes has been extended until April 2011
and an additional €65 million is earmarked to consolidate what has been
accomplished since 2004.

The APF also provides funding for
African-led peace support operations. In 2010, the African Union Mission to
Somalia (AMISOM) received an addi­tional allocation of €73 million, bringing
total EU support to €142 million, to continue to maintain security in Mogadishu
and to support the transitional federal government in its efforts to stabilise
the country. A further €15 million was allocated to the multinational force
deployed in the Central African Republic to consolidate peace and security,
bringing the total EU contribution to this operation to €68.5 million. The APF
also provided €15 million to support the early response mechanism which
finances pre­paratory stages of peace support operations or initial steps of
mediation processes. It currently supports such processes in Madagascar,
Guinea, Sudan, Niger and Guinea-Bissau.

Since 2008, the EU has been financing under
the 9th EDF an African Union (AU) support programme of €55 million
to strengthen the overall institutional capacity of the AU and to deepen the
Africa-EU partnership.

Another of the eight JAES partnership
covers trade, regional integration and infrastructure. The EU-Africa
Infrastructure Trust Fund is an innovative financial instrument launched in
2007. It encourages the financing of cross-border and
regional infrastructure projects in Sub-Saharan Africa in the energy, water, transport and
telecommunications sectors, which facilitate
interconnectivity and regional integration. The trust fund combines grants from
the Commission and EU Member States with long-term loan finance from the
European Investment Bank, EU development financiers and, since November 2010,
the African Development Bank. In 2010, following
additional contributions pledged by EU Member States (UK €10 million, Austria
€1 million, France €5 million), the overall trust fund endowment reached €388.7
million. The fund’s executive committee approved 17 grant operations in 2010
worth €110.6 million, bringing the number of approved grant operations to 36
and the total commitments to €209 million. These are combined with €970 million in loans from the
trust fund financiers to finance projects whose total financing now exceeds
€2.5 billion. The latest figures bring the total leverage factor of funds to
about 12:1.

The second ACP-EU Water Facility, which was
endowed with €200 million in 2009, issued two calls for proposals in 2010.
Under the call entitled "Water, sanitation and hygiene promotion
for the Millennium Development Goals", 55 projects were selected with a
total value of €109.5 million. They will provide access to safe water to about
3.3 million people, of whom 2.8 million will also benefit from improved basic
sanitation. Some seven million people will benefit from hygiene promotion
programmes. Results of the second call, Partnerships for capacity de­velopment
in the ACP water and sanitation sector, published in February 2010, will be
known during the first half of 2011.

Most of the 75 actions financed under the
first ACP-EU energy facility are already being implemented in rural and
peri-urban areas of the ACP region, with a projected impact on 7.5 million people.
In 2009, a second energy facility was granted €200 million with the aim of
continuing action against poverty by providing energy services and promoting
the use of renewable energies in the fight against climate change. A first call
for proposals (for €100 million) led to the selection of 65 projects
concentrating on improved access to energy services, energy management and
governance, while focusing on renewable energies and efficiency.

The Commission has also launched an
innovative blending instrument under the energy facility. An amount of €40
million, to be blended with funding from Member States and the EIB, is now
available to co-finance medium-size projects aiming at increasing access to
sustainable energy services in ACP rural and peri-urban areas. This instrument,
which involves blending finance and support to the private sector, is expected
to be a powerful tool in terms of achieving synergies, leverage and ultimately
impact. A similar blending instrument will be launched in 2011 under the water
facility.

Energy Facility – Steam turbine installation at Charter Sawmill,
Zimbabwe

The aim of this project funded under the first energy facility was
to provide sustainable electricity to 30 000 people in the communities
surrounding a sawmill in the mountains of the Chimanimani region. The project
consisted in the purchase and installation of a suitable steam-driven generator
to run on heat from the existing boilers at Charter Sawmill. The heat source for
the boilers is waste wood and sawdust that is sustainably produced within the
sawmill itself.

The power generation
facility will be able to operate as long as waste sawdust is produced at
Charter Sawmill, which has been operating for over 50 years. This forestry
business is sustainable, and certified by the Forest Stewardship Council – FSC (an environmental standard). It should continue to
produce waste sawdust for use as fuel for a power plant into the future on a
renewable basis. The sawmill has already planted young seedlings to be cut down
in 25 years time, helping to ensure the long-term benefits of the scheme.

The 2010 annual action programme for
intra-ACP cooperation under the 10th EDF, benefiting all ACP States,
was approved in December 2010. It consisted of a package of 13 programmes amounting to a total of €445.3 million in the fields
of health, climate change (environment and disaster risk reduction), education
and culture, trade and private sector development, agriculture and rural
development and sanitary services. The package includes a €150 million
contribution to the Global Fund to fight AIDS, tuberculosis and malaria and €20
million for increasing access to new and under-used vaccines in least developed
ACP countries. In the education sector, €20 million will be allocated to the
ACP-EU cooperation programme in higher education and €40 million to the
intra-ACP academic mobility schemes. In the field of climate change, the EU
contributes €60 million to the ACP-EU natural disaster risk reduction
programme, with €20 million to biodiversity and protected areas management
(BIOPAMA) and €10 million for climate-smart land and water management. The
EU-ACP support programme for the cultural sector and the "Reinforcing
Veterinary governance in Africa" programme each received €30 million.

Eradication of Rinderpest in Africa, a devastating livestock disease

Almost 50 years of continued collaboration between the EU and the
African Union Interafrican Bureau for Animal Resources (AU-IBAR) to eradicate
Rinderpest, one of the major transboundary
animal diseases affecting Africa, achieved its ultimate goal. The official
declaration of global freedom from Rinderpest is foreseen for 2011. The EU has
been a major contributor to the eradication of the disease in Africa with
contributions of more than €203 million since the 1960s.

The programme "Reinforcing veterinary governance in
Africa" (€30 million), adopted in 2010, builds on the success of this
long-term partnership. It aims at further strengthening African veterinary
services as improvements in animal
health in Africa are still needed to boost livestock development, and in turn
increase food security and trade opportunities.

2.2.5.
Overseas Countries and Territories (OCTs)
2.2.5.1.
Introduction

In accordance with part four of the EU
Treaty, the OCTs are closely associated with the European Union. The purpose of
this association "shall be to promote the economic and social development
of the countries and territories and to establish close economic relations
between them and the Union as a whole".

The original list of OCTs included
countries and territories which have since become independent sovereign
countries in Africa, the Caribbean and the Pacific. Consequently, a parallel was
established between the association linking the OCTs to the EU and the
relationship between the ACP countries and the EU.

Nevertheless since 2003, the OCTs and the
four member states with which they have special links have been calling for
better recognition of the OCTs’ specific status and have suggested building a
new relationship with the OCTs. An overall review of relations between the EU
and the OCTs was proposed, including a possible substantial revision of the
detailed rules and procedures governing the OCT-EU association.

In 2009 the Commission published a
Communication[56]
suggesting more focused cooperation, concentrating on issues of mutual interest
and narrowing the scope of cooperation accordingly.

Three central objectives have been
identified: (i) to enhance the competitiveness of the OCTs, (ii) to strengthen
their resilience and reduce their vulnerability and (iii) to promote
cooperation between OCTs and their regional, European and international
partners.

The Communication provides a guide for the
further work on replacing the current Overseas Association Decision when it
expires in 2013.

Numerous issues are involved including:
regional integration, the principal challenges and the opportunities of each
OCT, identification of their potential, their level of competitiveness, and
possible adaptation of the rules of origin, and possible financing mechanisms.
These issues will be examined in the impact assessment exercise the Commission
will carry out prior to the adoption of its legislative proposals – post 2013 –
concerning the OCTs.

During 2010, the Commission held several
meetings with the OCTs and their related Member States and pursued political
dialogue on the modernisation of the association. The Commission also undertook
a series of technical initiatives in preparation of its legislative proposals
to revise the Overseas Association Decision. The Commission also organised a
workshop on trade and regional integration, four trilateral meetings with OCTs
and Member States and two partnership working parties on trade and
environmental issues.

Cooperation between the EU and the OCTs is
implemented via the EDF. In the current programming period 2008-2013, OCTs will
have a budget of €286 million. The territorial allocations take the form,
mainly of budgetary support with a regional allocation of €40 million. Programming
is done via a single document composed of five sub-programmes (Atlantic, Indian
Ocean, Pacific, Caribbean, Multi-OCT projects). All sub-programmes are expected
to be submitted by the end of 2011.

2.2.5.2.
Implementation and results

Atlantic OCTs

EU cooperation with Greenland continued in
2010 to support the education sector with disbursement of €26.3 million and a
new commitment of €27.8 million. It has helped to increase student intake at
all post-elementary education and to provide vocational training for unskilled
workers and to support the government's education sector reforms.

For the other Atlantic OCTs – St Pierre and
Miquelon, Saint Helena, Ascension and Tristan da Cunha, and the Falkland
Islands – the implementation of the 9th EDF budget support
programmes came to end in 2010. The implementation of budget support programmes
is scheduled to begin during 2011, with a focus on economic, infrastructure and
trade development.

Pacific & Indian Ocean OCTs

The budget support programmes in vocational
training under the 9th EDF came to an end in New Caledonia, whereas
budget support to Pitcairn started. Project implementation progressed in the
other OCTs: water and sanitation for French Polynesia, construction of a wharf
in Wallis & Futuna, and management of rain water in Mayotte.

The 10th EDF programming has
advanced with New Caledonia where the sector budget support for vocational
training should be decided in early 2011 and start soon after. In the other
OCTs, projects identified include: the construction of another wharf in Wallis
and Futuna, and in French Polynesia a water and sanitation project for the city
of Papeete. The EU will also help these two territories to develop their
strategies in given sectors. Pitcairn and Mayotte are in the process of
preparing budget support programmes.

A project to help Wallis and Futuna, to
cope with the consequences of Hurricane Tomas in 2010, has been prepared in
2010 (B envelope for OCTs).

The regional programme TEP vertes in three Pacific OCTs
started its last phase in 2010. Its aim is to create synergies in renewable
energy. The 10th EDF regional allocation is to finance a Pacific
environmental project which will enhance regional integration not only among
the four OCTs but also with ACP countries of the region (€12 million). In the
Indian Ocean (Mayotte and Iles Eparses), the allocation will support the
sustainable management of natural areas (€3 million).

Caribbean OCTs

In the former
Netherlands Antilles, the Commission finances the "Bonaire sewerage and
sanitation programme" and the "Urban infrastructure programme"
on the five islands. Contracts were awarded for both programmes in 2010. Budget
support ended in Anguilla and progressed in Montserrat.

Budget support
programmes have been developed for Anguilla, Aruba and Montserrat. For the
Turks and Caicos Islands, a project has been identified including further
technical assistance for the public finance management improvement programme,
support for the ministry of works and assistance to reconstruction following
hurricane damage. On 10 October 2010, the constitutional reforms of the
Netherlands Antilles were completed. As a result, Curaçao and St. Maarten
became separate autonomous countries (besides Aruba and the Netherlands) within
the Kingdom, while Bonaire, Saba and St. Eustatius became part of the
Netherlands: this impacted the preparation of the 10th EDF in all
five islands.

Within the Caribbean
region, all seven OCT's continued to benefit from the regional risk
reduction initiative which provides spatial data infrastructures, and best
practises to support comprehensive disaster management. The seven OCTs also
progressed in the preparation of the 10th EDF regional programme in
support of SMEs, which should be adopted in 2011.

The Turks and Caicos Islands received an
allocation of €4.3 million (from the B-reserve) for the OCT's for the
reconstruction programme after Hurricane Ike and Tropical Storm Hanna.
Some 300 houses will be repaired and 50 houses rebuilt for low-income
households.

2.3.
Asia and Central Asia
2.3.1.
Asia
2.3.1.1.
Introduction

The economic and political emergence of
Asian countries is producing dramatic changes, creating the need for a new
balance in international relations. This represents a real challenge for the
European Union. EU cooperation with Asian countries seeks on the one hand to
help promote poverty reduction, sustainable development, and social inclusion
while on the other to enhance its economic, trade and political cooperation
with the region.

This makes for a complex overall
relationship with Asia. For this reason, the EU has been fostering dialogue and
cooperation with all Asian partners and numerous sub-regional groups like the
Asia-Europe Meeting (ASEM), the Association of South-East Asian Nations (ASEAN),
the South Asia Association for Regional Cooperation (SAARC) and the ASEAN
Regional Forum (ARF). Bilaterally, the EU has privileged partnership and
cooperation agreements and free trade agreements, like those already signed or
under negotiation with Indonesia, the Philippines, Vietnam and Mongolia (PCAs)
or India (FTA).

To strengthen political and economic
relations with Asia, an ASEM summit was held in 2010 as well as EU-ASEAN
ministerial meetings. The eighth ASEM summit in
Brussels in October agreed that Asia-Europe cooperation is wider than aid, and
should be a comprehensive, equal, and mutually beneficial partnership
responding to different circumstances and needs. The partnership should include
exchanges between state and civil society organisations, local operators, while
development finance should be a blend of grants and loans.

ASEM Dialogue Facility – Asia & Europe work together on global
challenges

The Asia-Europe Meeting has been the official platform for dialogue
between Asia and Europe since 1996. As an ASEM coordinator, the European
Commission underpins the process. The ASEM Dialogue Facility is a Commission
instrument created in 2007 to support the ASEM dialogue in priority areas:
economic and financial matters, employment and social policy, environment,
cultural diversity and intercultural dialogue, development cooperation,
information technology and maritime affairs.

The facility (with a €3 million budget for 2008-2010), promotes
exchanges among policymakers in Asia and Europe, facilitates regional
cooperation among ASEM countries and enhances policy and know-how transfer to
less developed Asian countries.

Bilateral summits with China (6 October) and
India (10 December) were also held. Other bilateral meetings took place. The EU
and China held their 3rd High-Level Economic and Trade Dialogue
(HED) in Beijing (21 December). The main themes were climate change, trade and
investments, and cultural cooperation. An EU-India ministerial meeting (Delhi,
22 June) addressed similar themes, while the second India-EU Forum on effective
multilateralism took place in October 2010.

Asia’s impressive economic vitality and
steady global integration is one side of the coin. Asia comprises high-income
industrialised partners and fast-growing emerging economies. But it is also
home to the largest concentrations in the world of those living in absolute
poverty. Although one of Asia’s greatest MDG successes is on poverty reduction,
nearly one billion people still live on less than $1.25 a day (2008).

Development cooperation, therefore, remains
high on the EU's agenda with Asia. The EU has earmarked €5.2 billion for Asia
for the current financing period 2007-2013. In the first phase from 2007 to
2010, the EU committed around €2.7 billion which went to programmes agreed with
the beneficiary countries. As planned, 18 annual action programmes – bilateral
and regional – were adopted in 2010.

As 2010 marked half-way in the current
programming period, several evaluations of ongoing or completed programmes and
projects took place. The mid-term review of the 19 strategy documents for Asian
countries in accordance with article 19 of the DCI has been completed. This
exercise showed the relevance of EU action during the first phase. It
also enabled the EU to adjust strategies for the second implementation period
and to adopt a multi-annual indicative programme for 2011-2013, taking account
of the lessons learned and best practices. The programme also reflects
EU priorities: aid effectiveness, strong emphasis in pursuing MDGs, supporting reforms driven by the beneficiary countries, and
the division of labour with other donors.

2.3.1.2.
Aid effectiveness and donor coordination

During 2010, the EU further strengthened
its commitment to aid effectiveness. It strongly supported donor coordination
mechanisms in Asia which have been particularly relevant in Bangladesh and
Vietnam. The EU has promoted the division of labour, notably in the programming
phase, but also in the implementing phase through transfer agreements and
delegated cooperation between Member States and the European Commission.

EU cooperation increasingly uses country
systems in a move from project to sector policy approach. This permits the
funding of bigger assistance programmes through sector policy support
programmes or – wherever possible – budget support combined with the
enhancement of public finance management by beneficiaries. This approach, which
reinforces partner country ownership, also reduces the number of small projects
(<€10 million) and improves effectiveness, as management efforts are more focused
instead of being spread thinly across too many areas.

General budget support and sector budget
support have proved to be particularly effective in enhancing policy dialogue
with beneficiary countries and in allowing the EU to work more strategically.
They secure ownership by beneficiary countries, insuring better linkage between
the broader political agenda and the sector policy dialogue held around the
programme. They reduce the need for the creation of separate individual project
implementation units. Along with budget support, the EU regularly provides
support for capacity building in public finance management.

Burma/Myanmar – Three Diseases Fund

Communicable diseases are a major health concern
in Burma/Myanmar, which suffers from a public health emergency in relation to
HIV/AIDS, tuberculoosis (TB) and malaria. Access to affordable quality health
services is a key issue and many vulnerable communities, especially in border
and conflict areas, are forced to resort to sub-standard treatment.

The Three Diseases Fund (3DF) allocates grants
to programmes targeting populations most at risk and providing them with access
to essential medicines and related services. With a total budget of €92
million, the programme was set up by a consortium of seven donors: the EU
(which is contributing €18 million), the Netherlands, Norway, Sweden, the
United Kingdom, Australia and Denmark. The fund manager is the UN Office for
Project Services (UNOPS).

So far, 3DF has supported 27 HIV projects, eight
TB projects, nine malaria projects and 4 integrated projects. As a result,
about 13 000 people received antiretroviral treatment. Prevention programmes contacted
500 000 most-at-risk people at least once. Around 120,000 TB positive-smear
cases were detected, and approximately 100 000 were successfully treated.
Over 1.1 million confirmed and probable malaria cases were treated.

In three years of implementation, 3DF made
significant changes to the lives of the most vulnerable people in the country.

2.3.1.3.
Working towards the MDGs

Asian countries have made big strides
forward over the past ten years in terms of economic growth and poverty
reduction. This has been accompanied by the rise of a considerable middle
class, which represents 56% of the population. At the same time, however,
economic and social inequalities have got worse. Asia is still home to two
thirds of the world’s poor. Economic growth can often involve high costs for
the environment.

China, Malaysia, Thailand, and Vietnam have
already achieved their 2015 target on poverty reduction (MDG1) while Mongolia
and Sri Lanka are well on track. The number of people living on less than $1.25
a day, however, remains particularly high in Nepal (55%), Bangladesh (50%) and
Lao PDR (44%). Even countries which have experienced rapid economic growth in
recent years are lagging behind on MDG1, most notably Cambodia, Mongolia, and
Pakistan. This is also the case for India and the Philippines despite their
middle-income country status.

Asia as a whole has made impressive
progress towards other MDGs, especially education (MDGs 2 and 3), in stopping
the spread of HIV/AIDS and other infectious diseases (MDG6) and in halving the
proportion of people without access to safe drinking water (MDG7).

However, a
number of countries are off-track for MDG7, while others have serious problems
in MDGs 4 and 5 (reducing child mortality and improving maternal health). This
stems from a lack of access to health services for the very poor, but also from
cultural and social factors.

The Development Cooperation Instrument
gives particular priority to social sectors. In 2010, 41% of funds committed in
2010 went to health and primary and secondary education. In Asia, EU aid
helps to improve primary school completion rates and the quality of education,
alleviate child hunger and malnutrition, and promote gender equality in
secondary and tertiary education. In the health sector, EU-supported programmes
sought to improve poor people’s access to health services, reduce infant
mortality and improve maternal health. The EU also gives particular attention
to environmental issues by contributing to the replenishment of forest cover,
limiting illegal logging, reducing CO2 emissions, promoting
sustainable use of energy, and access to safe water and sanitation in rural
areas. This represented approximately 12% of EU funds committed in 2010.

2.3.1.4.
Implementation and results

In 2010, the DCI’s fourth year, the EU committed
€677 million to Asia for policy and reform-oriented projects and programmes,
many of them through the beneficiary country's
institutions or in partnership with other donors,
including Member States.

Eradication of extreme poverty and
hunger

The EU maintained its commitment to help
Asian countries eradicate extreme poverty and hunger (MDG1) by deploying food
security programmes in Afghanistan, Bangladesh, Burma/Myanmar, Cambodia,
Mongolia, North Korea (DPRK) and Lao PDR. It also financed rural, social and
economic development programmes throughout Asia.

Afghanistan – Fruit production improvement through training and
support to growers & networks

The improvement of fruit production is part of a wider project, the
"Perennial Horticulture Development Programme", to alleviate rural
poverty. The aim is to disseminate knowledge on the best varieties and growing
techniques to help develop a high-quality export sector within Afghanistan.

With a budget of €12 million, project centres have been built where
it will be possible to store varieties of fruits and nuts, to test and
demonstrate modern methods of fruit growing, and to train staff from the
ministry of agriculture and the farming community. The project has also
completed the collection of all the fruit and nut varieties in the country.
Moreover, the project includes the selection and distribution of clean planting
materials, the creation of 22 fruit tree nursery grower associations and the
provision of services to farmers by several NGOs.

Support health, combating HIV/AIDS and
other diseases

In 2010 the EU provided additional funds to
support the health sector in Afghanistan, China, Lao PDR and Vietnam. In
Vietnam, the "Health Sector Policy Support Programme" contributes to
improving the health of the poorest and most vulnerable (particularly mothers
and children) through a more effective, efficient and equitable health system.
With a budget of nearly €40 million, the expected results of the programme will
focus on MDGs 1, 3, 4 and 5.

Health programmes were implemented in a
number of other Asian countries. Substantial assistance was delivered to
Afghanistan where, despite the country's fragile situation, the health sector
performs relatively well, and to the Philippines. The EU and India have agreed
on the amendment of the sector budget support programme in health that should
allow this programme, adopted in 2008, to move forward. At the regional level,
the EU is the largest contributor to the Avian and Human Influenza Facility and
also contributes to activities to prevent and/or treat emerging infectious
diseases.

Achieve primary and higher education

The EU has substantially contributed to
progresses on universal primary education (MDG2) and lower secondary education
in Bangladesh, Burma/Myanmar, Cambodia, India, Indonesia, Nepal, and Pakistan,
wherever possible through sector support programmes. In Bangladesh, the EU
launched a €52 million programme to increase the number of children enrolling
and completing primary education in formal and non-formal schools, to expand
the provision of early childhood care and education, and to increase youth and
adult literacy. In Indonesia, the EU supports basic education through sector
budget support of €201 million. This joint aid programme with Australia (ESSP)
supports Indonesia's strategic education plan 2010-2014 to achieve equitable
access to high-quality basic education, and to improve its quality, governance
and accountability. In Cambodia, the EU has launched a large education sector
policy support programme (€31 million in 2011-2013) to strengthen institutional
and human resource capacities with the aim of reaching MDGs 2 and 3 by 2015.
Implementation of ongoing education support programmes in Bangladesh, India and
Nepal continued.

Bangladesh - Strengthening basic education in Chittagong Hill Tracts

Although Bangladesh has made significant progress towards gender
parity in primary and secondary education with rising enrolment levels, the
quality of primary education remains a problem. The formal primary education
system still leaves about three million of the estimated 19 million primary-school-aged
children behind. Difficulties are greatest in remote or sensitive areas. As a
post-conflict zone, the Chittagong Hill Tracts is one such area where the net
enrolment ratio for different indigenous groups varies between 12% and 61%.

The Chittagong Hill Tracts Development Facility (CHTDF), which is
largely funded by the EU, focuses on three areas:
advocacy for policy change, access to education services and raising education
quality by strengthening the system and promoting multi-language schemes.

With a €6.6 million budget, the project is fully operational in 12
targeted Upazilas (sub-districts). Out of a total of 480 schools to be
supported, most have already been established by indigenous communities or the
government. A total of 595 teachers are being trained and over 15 500 children
are at present benefiting from the new schools and the improved quality of
teaching and learning. Local communities have increased their involvement
through the creation of parents' associations. Teaching and learning materials
for pre-primary classes have been developed in six languages to supplement the
Bengali education curriculum provided by the government.

Higher education and vocational training
have an important place in EU development cooperation. The Erasmus Mundus
programme is achieving results in Asia in promoting education and research
exchange through student scholarships. It contributes to the capacity-building
of Asian higher education institutions and will, over time, assist in
modernising higher education systems and institutions. The Trans-Eurasia
Information Network project contributes to research cooperation in Asia and in
Europe, by providing high-speed and high capacity
internet links. By reducing the digital divide the network enables scientists
and students throughout Asia and Europe to collaborate on a number of joint
research activities that are important in helping save and improve lives in
areas such as disaster warning, post-earthquake relief efforts, crop research,
tele-medicine, earth observation for forest fires and e-learning. This
contributes to increased economic development, creating more open societies in
developing countries, and democracy building.

Improve governance and the rule of law,
development, and poverty reduction

The EU contributed to the improvement of
good governance, respect for human rights and the rule of law in several Asian
countries: Afghanistan, Pakistan, Bangladesh, Sri Lanka, Philippines, Nepal,
Cambodia and China. A new programme will support the 2011 population census in
Bangladesh. Following the positive lessons learned from previous projects, the
local governance support programme has been launched in Bhutan to enhance
democratic governance at local level and to empower local governments to
deliver services effectively and efficiently. In Cambodia, support for public
financial management reform entered its second phase and will lead to a better
revenue policy, budget formulation and execution, payment processes,
transparency and oversight.

Measures to improve peace-building have
been undertaken in the Philippines and Nepal. A new China-EU police training
project will improve basic policing skills and senior level policy dialogue.
The EU has helped to support the electoral process in Afghanistan and to pay
regular salaries to the national police in order to strengthen law and order in
the country. The EU also continued its support for justice reform in
Afghanistan and for strengthening sub-national governance.

Strengthening poverty reduction through
economic development and social cohesion

The EU is enhancing the capacity of China
and India to respect international obligations, and helps develop export
capacities in Bangladesh, Indonesia, Lao PDR, Pakistan, Philippines, Thailand
and Vietnam and, at regional level, in ASEAN. ASEAN received support for
regional economic integration in a number of sectors. In Vietnam, EU trade
assistance through the MUTRAP project is now helping the country to honour its
WTO commitments. Recent evaluations have shown the relevance of the project in
integrating Vietnam into the global system and in supporting pro-poor policies.
A large project on environmental and socially-responsible tourism, approved in
2010, will reinforce the capacity and quality of policy making, planning and
management in the tourism sector.

Multilateral Trade Assistance Project

The MUTRAP III programme, launched in 2008 with a budget of €10
million, aims to strengthen the capacity of the Ministry of Trade and
Investments (MOIT) to further develop Vietnam’s trade and economic integration
strategy.

The programme focuses on key areas such as Vietnam's WTO
commitments, to deepen trade relations with ASEAN partners, to reinforce fair
competition in the domestic market and to strengthen consumer protection. The
project is also designed to encourage private sector organisations, business
associations, universities and research institutions to provide professional
insights into the trade-policy formulation process.

A monitoring report in 2009 and a recent mid-term evaluation
acknowledged that MUTRAP had been particularly successful and relevant and
that, “it had greatly assisted stronger integration of Vietnam into the global
trading system”[57].

The EU committed funding to new programmes
for China and Vietnam in order to raise social standards. The EU-China project
on "Occupational health and safety in high-risk sectors" will help
develop China's capacity to design an effective strategy based on prevention
and the direct involvement of workers in risk management. In Vietnam, a €12
million programme, "Raising living standards of ethnic minorities",
was launched in 2010 to contribute to poverty reduction of ethnic communities
in mountain areas, underdeveloped in comparison with the rest of the country.

Protecting the environment and promoting
clean energy

The EU has decided further measures to
mitigate undesirable effects of economic growth and demographic pressures on
climate and the environment, via regional programmes (SWITCH[58] and FLEGT[59]) or through bilateral
programmes as with China where the EU promoted the "Environmental
governance" programme and the creation of an institute for clean and
renewable energy (ICARE). New 2010 programmes will promote:

·
renewable natural resources in Bhutan;

·
disaster risk management in China and Nepal;

·
support for renewable energy, clean technologies
and energy efficiency in India;

·
sustainable development policy dialogues in Lao
PDR and Malaysia.

Asia SWITCH Programme - Promoting sustainable consumption and
production

The rate of economic and demographic growth in Asia puts big
pressure on natural resources. Despite significant improvements, the industrial
sector still uses outdated technology, and is marked by a lack of maintenance,
poor production management and inefficient use of raw materials. This has
caused a rise in greenhouse gas (GHG) emissions, a severe loss of biodiversity,
deforestation, desertification, and air and water pollution.

A switch from unsustainable to sustainable patterns of development
is required. That is why the ASIA-SWITCH programme was launched in 2007 with a
budget of €90 million to promote both sustainable production and consumption,
and to contribute to poverty reduction and a better quality of life (MDGs 1 and
7). To achieve this objective, the programme works simultaneously with
producers and consumers, at the level of policy-making and dissemination of
best practices, promoting the adoption of the most successful methodologies.

So far, SWITCH has funded 30 projects in 13 Asian countries with
good results. For instance, in China electric-powered systems and equipment
account for about 60% of total electricity consumption, but their
energy-efficiency is 10%-30% below international best practice. SWITCH launched
an ad-hoc project in 2007 to raise efficiency standards. In three years,
around 400 major industrial users of electric-powered systems have improved the
energy-efficiency. In addition, 300 manufacturers take part in workshops on
international standards and how to comply with them. As a result of the
project, an average energy saving of around 25% per system was achieved, making
for a total of reduction of around one million tonnes of CO2 emissions per year.

In Nepal, the production of paper using lokta, a local raw material,
is a traditional SME activity for people living at high altitude. It also has
significant economic potential given that 90% of handmade paper and
paper-products made in Nepal are exported. But inefficient resource extraction
and production processes, prevent farmers and entrepreneurs from exploiting the
full economic potential. Thanks to SWITCH, 1 195 lokta cutters have been
trained on lokta cutting and forest management, and 727 SMEs were trained on
more efficient production methods. In addition, 30 entrepreneurs have been
trained to use waste water to clean up a polluted environment.

Given these positive results, SWITCH received funding of €62 million
for the period 2011-2013 to encourage and support Asian SMEs towards better use
of resources and more sustainable development.

Through its development cooperation
activities, the EU has helped Asian countries move towards their MDG goals.
Measures financed by the DCI in Asia contributed to alleviate extreme poverty,
improve health systems, foster universal primary education, and promote use of
sustainable sources of energy.

Some examples can be given of EU's best
practises in 2010, as highlighted by the ROM monitoring. In China, the project
"Improving environmental and safety performance of the electrical and
electronics industry" has stood out as best practice of high efficiency,
thanks to a good internal monitoring and efficient partnership and cooperation.
Others include the Food Security action for extremely poor people in
Bangladesh, health support in Burma/Myanmar for HIV/AIDS prevention and care
among sex workers, the provision of basic services for convicted criminals in
Afghanistanamong and the socio-economic empowerment of conflict-affected
communities in northern and eastern Sri Lanka. The table below shows the
progress for each MDG.

Asia average scores according to MDG
from January to June 2010

Source: Results-oriented monitoring of
projects and programmes financed by the EU. Draft Progress Report July 2010 – Scores
range from 1 (the lowest) to 4 (the highest)

Beyond the achievement of the MDGs, the EU
has worked to improve governance and respect for human rights and the rule of
law. In Afghanistan, for example, Commission assistance helped promote the rule
of law, in particular via its financing for the law and order trust fund which pays
the police, as well as through work on border management and customs support.

The EU is strongly committed to improving
public finance management systems in Asia, particularly in countries where
budget support is provided or envisaged. As shown by recent monitoring, the PFM
programme has helped to maintain macro-economic stability through continued
fiscal discipline, increased revenue collection and efforts to keep inflation below
10%. Significant improvements have strengthened the functioning of the central treasury,
thanks in part to a new centralised tax and customs system and
inter-ministerial work to implement a revised chart of accounts and new budget
nomenclature.

2.3.1.5.
Monitoring

The Results-Oriented Monitoring Report
which evaluated the impact of external cooperation projects and programmes
carried out in 2010 in Asia shows an overall improvement in Asian ongoing
projects (national and regional). Relevance, in particular, improved between
2008 and 2010, with the number of projects scoring good/very good rising from
59% to 78%. Other criteria also improved (efficiency from 59% in 2009 to 69% in
2010 and effectiveness from 64% to 68%). A slight decrease was noted for
sustainability (from 70% in 2009 to 69% in 2010) while impact remained steady
at 78%.

Table 15 Asia- Very good and good ROM scores per evaluation criteria 2008-2010

Table 16: Asia
- Scoring of ODA sector by monitoring criteria

Improvements were registered among projects
re-monitored between 2008 and 2010 for all DAC criteria: relevance from 58% to
69%, efficiency from 53% to 63%, effectiveness from 63% to 75%, impact from 67%
to 84% and sustainability from 67% to 69%. The reasons for these improvements
can vary but project design and coordination with beneficiaries or other donors
are particularly important for ensuring success. When these are combined with good management, the prospects for success improve
significantly. Increased levels of ownership, higher levels of flexibility and
capacity to adapt to changing circumstances, together with participatory
monitoring and evaluation would appear to be leading to improved aid
effectiveness.

2.3.1.6.
Outlook

The mid-term review of strategy showed that
the first phase of the strategies was relevant, though requiring some minor
adjustments. The EU will thus continue to use the DCI, promote political
dialogue and improve aid effectiveness to help Asian countries achieve, in
partnership with the EU, poverty reduction and progress towards the MDGs.
Beyond the MDGs, the EU will strive to promote good governance, the rule of
law, environment protection, and mainstream gender issues in its programmes, so
as to achieve more sustainable development.

2.3.2.
Central Asia
2.3.2.1.
Introduction

The implementation of the “Strategy for a
new enhanced partnership with Central Asia” adopted by the European Council in
June 2007 continued throughout 2010, providing new impetus to both regional and
bilateral dialogue. Together with partnership and cooperation agreements, this
strategy has strengthened the EU’s political and economic ties with the five countries
of central Asia: Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and
Uzbekistan. It has also advanced the dialogue on major issues facing the region
like poverty reduction, sustainable development, stability and their
integration in the global economy. As part of the EU-Central Asia enhanced
partnership, several initiatives took place in 2010 such as the first
cooperation council with Tajikistan (December), the EU-Central Asia regional
meeting of foreign ministers (April), the visit of the President of Kazakhstan
to Brussels (November) and the visit of the Commissioner for Development to
Uzbekistan and Kyrgyzstan (November). The EU Delegations in the Kyrgyz Republic
and Tajikistan became fully operational, in line with the overall aim of
enhancing EU cooperation and political commitment to support national reforms
and help meet key regional challenges.

In 2007-2010, EU cooperation sought to
support the reform agendas of central Asian countries. However, Kyrgyzstan
experienced serious political disturbances in April 2010 that led to the
resignation of President Kurmanbek Bakiyev and the take-over of power by a
provisional government. In June, ethnic clashes in the south-west of Kyrgyzstan
further increased political fragility. The EU, in close coordination with the
OSCE, provided assistance to restore stability and provided relief to the
affected population through the Instrument for Stability.

Despite some cooperation at regional level
to address common challenges, tensions over sharing water resources and access
to energy, plus differences on environmental and trade issues have not been
resolved. There is however a growing common understanding that closer
cooperation on national policies and better neighbourly relations would benefit
all the countries in their search for sustainable development.

The regional environmental programme for Central
Asia (EURECA, €9.2 million) is now starting and will gather all the Central
Asian countries together around such issues as biodiversity and environmental
awareness raising.

The EU experience in regional integration,
political stability and prosperity, offers specific added value to the region.
EU regional programmes are focused on the areas of higher education, border
management and anti-drugs policy, environment, water management and private
sector development. The second joint Commission-Council progress report on the
EU-Central Asia strategy and other reports highlight positive results at the
end of the first implementation phase. EU action has been relevant in
education, health, poverty reduction, regional integration, rule of law,
environment and water supply. The investment facility for central Asia (IFCA)
was launched in 2010 to support sector policy reforms in energy, climate
change, the environment, SMEs, and social infrastructure. A later extension to
transport is also envisaged. Following the extension of the EIB’s mandate to
cover central Asia, EIB framework agreements were concluded with Kazakhstan and
Tajikistan and negotiations were launched with the three other countries.

The energy sector will also be supported
via a regional programme designed to increase security,
reliability and efficiency of energy supplies in Central Asia.

Much remains to be done, notably to
increase visibility and the security aspects of the EU strategy. The mid-term
review of the EU regional strategy paper for assistance to Central Asia
(2007-2013) was completed in 2010. The process included consultations with
stakeholders from the five central Asian countries. It confirmed current
priorities for regional and national bilateral assistance. It also agreed with
central Asian partners on more targeted support for their social and economic
transition in line with DCI objectives and article 8 of the Regulation for
Central Asia. The Commission adopted in April a €321 million regional central
Asia DCI indicative programme for 2011-2013, which covers both regional and
bilateral cooperation with five countries. Five bilateral and one regional
annual action programmes for 2010 were approved in the second half of the year.

2.3.2.2.
Aid effectiveness and donor coordination

The central Asia regional programme and
bilateral cooperation with Kazakhstan, Uzbekistan and Turkmenistan remain
project-based, but attention is growing for more donor coordination and aid
effectiveness.

Donor coordination is improving across the
region, in part thanks to the EU-Central Asia Strategy and its implementation
mechanisms, and in part as a result of country-level efforts. The EU has
increased its cooperation with IFIs and international organisations, as well as
EU member states active in the region. Results have been good overall in terms
of enhanced overall coordination and sharper focus on ways to improve the
impact of assistance. Synergies have been strengthened, particularly
with the EBRD and EIB which resulted in the launch of the investment facility for
central Asia.

During 2010, the Commission made further
efforts to foster donor coordination and the implementation of the EU code of
conduct on division of labour in central Asia. In 2008, the Commission joined a
group of donors establishing a joint country support strategy for the Kyrgyz
Republic and Tajikistan in support of their respective national poverty
reduction strategies. Donor coordination in Kyrgyz Republic and Tajikistan
focused on public finance management issues. In 2009, the EU joined a multi-donor
trust fund on public finance management in Kyrgyzstan, run by the World Bank,
and involving DfID (UK), DECO[60](Norway)
and SIDA (Sweden). For the coming 2011-2013 period, budget support assistance
will be consolidated by appropriate policy advice and close monitoring of PFM
progress, enabling the use of country systems in accountable and transparent
ways, thereby increasing ownership and effective impact.

2.3.3.
Working towards the MDGs

The global
economic downturn has affected central Asian countries to varying degrees. But
meeting major challenges in 2010, like public finance constraints and growing
unemployment and poverty could exacerbate social tensions and jeopardise the
momentum of reforms. Current assistance for rural and private sector development
and poverty reduction (which includes migration issues where relevant) remains
as important as ever. So too does the focus on improving the rule of law,
justice and good governance.

Kazakhstan is the most developed of the
five central Asian countries. It has already achieved the first three MDGs
(poverty reduction, access to primary education and gender equality) and has
consequently adopted more ambitious objectives for those areas (the MDG+
targets). This enhanced version of the MDGs is aimed at strengthening and
consolidating these early achievements and setting a new roadmap for the period
2010-2015.

The Kyrgyz Republic is also an early
achiever of MDG1 and MDG3 targets and it is well on track to reach MDG2. But
both countries need to deploy greater efforts in fighting HIV/AIDS and other
infectious diseases (MDG6) and in enhancing environment sustainability (MDG7)
where they are regressing in many indicators.

Despite improvements in the Kyrgyz Republic
and Tajikistan with regard to MDG1 and MDG2, these countries remain among the
poorest in Asia according to the Human Development Index (HDI). But the
greatest challenge is for Uzbekistan where the number of extremely poor people
has risen. It needs to reduce poverty by 2.5 percentage points a year to reach
its target. Progress as regards HIV/AIDS prevalence has been made in all
countries except for Tajikistan.

All central Asia countries are off-track on
MDG4 (child mortality), with an under-five children mortality average rate of
44 per 1000 and an infant mortality average rate of 38 per 1000 live births.
Country performances for MDG5 (maternal health) are mixed, Tajikistan and
Kazakhstan are advancing slowly or even regressing. Others, such as Uzbekistan,
have already attained or are on track for both of them. In Uzbekistan, the
"Mother and Child" programme (see case study) is helping achieving
MDGs 4 and 5 as shown by the trend on the indicators for under-five mortality
(down 8% between 2005 and 2009) and the infant mortality rate (10% lower in the
same period).

Improvement of mother-and-child health services in Uzbekistan

The mother-and-child health services programme is a three-year
project started in 2007 with an overall budget of €3.5 million, in cooperation
with UNICEF. It is aimed at improving the quality of services for newborns and
their mothers with a direct emphasis on reducing infant mortality (MDG4) and
improving maternal health (MDG5). So far the programme has trained more than 13
000 health providers while infant mortality rates, still high in the region,
are falling. In the neonatal pathology unit of Samarkand hospital, the mortality
rate has dropped by more than one third. Sixteen regional training centres have
already been renovated and re-equipped. Targeted training on maternal care is
provided to key medical staff in the eight regions covered by the programme. A
pool of 665 national and oblast trainers has been established. Because
of these positive results, a second phase of the programme (with an EU
contribution of €6.7 million) will start in 2011. Phase II will carry forward
what has already been done in the first phase and will extend geographic
coverage to the whole country.

In the MDG context, EU aid under the DCI contributes
to the fight against poverty by supporting living standards and human capacity
development, agriculture reforms and pro-SME, investment and business capacity
programmes. Support also goes to improving health management systems, to
enhance social protection and improve education systems. Governance and the
rule of law are particularly targeted by EU action supporting judicial reforms
and strengthening public administration and public finance management.
Attention is also given to environmental issues and the illegal drugs trade.

2.3.3.1. Implementation and results

EU development cooperation with Central
Asia comes under the 2007 EU strategy for the region but only through the
financing agreements for annual action programmes, in contrast to other Asian
countries. The two poorest and most fragile countries, Tajikistan and
Kyrgyzstan, receive bilateral assistance, with larger sector support to help
attain the MDGs whenever possible through sector budget support. Assistance to
the other three, energy-rich countries are more often limited to technical
cooperation, particularly in Kazakhstan.

In 2010, the level of EU commitment
increased, to €143 million. A strong emphasis was put on primary, secondary and
higher education, governance, employment and social protection, economic
transition, and leveraging investments in the priority sectors of energy,
environment and water.

The EU committed the 32% of its total 2010 appropriations
on social protection. This enabled it to support the Tajik social protection
strategy, implemented through budget support. It
includes pensions and social security reforms, labour
market and migration, social assistance and services to vulnerable groups. In
Kyrgyzstan the EU contributed to implementing the sector policy support
programme on social protection and public finance management, and to improving
the legal and institutional framework for social and child protection reforms.
To date, the programme has progressed well. New programmes decided in 2010 will
help Kyrgyzstan to refocus its social protection sector. They will also
contribute to health and social protection through sector budget support in
Tajikistan.

By the end of 2010, 22 new projects managed
by local associations in Uzbekistan started to provide a wide range of social
services to the most vulnerable population (from legal advice to business
opportunities for disabled people).

Kyrgyzstan – Social protection and PFM programme

The Kyrgyz Republic remains one of the poorest countries in central
Asia. This is why social protection has been a focal point of EU support since
the late1990s under the food security programme and is still on the agenda
under the DCI.

The sector policy support programme in social protection and public
financial management is a €27 million three-year programme started in 2008. It
supports policies through the creation of an efficient social assistance system
targeted at poor families, and the establishment of institutions to provide
better care for deprived children. One lesson learnt from more than a decade of
budget support in the Kyrgyz Republic is that using government processes and
systems to deliver development aid offers a more effective and focused platform
for dialogue and cooperation.

The recent review mission to the Kyrgyz Republic (June 2010) showed
that the social protection and social insurance systems have become more
effective and have eliminated delays in the payment of pensions and social benefits.
All payments are made in cash. Because of high inflation, pensions are indexed
on a regular basis. Specific actions have been taken to include childcare
social protection, to improve the targeting of benefits, and to establish
effective decentralised social services to support vulnerable families and
children. Progress was made towards establishing the legislative and
institutional framework for reforms, and in building the institutional and
personnel capacity to carry them out. There is a lot of popular support for
reforms to social assistance and child protection promoted through the
programme and a keen understanding of the issues involved.

In the health sector the Mother-and-Child
project in Uzbekistan is continuing to improve the health services delivered to
mothers and children, helping the country attain MDGs 4 and 5 (see case study).
Other projects in Kazakhstan are helping the ministry of health to provide
health services, especially at most vulnerable subjects, as children, mothers
or people affected by infectious diseases. In Tajikistan, the EU is developing
a health management information system to produce relevant and quality
information for health system activities.

EU programmes to strengthen primary and
higher education positively affected the whole region, creating strong academic
networks and increasing institutional capacity, developing professional
curricula, and improving the quality of learning and teaching methods. In 2010,
the EU agreed a programme to mainstream children with special needs into the
education system in Uzbekistan and renewed its support to the mother-and-child
care improvement in Uzbekistan. In Kyrgyzstan, the EU is providing technical
assistance to the ministry of education to redesign the national education system.
Another programme is targeting professional schools, allowing students to
acquire new skills in line with the needs of the local job market. In
Turkmenistan, the EU is providing technical assistance to the ministry of education
to modernise the education system – with as special focus on general secondary
education. Here the aim is to introduce innovative methodologies and teaching
approaches to raise the quality assurance system closer to international
standards.

At the regional level, EU allocated new
funding for quality higher education and vocational training through the Tempus
and Erasmus Mundus programmes. It will also support enhanced policy dialogue
through the central Asia education platform in the framework of the European
education initiative for central Asia.

Governance represented 29% of overall
commitments for 2010. The EU is supporting the development and modernisation of
parliament and of the public administration in Turkmenistan, together with
public sector reform and modernisation in Kazakhstan.

Other new programmes decided in 2010 will
support Turkmenistan's reforms in the field of economic policies, strategic
planning, parliamentary issues, technical regulation, sustainable development
and the rational use of natural resources. In Uzbekistan, the EU will
strengthen the bi-cameral parliamentary system and networking by regional
authorities. The EU continued to implement ongoing projects in Kyrgyzstan and
Tajikistan, assisting both countries to improve public finance management.

On the rule of law, the
implementation of the fifth phase of the EU’s flagship CADAP regional
programme, supporting anti-drug policies of central Asian countries started in
2010. Unlike previous phases, the present phase of CADAP is implemented by a
consortium of EU Member States, bringing together the EU’s best expertise. The
EU continued to implement another flagship regional programme – BOMCA,
supporting integrated border management and regional dialogue. The EU will also
support wider dialogue with central Asia in the framework of the EU-CA rule of
law initiative.

The central Asia human rights reporting
project is helping all five republics to develop an effective media sector.
Information is more widely shared through local media systems, helping citizens
to become more aware of human right issues and thereby raising pressure for
government accountability. Successful actions supporting good governance in
Kazakhstan include a project to provide access to justice for women and a
judiciary programme. These initiatives, focused on developing a solid legal
framework, are promoting a favourable environment for investments in the
country. After the April 2010 political crisis in the Kyrgyz Republic, the EU
has helped the new interim government to draft a new constitution, hold a
constitutional referendum and the first elections under the new rules (October
2010).

In the area of economic and private sector
development at regional level, the EU promoted job opportunities provided by a
growing business and SME sector. Since 2010, the SME sector is further
supported by the central Asia invest programme, which supports
capacity-building by business intermediary organisations. This new tool should
become a strategic instrument in providing assistance to key infrastructures in
central Asian countries, where those investments could not otherwise be made.
The EU continued implementation of bilateral projects, supporting private
sector development, particularly in Kazakhstan.

CAREN – The Central Asia Research and Education Network

CAREN began in 2008 to increase access to a high-capacity internet network
to facilitate information exchange between research and education institutes
throughout central Asia. CAREN currently connects scientists and students in
Kyrgyzstan, Tajikistan and Turkmenistan, with Kazakhstan and Uzbekistan waiting
to join. The network will link over half a million users in more than 500
universities and research institutes, and provide access to European and global
research communities. Now researchers, academics and students throughout the
region have access to high-capacity internet connections, offering the chance
to create new partnership with their peers in others countries. Thanks to the
connection of CAREN to the European counterpart system, GÉANT, they can participate
in international research. CAREN has a direct impact on people living in this
earthquake-prone region, as it allows scientists to exchange seismic data from
monitoring stations in near-real time. It also facilitates web- and
computer-based e-learning, offering virtual classroom opportunities and digital
collaboration. In the public health sector it makes telemedicine possible,
where medical information is transferred through interactive audiovisual media
for consultation purposes, or sometimes to carry out remote medical procedures
or examinations. CAREN's budget is €6.3 million of which, 80% is financed by
the EU and 20% by the beneficiary countries.

In Tajikistan, the EU contributed to
establishing of a single structure for imports and exports.

The new investment facility for central
Asia provides regional and bilateral assistance by blending EU grants and loans
from European financing institutions. It is based on the successful
implementation of the Neighbourhood Investment Facility. It will target mainly
environment, energy, SME and social infrastructure investments, with a possible
later extension to transport. The 2010 allocation to the facility was €20
million and it is planned to add at least another €45 million in 2011-2013. The
current pipeline of grants and loans has reached €500 million, targeting mainly
the energy sector (renewable energies and energy efficiency) and the
environment (water and waste water treatment).

Other initiatives include the economic
diversification programme in Kazakhstan that is helping to reduce its
overdependence on the energy sector, by creating new business opportunities and
increasing competitiveness. The programme is strongly supported and co-financed
by the Kazakh government. In Uzbekistan, the EU has provided training and
exchange programme opportunities for entrepreneurs within European companies,
helping to build local capacity and strengthen managerial skills in the SME
sector. Other projects in the region supported the construction of a road
through an ethnically sensitive region in Kyrgyzstan and contributed to
improving agricultural productivity in Kyrgyzstan, Uzbekistan and Tajikistan.

Finally, the EU has improved the water and
sanitation sector in Kyrgyzstan, Kazakhstan, Tajikistan and at regional level
within the policy framework provided by the EU water initiative for eastern
Europe, the Caucasus and central Asia. Individual, projects include the central
Asia water governance project and the upcoming central Asia environment and
water cooperation platform. In
Kazakhstan the Ust-Kamenogorsk Environmental
Remediation Project, is pursuing its objective to prevent the contamination by
industrial groundwater of the drinking water sources in the city of
Ust-Kamenogorsk.

2.3.3.2.
Monitoring

During 2010, 60 projects were monitored in
central Asia, representing a total budget of €89 million. More than half
concerned activities related to MDG8 (develop a global partnership for
development). Others mainly covered programmes related to MDG1 (eradicate
extreme poverty and hunger).

Table 17 Central Asia- Very good and good ROM scores per evaluation criteria 2008-2010

Table 18[61] Central Asia - Scoring of ODA sector by monitoring criteria

The average performance of national
projects in Central Asia rose between 2009 and 2010, (from 2.78 to 2.98). This
confirms the general tendency towards better performance over the years. The percentage of ‘a’ ratings (very good performance) increased from
1% to 5.4%, ‘b’ (good ratings) remained at 73%, ‘c’ (problems) ratings fell
from 24% to 21.6%, and ‘d’ (serious deficiencies) improved from 1% to 0%.

The table shows aggregated data for ongoing
and re-monitored projects that received "very good" (a) or
"good" (b) marks. Over the years, the project performance has
improved for the relevance criterion (from 64% in 2008 to 90% in 2010). Ratings
for impact rose from 62% in 2008 to 90% in 2010, while for sustainability they
moved up from 49% to 80%. Political dialogue, accurate project design,
involvement of stakeholders, and sound management have been key factors in
improving overall performance.

2.3.3.3.
Outlook

Located at the cross-road between Europe,
China, Afghanistan and the Middle East, and an important supplier of energy
resources its own right, central Asia is of fundamental geostrategic importance
to the EU.

For the second phase of the EU strategy in
central Asia (2011-2013), a total indicative allocation of €321 million has
been made covering regional as well as bilateral cooperation. It gives special
attention to governance, supporting administrative capacity-building and
judicial reform in Kazakhstan, Uzbekistan and Kyrgyzstan as well as strengthening
public administration and public finance management in Tajikistan. Protecting
the environment and promoting sustainable growth remain EU priorities, as in
Tajikistan where EU will support private sector development in agriculture, and
in Uzbekistan where the EU aims to develop the economic potential of rural
areas. The EU will also promote a bilateral sustainable energy development
programme in Turkmenistan aimed at reinforcing the legislative framework for
sustainable development. It will also promote renewable energy projects in all
five central Asian countries via a regional operation worth €6 million.

In Kyrgyzstan and Tajikistan, the region’s
two poorest and donor-dependent countries, EU assistance will continue to focus
on poverty alleviation and support for social protection reform. As both
countries have good absorption capacity and a proactive attitude to cooperation,
the EU is also considering expanding the use of budget support to education in
Kyrgyzstan if eligibility criteria are met. In Tajikistan, the EU will continue
to support health sector reform.

In Uzbekistan, EU assistance has
been more limited. But EU cooperation with the government is improving and
opportunities are widely appreciated at local level.

Kazakhstan and Turkmenistan are
respectively an upper middle-income and a middle-income country. Both have
strategic importance for Europe in terms of energy supplies. Kazakhstan offers
the opportunity for know-how transfer and advanced technical cooperation on
reform and modernisation; There is high potential for cooperation on issues of
common interest (like energy) as well as twinning-like public partnerships with
institutions in the EU.

Regional cooperation is of a strategic
importance for central Asian countries which face common challenges requiring a
regional approach. New EU funding for 2011-2013 focuses on three main sectors:
sustainable regional development (IFCA & renewable energies programme),
higher education (Tempus, Erasmus Mundus, CAEP) and governance/rule of law
(BOMCA, CADAP).

2.4.
Latin America
2.4.1.1.
Introduction

Political relations with Latin America continued to
strengthen in 2010 in line with the Commission’s Communication on Latin America
of September 2009. The sixth EU-LAC (Latin America and Caribbean) summit took
place in Madrid in May 2010. It was the occasion to take stock of progress made
to implement the communication; to deepen political dialogue and regional
integration; to promote social cohesion; and to encourage closer bilateral
relations between individual countries of the region. The summit achieved
several results:

·
negotiations on an association agreement with
central America were concluded;

·
negotiations for an association agreement with
Mercosur were resumed (after a six-year stalemate);

·
the completion of negotiations for a trade
agreement with Colombia and Peru in March 2010 was officially welcomed;

·
the Latin America investment facility (LAIF) was
launched;

·
the decision was taken to establish the EU-LAC Foundation;

·
a 2010-2012 action plan was adopted and is now being
implemented.

In parallel to the Madrid summit, a number of important
meetings took place in May. EU-LAC foreign ministers agreed to create a task
force to improve the functioning of the EU-LAC strategic partnership and summits.
The EU-Mexico bilateral summit formally endorsed the joint executive plan of
the EU-Mexico strategic partnership and agreed on the importance of launching
sectoral policy dialogues on macro-economic issues and security. The summit
with Chile provided the occasion to establish closer contacts with the
government of president Sebastian Piñera, to discuss the aftermath of the
February 2010 earthquake, and to welcome the establishment of the Association
for Development and Innovation and Chile’s signature of a framework agreement
with the EIB. Besides re-launching negotiations for an association agreement,
the summit with Mercosur resulted in commitments by leaders to avoid
protectionism, to cooperate more closely on science and technology, and to
increase coordination in international fora. The summit with the Andean
Community welcomed the conclusion of negotiations for the trade agreement with
Colombia and Peru. It also agreed to step up cooperation in the fight against
drugs. The summit with Central America welcomed the conclusion of negotiations
for the association agreement and agreed to intensify cooperation on security-
and climate change-related matters.

An EU-Brazil summit took place in Brasilia in July,
confirming the solidity of the bilateral relationship. It explored climate
change, the international economic and financial crisis and the G20 process.
Civil aviation agreements were signed. A ministerial meeting of the Rio Group
was held in New York in September (at the time of the UN General Assembly). It
discussed inter alia prospects for the “Comunidad de Estados de
América Latina y el Caribe (CELAC)”, whose creation was decided by LAC
partners in February.

Three EU-LAC senior officials meetings took place in 2010,
with the main objective to prepare the Madrid summit. The EU-LAC structured
dialogue on migration continued. Three high-level meetings took place in 2010
focusing on education, health, vulnerable groups and family-related matters
from a migration perspective. As part of the structured dialogue on drugs, a high-level
meeting took place in Madrid in April. The main issues were drug-related
environmental problems, cooperation with west Africa and financial needs for
combating illicit drugs.

Formal texts were prepared for the agreements with Colombia
and Peru and with central America during the second half of 2010, with a view
to possible signature before the end of 2011 or in the
case of Central America in 2012. Several rounds of negotiations with Mercosur have taken place since the resumption of negotiations, with
a timetable agreed for 2011.

In the context of existing contractual frameworks with individual
Latin Americanl countries, joint committees with Argentina, Mexico and Chile
took place.

Political
consultations were held with privileged partners such as the United States,
Canada and Russia. These meetings discussed important issues related to Latin
America such as security, trade and investment, natural disasters and regional
integration, as well as – where appropriate – specific country-related matters.

2.4.1.2.
Aid effectiveness and donor coordination

Efforts continued to foster aid
effectiveness and the division of labour among donors in Latin America. Six
countries (El Salvador, Honduras, Nicaragua, Peru, Bolivia and Colombia) are
participating in an OECD survey to monitor progress by donors and partner
countries on the Paris and Accra commitments. These country-level surveys will
show Commission's performance until December 2010, and will measure progress
since previous surveys (2006 and 2008). The OECD report will be presented at
the fourth high-level forum on aid effectiveness in Busan, in 2011.

EU delegations continued their pro-active role in promoting division of
labour among donors, fostering policy dialogue with partner governments,
through the participation in donors-governments sector groups, and supporting
partner governments' own coordination initiatives. In Bolivia, one of the pilot
countries of the EU Fast Track Initiative for the Division of Labour, the EU
continues to lead in the implementation the aid effectiveness agenda. In El
Salvador, the EU has subscribed to a commitment for a national agenda on aid
effectiveness" proposed by the Salvadorian government in June 2010 to donors and civil society organisations.

A number of partners in Latin America,
namely Brazil, Mexico and Chile, are interested in triangular cooperation with
the EU. A triangular cooperation initiative with Mozambique was launched in the
field of bio-energy at the EU-Brazil summit in July.

The design of all new operations in Latin
America follows the recently-adopted EU backbone strategy on technical
cooperation, whose objective is to make technical assistance more effective,
notably by providing support for demand-led capacity building.

2.4.1.3.
Working towards the MDGs

Despite the high levels of inequality
within and between Latin American countries, the report "Achieving the
MDGs with equality in Latin America and the Caribbean: Progress and challenges
(2010)"[62],
says Latin America is on track to reach the targets on extreme poverty, child
mortality and access to safe drinking water and basic sanitation. However, six
of the eight MDGs will not be met if prevailing trends persist. These include
targets related to undernourishment (MDG1), completion of primary education
(MDG2), though important progress has been made and 95% of children in Latin
America are enrolled, gender parity in national parliaments as a principal
indicator of gender equality and female empowerment (MDG3), and maternal health
(MDG5).

Improve health conditions in Nicaragua

The PRASNIC project in Nicaragua, with an EU
contribution of €11 million, improved hygiene and health conditions in rural
areas. The chances of sick children under five dying as a result of water-borne
infectious diseases and diarrheic diseases was reduced from 63.3% to 41.4%. In
addition, 52 000 people now have access to clean water and 145 000 people
have access to basic sanitation. The project supported the construction of
sanitary infrastructures in schools and households, such as 140 small aqueducts,
120 wells, 800 rain water containers, 15 000 latrines, 100 public toilets,
300 improved household floors, 10 000 improved stoves and the protection
of 20 water points and river basins.

The EU contributes actively to the
achievement of the MDGs in Latin America. On MDG1, two programmes implemented
in Peru and Guatemala, with EU contributions of €60.8 million and €33.8 million
respectively, are helping to reduce chronic malnutrition. Several projects in
Cuba under the food facility (EU contribution €11.7 million) and food security
(EU contribution €16.5 million) are increasing local food production by
supporting farmers and cooperatives, mostly through NGOs. In the area of MDG2,
several programmes support national governments in the implementation of educational
policies, such as PAPDE I and II in Ecuador (EU contribution: €75.2 million)
and a €54 million education programme in Paraguay approved in 2010. On MDG3, a
€4 million project in Costa Rica promotes the entrepreneurial capacities of
women to strengthen their economic independence.

Fighting poverty in Peru

The EU-Peru programme to fight poverty in
metropolitan Lima (PROPOLI, with an EU contribution of €12 million), financed
the creation of 780 micro-enterprises in the sectors of production, services and
trade. Close to 10 000 micro-enterprises received training, consultancy
and technical assistance, while 700 women took up trading activities.

2.4.1.4.
Implementation and results

The Commission adopted 24 actions in Latin
America in accordance with the 2010 annual action plans with a total value of
€356 million. The most important areas concern the fight against poverty,
social cohesion, mutual knowledge and understanding, sustainable development,
the fight against drugs, and trade and the private sector.

Under social cohesion, a €22.5 million
programme was approved to support Guatemala's justice and security sector. In
El Salvador, the EU will finance the economic recovery plan (PARE-ES), with a
contribution of €24.2 million. The programme aims to alleviate the impact of
the economic crisis in El Salvador by supporting fiscal reform to improve tax
collection and optimise spending.

Support for secondary education in Honduras

The European Union backed the PRAHEMO programme
on secondary education in Honduras with a contribution of €28 million. The
programme trained more than 4 000 teachers in professional and technical
training skills. A total of 446 students benefited from grants
guaranteeing their access to training and entry into the workforce. In addition,
the programme provided infrastructure and equipment for 33 workshops, 42
laboratories and 18 classrooms in 19 secondary schools.

The EU agreed to contribute €30.4 million
to a programme to stabilise peace in Colombia It will help create local
conditions to foster social, economic and political development which can lay
the foundation for active citizenship and peaceful conflict resolution. In
Bolivia, a €9 million project will support the implementation of the national
strategy to fight drug trafficking and revalorization of the coca leaf in a
climate of peace, coordination, participation and respect of human rights.

To support trade and the private sector, a
€13 million project in Bolivia was adopted, to increase employment and reduce
poverty by helping Bolivia diversify and increase its exports. In Argentina, a
€9.8 million project was approved to strengthen SME competitiveness and create
jobs.

Support for the production and export of quality
agricultural products in Nicaragua

The objective of the project was to increase the
production and raise the quality standards of Nicaraguan agricultural products
so that they meet requirements for exporting to the EU market. The EU
contribution towards the project was €5 million, and it was implemented between
2006 and 2010. During this period, the capacities of the ministries for
agriculture and commerce were strengthened by providing training and equipment.
In particular, the conditions for sanitary and phytosanitary supervision were
improved to meet EU standards. Agricultural producers and food processors are
incorporating good production practices, including self-regulation/safety, risk
analysis and critical control in their production lines. Thanks to the project,
100 cattle farms apply traceability norms and 30 shrimp farms now meet EU
standards.

In Honduras, a €21 million project was
adopted to support the management of forest and protected areas and wildlife.
Full cooperation with Honduras was resumed in 2010 after presidential elections
there. A similar €7 million project in Brazil will strengthen the sustainable
use of protected areas in the Terra do Meio region (State of Pará).

In May, the European Commission adopted the
first country strategy paper for Cuba (2011-2013), which will serve as the
basis for future bilateral cooperation.

The Commission gives high priority to
supporting integration processes in Latin America. In the Andean Community, two
actions were approved in 2010: one to support regional participative
integration (€8 million) and the other on institutional strengthening (€1
million). The EU provided €6.7 million for EU-Mercosur study centres.

To support regional integration and to
consolidate peace between Peru and Ecuador, the EU contributed €51 million to
upgrade the Piura-Guayaquil highway. The project, which included road
infrastructure works, building the "Centro Binacional de Atención en
Frontera" and activities for social and economic integration, has
improved the quality of life of border communities by reducing transport times
and increasing trade between Peru and Ecuador.

Sector support programmes since 2003 have benefitted
nine of the 17 partner countries in Latin America: Guatemala, Honduras, El
Salvador Nicaragua, Ecuador, Peru, Bolivia, Paraguay and Uruguay. With a total
commitment of €712 million (about. 30% of total aid funds for the region
between 2003 and 2010), the programmes covered education, water supply and
sanitation, health, and government and civil society.

In 2010, the Commission adopted two sector
policy support programmes. One was the economic recovery plan for El Salvador
(PARE-ES). The other was Bolivia’s programme for water and sanitation in
suburban areas (PASAP), with an EU contribution of €20 million. It supports
government policy in water and sanitation, including climate change adaptation
measures.

The decision taken by the Commission and other
EU donors to suspend from January 2009 the disbursement of aid to Nicaragua channelled
through the budget was maintained in 2010. As agreed, the Commission pursued
its other aid activities and maintained a dialogue with the Nicaragua
government, particularly in the areas of governance and electoral reforms. The
EU might review the situation in the light of a positive evolution in these
areas.

Reducing chronic malnutrition in Peru

Following a constructive and open dialogue with
the government of Peru, the EU is contributing €60.8 million towards the
Peruvian nutritional programme (PAN), which aims to reduce chronic malnutrition
and fight poverty. Euro-PAN, officially launched in February 2010 in Lima by
Peruvian President Alan Garcia, focuses on the 20% most vulnerable population
of the three poorest Peruvian regions. Euro-PAN has already generated positive
improvements in both the nutritional and financial policies of Peru.

The following regional programmes continued
in 2010:

·
Alßan programme for higher education and
training scholarships in the EU for Latin American citizens.

·
ALFA III programme between higher education
institutions of the EU and Latin America.

·
EUROsociAL I programme, supporting new practices
and policies to increase levels of social cohesion in Latin American societies.

·
AL-INVEST programme to facilitate the
international activities of Latin American SMEs.

·
@LIS 2 programme (alliance for the information
society) aiming to reduce the digital divide and the integration of Latin
America into the global information society.

·
URB-AL programme, targeting local authorities of
the EU and Latin America as well as other actors involved in the urban sector.

URBAL-III Project "La Basura sirve"

The project "La Basura sirve"
(EU contribution: €2 million) aims to raise environmental awareness and to
promote recycling as an instrument for social cohesion in six Latin American
cities. This is done through promoting the experiences of the cities of
Santiago de Surco (Peru) and Cuenca (Ecuador), considered as pioneer models in
Latin America for their policies and innovative practices in environmental
management. These experiences constitute an important instrument for social and
economic cohesion through the creation of new jobs and the heightened awareness
of young people of environmental topics.

·
Erasmus Mundus, which contributes to the
promotion of partnerships and institutional cooperation exchanges between
higher education institutions from both regions.

·
EURO-SOLAR programme to reduce poverty in eight
beneficiary countries (Bolivia, Ecuador, El Salvador, Guatemala, Honduras,
Nicaragua, Paraguay and Peru), by enabling remote rural communities without
access to electricity to benefit from renewable energy sources.

EURO-SOLAR: Renewable energies for sustainable
development

The EURO-SOLAR programme (2007-2011) provides
600 isolated rural communities with a hybrid system of photovoltaic panels,
sometimes combined with a small back-up wind generator, to produce electricity
to be used by local communities for social and economic development. EURO-SOLAR
supplies electricity without affecting climate change, for a wide range of
applications (education, health, communication and information technologies and
productive activities). The EU contributes €28.7 million to the programme,
which is a good example of an action combining poverty alleviation and moves
toward a low-carbon economy.

In 2010, the following regional programmes
were launched:

·
COPOLAD: a cooperation programme between Latin
America and the European Union on anti-drugs policies.

·
EUROsociAL II: a programme, to continue support
for national public policies to enhance the level of social cohesion and
strengthen the institutions responsible for their implementation.

·
EUrocLIMA: an EU-LA environmental programme
complementing European actions on climate change already carried out in the
region aimed at knowledge sharing, fostering structured and regular dialogue at
all levels, and ensuring synergies and coordination of current and future
actions.

·
RALCEA: a project to improve water management by
developing technical capacities in order to impact on political
decision-making, and to contribute to sustainable management of water resources
with information-based policies, in line with the aims of the EU water
initiative in the region.

·
LAIF (Latin American Investment Facility): to
promote additional investments in key infrastructures, focusing on transport,
energy, and environment. The facility also supports social and private sector
development in Latin American countries.

2.4.1.5.
Monitoring

In 2010, 20 monitoring missions examined
projects in all 17 countries in the region. A total of 180 ongoing projects
were monitored including bilateral, regional and sub-regional projects. One
sector policy support programme was monitored in Bolivia. The total value of
ongoing projects monitored amounts to €663.3 million, which represents 43% of
the overall value of ongoing projects in the region. In addition, a total of 44
completed projects were monitored ex-post with a total value of €169.3
million.

As the table shows, 85 % of projects in
Latin America are performing well or very well, while 13% have some problems
and 2% experience major difficulties. The percentage of projects doing well or
very well has increased from 76% in 2008 to 85% in 2010. The number of projects
facing difficulties fell from 21% in 2008 to 13% in 2010. This positive trend
is confirmed by the so-called re-monitoring exercise: out of the 180 ongoing
projects monitored in 2010, 36 (20%) had been monitored previously in 2008 and
2009, showing a positive evolution in their performance.

Table 19 Latin America- performance of
ongoing projects

Table 20 Latin America- Project performance
per ODA sector

Ongoing projects monitored in 2010 in Latin
America show that 85% have scores of very good or good for relevance and
quality of design, and 88% have very good impact or potential impact (i.e.
contribution to improving the livelihood of the people and/or the overall
environment in which they operate). Social infrastructure and services (mainly
governance and civil society) is the most important sector in Latin America,
followed by the production sector and multi-sector/crosscutting. All sectors
are showing a good performance with the majority of projects (84 % as an
average) on track.

2.4.1.6.
Outlook

EU policy priorities for Latin America in
the coming years were defined in the 2009 communication "EU and Latin
America: Global players in partnership". Financial resources will
concentrate as before on the poorest countries – notably to promote sustainable
economic and social development and to reduce inequalities. The EU will also
look at new forms of cooperation with countries with higher levels of
development.

The mid-term review of the regional and
country strategy papers 2007-2013 was completed in 2010. It largely confirmed
the cooperation strategies based on social cohesion and regional integration for
the remaining period (2011-2013). The financial allocation for the period
2011-13 for the Central America regional strategy was increased by €20 million to
respond to the needs related of the conclusion of the Association Agreement as
well as the increasing vulnerability of the region on security and trans-border
criminality. For MERCOSUR, the emphasis will be on a research project on
biotechnologies. For the Andean Community climate change was included as a new
priority.

Following the adoption of the first country
strategy paper in 2010, bilateral cooperation activities with Cuba will start
in 2011.

Special attention will be paid to the
impact which the Madrid action plan will have. The plan identifies instruments
and activities which, if properly implemented, should lead to concrete results
guaranteeing ownership and capacity-building in several key areas.

The Commission will continue to foster
closer coordination on development cooperation with EU member states and
multilateral donors. It will also seek to apply aid mechanisms which promote
dialogue and ownership and which use partners’ national procedures, whenever
the appropriate conditions are met.

3.
IMPLEMENTATION: THEMATIC OVERVIEW

This chapter presents EU external
assistance on a thematic, rather than geographic basis.

The main implementation instruments covered
by this report are:

·
the Development Cooperation Instrument –
thematic programmes

·
the European Instrument for Democracy and Human
Rights (EIDHR)

·
the Instrument for Stability (IfS)

·
the Instrument for Nuclear Safety Cooperation
(INSC).

A section of this chapter is dedicated to
humanitarian assistance[63]. This report does not, however, cover the
Instrument for Pre-Accession (IPA)[64] nor
the EU’s Common Foreign and Security Policy[65]
(CFSP), on which separate reports are provided.

Some figures and data are used to
illustrate this chapter but detailed financial information can be found in the annexes
to the present document.

3.1.
Thematic programmes
3.1.1.
Investing in people

The EU continues to help low-income
countries to achieve the MDGs and to deliver social services to their citizens.
It supports health, education, employment, social inclusion and culture through
country programmes and regional programmes as well as worldwide thematic
programmes. It deploys different delivery methods including budget support. In
2010, the proportion of country-level assistance to basic and secondary
education and basic health was 22% of DCI commitments. The aim is to support
national policies and strengthen national and local delivery systems, while
keeping a focus on the results to be delivered.

The Commission completed a mid-term review
of the thematic programme for human and social development "Investing in
People" in 2010. The programme, covering the period 2007-2013, supports
thematic activities in health, education, knowledge and skills, gender
equality, and other aspects of human and social development (employment and
social cohesion, children, youth and culture). As a result of the mid-term
review it was decided that programming in 2011-2013 should follow the original
strategy and continue to focus on all four main pillars of thematic action. The
programme will, however, move away from supporting actions in all areas every
year to supporting each area in turn over a longer time frame.

Health

Specific support was provided in 2010 to
major health and health-care problems that pose particular challenges to countries,
services and populations. The EU launched a worldwide call for proposals for
innovative approaches to address the shortage of human resources in the health
sector. A total of 17 projects were contracted in this area for a total value
of €14.5 million. Another call for proposals dealt with advocacy and technical
support for the development of national strategies on sexual and reproductive
health and rights (€34 million, 28 projects selected). This was complemented by
direct support to UN agencies to promote better links between HIV/AIDS care and
general reproductive health care (€7 million). For the first time, the burden
of non-communicable diseases on low-income countries was the object of a call
for proposals (10 projects selected). The EU budget contributed €50 million to
the Global Fund against HIV/AIDS, tuberculosis and malaria (with a further €50
million coming from the EDF). Capacity building for non-state actors was
specifically addressed in a call for proposals on HIV/AIDS and tuberculosis prevention,
treatment and care in the eastern neighbourhood.

Education

The second pillar of the investing in
people (IiP) programme supports activities to promote universal access to
quality primary education. The EU contributed to this objective in 2010 with
€5.8 million via the Fast Track Initiative catalytic fund.

In 2010, the FTI underwent reform following
recommendations and observations from an external mid-term evaluation. The main
areas of reform include expanding the scope of the FTI to all Education-for-All
goals and reinforcing the country focus, results monitoring and mutual
accountability of partners. The goal is to strengthen the partnership's
value-added, and improve the effectiveness of education aid. Another key reform
concerns the global-level governance structure and the establishment of one
single FTI fund to replace the three previous ones.

In addition to its FTI involvement, the
Commission took part together with the Netherlands ministry of foreign affairs
in evaluating the global programme EEPCT (Education in Emergencies and
Post-Conflict Transitions) managed by UNICEF. A second disbursement of €1.2
million was made to this programme before the end of 2010.

Employment and social protection

In 2010, the European Commission launched
two calls for proposals in the sector of employment and social protection. One
was aimed at developing technical and vocational education and training
methodologies and services for the informal economy (€17 million). The second
focused on social protection and employment issues which enhance social
inclusion and social protection of workers in the informal economy and of
vulnerable groups at community level (€21.2 million). A study on the issue of
disability in EU development cooperation was carried out in close cooperation
with civil society. Under the IiP programme, four larger projects with a total
value of €11.3 million are jointly managed with the International Labour
Organisation (ILO). The projects seek to develop new tools which can be tested
and implemented in different regions of the world. The projects cover: trade
and employment, statistical systems, social protection and employment policy in
developing countries, occupational safety and health.

Culture

The investing in people programme promotes
access to culture and the protection and promotion of cultural diversity,
including inter-cultural dialogue and equal respect for the dignity of all
cultures. In 2010, the programme issued a call for proposals for €7 million
with an additional €8.4 million from the Eastern Partnership culture programme.

The theme of this call was strengthening
capacities in the cultural sector as a factor in development. The objective is
to improve governance and structuring of the cultural sector to enhance the
role of cultural actors in sustainable economic, social and human development.
The cultural sub-sectors concerned include activities with an artistic and/or
cultural content across creative industries such as music, cinema and
audiovisual, litterature and publishing, heritage, visual arts, performing
arts, plus cross-sectoral items like cultural tourism, education or
communication. The specific aim is to strengthen capacities of cultural actors
and their role in governance, to increase participation in governance and inclusive
cultural policies, and to reinforce cultural cooperation as part of regional
integration and international networking.

In parallel, a joint technical assistance programme with UNESCO is
supported (€1 million) to strengthen the governance of culture in developing
countries. This project addresses countries eligible under the programme which
have ratified the 2005 Convention on the protection and promotion of the
diversity of cultural expression. The assistance will be based on the needs and
priorities identified by beneficiary countries and will support their efforts
to establish legal, regulatory and/or institutional frameworks necessary to
develop the culture sector in their country, and introduce policies that
address the role of culture in social and economic development. In this way,
the project aims to reinforce the role of culture as a vector for sustainable
development and poverty reduction.

3.1.2.
Non-State actors and local authorities in
development

In 2010, the European Commission issued
calls for proposals addressed to non-state actors and local authorities to
enable them to obtain funding for development-related projects. For
country-based programmes implemented locally, each EU delegation launched calls
for proposals defining country priorities and eligible applicants, ensuring
complementarity and consistency with the EU development cooperation programme.
For multi-country operations, plus development education, awareness-raising and
coordination, global calls were launched at headquarters level.

Three NSA-targeted projects were also
funded: one operating grant to Concord, the European confederation of NGOs, and
two strategic projects implemented in cooperation with the EU presidency.

The Commission also engaged in the DEAR
study, a project aimed at defining its strategy on development education and
awareness-raising in Europe[66].
This was carried out in broad consultation with stakeholders and should result
in a more strategic approach by the EU and better coordination with similar
national efforts by Mmber States.

The Commission implemented its strategy for
local authorities as defined in its Communication “Local authorities: actors
for development”. The year 2010 was marked by the implementation of projects
following a call for proposals specifically aimed at local authorities,
launched in December 2009 at headquarters level. This call ensured their
increased participation in the NSA/LA programme. It received 444 project
proposals.

In addition, an atlas on decentralised
cooperation, financed by the Commission, was prepared and released in the first
quarter of 2010. It is available on the website of the Committee of the Regions[67]. The portal of decentralised
cooperation, also hosted by the Committee of the Regions, was established as a
working tool for European local authorities operating in the field of
development cooperation.

At policy level, a positive discussion took
place between member associations of PLATFORMA[68]
and the Commission services. PLATFORMA is the dialogue platform for local
authorities working in development cooperation. It organised two regional
seminars for local authorities in 2010. Key issues addressed were the added
value and impact of local and regional authorities in development and how this
could be best reflected in European policies.

Throughout 2010, EU headquarters and Delegations
carried out regular consultation and cooperation with local authorities and
non-state actors, e.g. during the drafting of EU development strategies and the
implementation of development policy actions. In this context, one important
initiative was the launch of the structured dialogue with non-state actors and
local authorities in March 2010. It will continue into early 2011 and will seek
to reach a common understanding on the main issues related to the strategic
role of non-state actors and local authorities in EU development activities and
to increase the effectiveness of their involvement.

The structured dialogue for an effective partnership in development[69] A structured dialogue for an effective partnership in development was launched in March 2010 and will be completed in May 2011 with a final conference in Budapest. This 14-month initiative aims at increasing the effectiveness of all stakeholders in EU development cooperation. It is a multi-stakeholder dialogue, involving the Commission, EU delegations, member states, the European Parliament and civil society organisations & local authorities from EU and partner countries. In total, 30 days of consultation have been organised bringing together more than 600 participants. The results of this process will feed into forthcoming decisions on EU programmes and instruments and will be used for drafting operational guidelines on Commission delivery and selection mechanisms.

The Commission is seeking to further refine
the tools mobilised to support these actors and build their capacity.
Preparations for a mapping study in Latin America were finalised, and another
has started for Asia. In both cases, the idea is to provide guidance on how
better to identify the actors, their added-value, strengths and weaknesses and
the global context in which they operate and to integrate this knowledge into
implementation strategies.

Under the programme’s
multi-annual strategy (2007-2010), the Annual Action Programme for 2010 allocated
a total of €219.4 million: €183.8 million for NSAs and €35.6 million for local
authorities. For in-country operations, €134.7 million were set aside for NSAs
and €18.4 million for LAs. With these funds, operations in 87 countries are
being launched.

Successful examples of projects financed
under this programme include inter alia a project implemented in the
West Bank to facilitate the life of persons with disabilities, the elderly and
patients by improving their access to rehabilitation and ability development.
Another project in Jordan and Syria, strives to improve women's quality of life
among rural communities and to enhance their access to the labour market.

Further to the evaluation of the 2007-2010
strategy, the objectives of the new strategy for 2011-2013 reflect continuity
with the previous period and the intention to adopt a more strategic and
focused approach. The new strategy opens up the possibility to explore new and
more effective aid delivery methods, in line with the Paris Declaration and the
Accra Agenda for Action.

CiSocH: a single-entry point for information about and for civil society and development cooperation[70] In 2010, the European Commission developed a new online portal aimed at civil society organisations and local authorities: CiSocH (Civil Society Helpdesk). Its aim is to provide a single entry point to facilitate access to existing information on topics of specific interest to NSA-LA – making procedures, vocabulary and working methods easier to understand. CiSocH's strength is that it brings together access to targeted information available elsewhere (the Commission, Council, other websites) and organises that information around "concepts" which relate to key issues of particular interest to civil society. Under each concept, a short description of the topic is given, as well as links to relevant documents, webpages, etc.

3.1.3.
Migration and asylum

The Stockholm Programme - an open and
secure Europe serving and protecting the citizens, adopted by the European Council in December 2009, and its April 2010 action plan,
confirmed the EU's global approach to migration. This is built around three
pillars: facilitating labour migration, preventing and curbing irregular
migration and promoting links between migration and
development as the strategic external dimension of EU migration policy. The thematic programme "Cooperation with third countries in the
areas of migration and asylum" (TPMA) is the main instrument for external
cooperation on migration and asylum. While recognising eastern Europe, the
Mediterranean and Sub-Saharan Africa as EU priority regions for cooperation on
migration and asylum, the programme stresses the importance of more cooperation
with countries like China and India and regions like central Asia, Latin
America and the Caribbean.

The 2010 TPMA annual action plan included
the following measures:

·
€7 million for targeted projects linked to the
implementation of mobility partnerships with Cape Verde, Moldova and Georgia;

·
€3 million for a targeted project to strengthen
dialogue and cooperation between the EU and Latin America and the Caribbean to
establish management models on migration and development policies;

·
€6.6 million for regional protection programmes
(north Africa, Tanzania and eastern Europe) targeting the refugee populations;

·
a call for proposals combining the budgets for
2009 and 2010 totalling €70 million. The amount earmarked for 2010 is €31.4
million;

·
€5 million for special measures.

Closed in November 2010, the call for
proposals resulted in the submission of more than 370 concept notes, from which
61 projects were selected. In addition, the Commission decided in November to
reallocate the €5 million earmarked for special measures to finance a further
four projects from the reserve list of the call for proposals. Forty-two
projects were contracted before the end of 2010 and the rest will be signed
during 2011.

Issues covered by the selected projects
include: preventing and curbing irregular migration and facilitating the
readmission of illegal immigrants; protecting migrants against exploitation and
exclusion and supporting the fight against trafficking in human beings;
promoting asylum, international protection and the protection of stateless
persons. For example, the Interregional network “Migration Rights” offers legal
assistance to refugees and migrants in Russia. Another project aims to combat
human trafficking from Morocco and Egypt to Jordan and to protect women migrant
workers in Jordan. A third project will set up a
European-wide African diaspora platform for development. Finally, a project aims to strenghten the capacity of policy-makers and
social partners to adopt and implement gender-sensitive labour migration
policies, legislation and administration in Central America.

The mid-term review of the TPMA was
completed in March 2010. The principal lessons learned have been taken into
account for the 2011-2013 strategy, which will be approved in early 2011. As
recommended by the review, the management of a large number of projects funded
from the TPMA was transferred to EU delegations in 2010. This decision was
intended to enhance the effectiveness, impact and sustainability of projects
and to improve local ownership.

The TPMA has substantially contributed to
the effective implementation of the mobility partnerships between the EU and Cape
Verde, Moldova and Georgia. Discussions are ongoing with other countries to
establish new mobility partnerships in the near future. The regional protection
programme covering Tanzania, has been signed with implementation due from the
beginning of 2011. The one for the Horn of Africa was signed at the end of
2010. The regional protection programmes in north Africa and estern Europe are
currently being negotiated.

The Commission also continued to play an
active role in the policy dialogue on migration and asylum issues at various
international and regional events like the fourth global forum on migration and
development in Puerto Vallarta, Mexico, in November 2010. There, as in other
fora, the EU supported the development of migration profiles as an essential
tool for defining national development policies. As part of the EU-Africa
dialogue, work continued on the migration, mobility and employment partnership.
An initiative supported by the TPMA is facilitating dialogue and exchange of
information and good practices in this area. Cooperation with partners in
eastern Europe, the south Caucasus and central Asia has been strengthened,
either bilaterally or through platforms like the Black Sea Cooperation
Platform, the Budapest Process and the Soderköping Process, and initiatives
such as 'Building Migration Partnerships'. The structured dialogue on migration
with Latin America launched in 2009 is also moving forward.

3.1.4.
Environment and sustainable management of
natural resources including energy

Environmental protection remained a
priority in 2010 with support from the thematic programme for the environment
and the sustainable management of natural resources including energy (ENRTP).
The 2010 annual action programme was adopted with a budget of €201 million. It
focuses on major environmental issues, such as climate change, desertification,
biodiversity, fisheries and forest preservation (including the EU Forest Law
Enforcement, Governance and Trade initiative) and sustainable energy. Support
for developing countries’ capacity to implement multilateral environmental
agreements is a prominent feature of the programme. An external review of the
programme provided input for the new 2011-2013 ENRTP strategy which was
approved in October. The three main priorities of the new strategy are: climate
change and sustainable energy, environment and development, and the
strengthening of environment and climate governance.

In 2010, the ENTRP allocated €49 million to
the Global Climate Change Alliance Of this, €25 million was counted as fast-start
climate change financing for adaptation (see below), to support countries most
vulnerable to climate change, in particular the least developed countries and
small island developing states. The following countries benefitted from the
GCCA 2010 budget: Ethiopia, Nepal, the Pacific region, Solomon Islands, Belize
and Mozambique. Typical climate change related activities are: capacity building
to integrate climate change into policies and strategies, sustainable land use
and watershed management, agro-forestry, renewable energy, disaster risk
reduction and general awareness raising.

Under the GCCA, two high-level regional
seminars on climate change were held in Bangladesh and Ethiopia. These
conferences provided a platform for discussion and exchange of views on the
current status of the international climate negotiations. They also were an
occasion to discuss the GCCA’s implementation mechanisms. In Dhaka, a tangible
outcome was an Asia-GCCA joint declaration between the EU, and the governments
of Bangladesh, Cambodia and the Maldives, who are currently GCCA beneficiaries.
In Addis Ababa, discussions focused on the international negotiations on
climate change in Cancun (the 16th Conference of the parties to the
UN framework convention on climate change), on GCCA experiences in a number of
African countries, and on the further need to train African negotiators.

The Commission pledged €150 million towards
fast-start financing with €50 million for 2010. The ENRTP was used as vehicle
to deliver on this pledge, with €25 million for adaption actions in Ethiopia,
the Pacific region and Nepal. The balance of €25 million was used for
mitigation activities in the area of REDD+[71],
carbon market preparedness, emissions monitoring, reporting and verification
(MRV), and the development of low emission strategies.[72]

The Global Energy Efficiency and Renewable
Energy Fund (GEEREF) which pools public and private funds through an innovative
public-private partnership, offers new risk sharing and co-funding options for
investors in energy efficiency and renewable energy. It approved two new
regional funds in 2010 for investments of €22.5 million. These will invest in
small-scale clean-energy projects in east Africa and Latin America.

Another energy-related activity supported
under ENRTP was the launch of the Africa-EU renewable
energy cooperation programme. This will provide the basis for renewable energy
cooperation between Europe and Africa in the context of the Africa-EU energy
partnership, and contribute to achieving its ambitious targets for renewable
energy.

All these ENRTP activities have been
complemented by projects and programmes funded under the geographical financial
instruments.

The Commission pursued its efforts in
preserving tropical forests and improving forest governance. Progress has been
made under the Forest Law Enforcement, Governance and Trade
(FLEGT) initiative with the signature of Voluntary Partnership Agreements (VPA)
with the Republic of Congo and Cameroon, in addition to the one that was
already signed with Ghana. A FLEGT VPA with the Central African Republic is
under ratification. FLEGT VPAs are under negotiation with the Democratic
Republic of Congo, Liberia, Indonesia, Vietnam and Malaysia.

3.1.5.
Food security

Despite progress in 2010, the lack of food security remains a
serious global concern.

The number of undernourished people in the world has been rising
since 1995. After a sharp increase between 2006 and 2009, this number is
estimated to have fallen in 2010: 925 million people were undernourished in
2010 compared with 1.02 billion in 2009. This decline is largely attributed to
renewed economic growth and a drop in food prices from a peak in mid-2008.
Nevertheless, food-security remains under threat from price volatility, climate
change and a growing population.

While access to food is a major concern, access to nutritious food
is even more challenging: about two billion people suffer from micronutrient
deficiencies while malnutrition is estimated to be responsible for 3.5 million
mother and child deaths per year.

Renewed
political commitment from the EU to tackle worldwide food insecurity

In March, the Commission presented a new policy on food security[73] which set out a comprehensive
approach to food insecurity (see chapter 1).

In December 2010, following its mid-term review, the Food Security
Thematic Programme (FSTP) was updated and a new multiannual indicative
programme for 2011-2013 was adopted with an overall budget of €750 million.
Over the coming three years, the FSTP will focus on three main priorities:

(i)
research, technology transfer and innovation to enhance food security;

(ii)
strengthened governance approaches for food security;

(iii)
addressing food security for the poor and vulnerable in fragile situations.

Along with the EU food facility, this instrument provides concrete
evidence of the EU's strong commitment towards improving food security in the
developing world.

Implementing
the food facility

The EU Food Facility was set up in December 2008
as a rapid response to soaring food prices in developing countries. It made
available an additional €1 billion for projects and programmes in 50 target
countries during the period 2009-2011. Through the food facility, the EU
provides farmers with essential agricultural inputs (seeds, fertilisers,
equipment) and services, increases access to local food for the most
vulnerable, and encourages the development of agricultural infrastructures and
services to help raise productivity.

Shielding children, pregnant women and nursing mothers

In Guatemala, the EU is funding a WFP/FAO project to protect
children, pregnant women and nursing mothers from the impact of high food
prices by improving market deliveries and subsistence production.

Food-for-work, food-for-training and food-for-asset activities are
improving the living conditions of 210 000 vulnerable beneficiaries and
the productive system of 8 000 subsistence farmers in target rural areas.

By the end of 2010, the full amount of €1
billion had been committed. More than 80% of the payments were made (i.e. over
€800 million) in 2009 and 2010. The food facility has funded 134 projects implemented by NGOs and
member states agencies, 68 projects by international organisations, three
regional projects and 11 budget support measures. Although projects were implemented in record time, strict controls
were applied via monitoring, evaluation and audit procedures to safeguard
quality. Best practices and lessons learnt from the food facility will be
incorporated in FSTP actions.

Supplying inputs for farmers

The European Commission and the FAO have joined efforts to supply
176 000 small farmers in Zimbabwe – representing between 10% and 15% of
communal farmers in the country – with 26 000 tonnes of seeds and
fertilisers. With good seasonal rain, timely implementation and effective
coordination, this project could almost double traditional food production in
the regions concerned.

The Food Facility has demonstrated Europe’s
ability to react rapidly, efficiently and transparently to a global food
security crisis.

Getting staple foods from rural communities in Bandundu (DRC) to
market in Kinshasa

In the Congolese Province of Bandundu, the European Commission has
strengthened farmers’ organisations and created new ones to help them market
their staple food products in Kinshasa There are four projects covering the following
activities:

- distributing improved plant varieties

- training local organisations

- creating warehouses

- processing agricultural products

- restoring and maintaining farm tracks

- providing trucks and barges for transport

- managing a central depot in Kinshasa.

As a result, production has significantly increased in the
communities concerned. During 2008-2010, the production delivered to the market
in Kinshasa increased threefold to more than 1 000 tonnes per year of staple
food. The EU contribution to these projects was €13.5 million.

The Food Security Thematic Programme

The food security thematic programme was
allocated a total of €240 million in 2010.

The
2010 annual action plan covers targeted projects and local calls for proposals on
linking relief, rehabilitation and development (LRRD) and innovative approaches
to combat food insecurity. It includes amongst others: agricultural research
for development (€54.5 million), operations linked to crisis and fragility
(€42.8 million), continental regional food security programmes (€74.5 million)
and technology transfer for agriculture in Asia (€22 million).

Food security is also supported through
projects and programmes financed under the various geographic development
instruments like the ENPI, DCI and EDF. These bring the total of funds
committed to agriculture, rural development, territorial planning and food
security (as described in the European Consensus on Development) to €1.2
billion.

3.2.
Democracy and Human Rights

In promoting human rights and democracy
worldwide, the EU uses a range of approaches, from political dialogue and
diplomatic initiatives to specific instruments of financial and technical
cooperation. Improving the design and the impact of EU external aid by ensuring
coherence, complementarity and synergy between the geographic and thematic
instruments and programmes has been a priority in recent years.

EIDHR

The European Instrument for Democracy and
Human Rights (EIDHR)[74]
is a self-standing funding instrument that complements and reinforces actions
on human rights and democracy around the world within the framework of relevant
EU policies. With a budget of €1.1 billion for 2007-2013, the EIDHR is the
concrete expression of the EU's intention to integrate support for democracy
and human rights into all its external policies.

The EIDHR has a broad remit and supports
actions in all aspects of democracy and human rights protection, including in
the socio-economic sphere and MDG-related goals and has a particular focus on
gender and the protection of minorities or vulnerable groups (such as people
with disabilities and child victims of armed conflicts). It also supports
actions against racism, xenophobia and discrimination on any ground.

The 2010 review of progress towards the
Millennium Development Goals showed that human rights promotion remains a key
factor. Discrimination has been highlighted by the UN High Commissioner for
Human Rights as a crucial obstacle in achieving the MDGs, as development can
fail if its benefits do not reach groups of people who are systematically
disempowered, discriminated against or who suffer multiple human rights
deprivations.

EIDHR has made
considerable provisions for country-specific small-scale projects
(country-based support schemes) in order to further enhance local ownership and
improve access by national civil society organisations. A total of 66 local
calls for proposals were launched and 434 grants contracts were signed in 2010
for a total value of €69 million.

EIDHR is also
active in countries where the EU has “difficult partnerships” and where
fundamental freedoms are most at risk and geographic development programmes
meet obstacles.

The fight against torture

Between 2007 and 2010 the EIDHR financed more than 60 projects to
fight torture (including locally-managed projects) for a total value of €44
million. The main focuses were on the implementation of EU guidelines, the
rehabilitation of torture victims, human rights training for the judiciary and
for prison officers, the setting up of national prevention frameworks, and
legal aid to defend victims from injustices.. The EIDHR offers an integrated
approach, combining the rehabilitation of victims with torture prevention and
efforts to end impunity for torturers. A good example of this approach is the
project on torture prevention in Ecuador. Guatemala and Peru finalised in 2010
with an EU contribution of €700 000 in partnership with local
organisations such as IPEDEHP (Peru), CEDHU (Ecuador), ICCPG (Guatemala). More
than 5 500 targeted persons were trained on prevention of physical and
psychological torture. A successful project to educate police and the military
against torture was carried out, involving an effective engagement of local
authorities, the military, policemen and social leaders. This showed that
education, awareness-training and the sharing of good practice could be key
factors towards the eradication of torture, thus contributing to the
consolidation of democracy in a region with a troubled past.

Lessons Learnt

The EU has committed more than €40 million
during 2007-2013 to support human rights defenders. In order to learn from its
actions and to improve the impact of its work, the EIDHR has carried out a
global evaluation on its support for human rights defenders. Its conclusions
are that this support was highly relevant, and that management was done with
the proper flexibility, openness and responsiveness. The support included
emergency protection, reimbursement of medical or legal fees, the purchase of
secure IT equipment or cellular phones, and temporary support for a grass-roots
human rights organisation during a difficult situation. The report said that,
in future, attention should be paid to avoid duplication of effort, reinforce
the quality of local partnerships, increase direct
support to human rights defenders and ensure a cohesive and strategic approach
in the overall selection of projects. The evaluation results were taken into
account for the launch of the global call for proposals in 2010 for providing
support to human rights defenders. The response to the call showed a growing
demand in this crucial sector of EIDHR activity.[75]

In response to
a recommendation of several EIDHR evaluations for more analysis and monitoring,
a maximum of 3% of the country specific budgets had been used to support local
organisations develop project cycle management and internal procedures. From
2011 this threshold will be raised to 10% to strengthen local capacities
further, thereby also obtaining greater ownership at local level for civil
society organisations.

The Palermo II process

The Commission launched the "Palermo
II process" in 2010, an initiative aimed at creating a new dialogue on aid
effectiveness with stakeholders in EU external cooperation: civil society
organisations, EU Member States and the European Parliament. Democracy and
human rights form an important pillar in this process. As an example, the Amman
regional conference (29 June-1 July) helped spread best practices on EIDHR
implementation in the European neighbourhood region. It highlighted several
needs:

·
simplification and predictability of grants;

·
more strategic insight by CSOs as regards their
sustainability;

·
creation of genuine CSO networks to limit
fragmentation and exacerbated competition for funds;

·
more support for human rights defenders in
difficult situations.

As a follow-up of the dialogue and consultation processes,
the EIDHR has now been given additional flexibility, so that recipients can
pass on small amounts of their grants to other local entities or individual
human rights defenders.

Improved visibility

A first compendium was published in 2009 to
give an overview of all EIDHR projects by theme, including a short description
of each project. This was followed in 2010 by regional compendia prepared in
advance of the regional events organised in the framework of the structured
dialogue. These compendia cover all projects funded in the ENP and central
Asian region, Latin America and Asia. Additionally, the first thematic
compendium on the death penalty[76]
was also published in 2010 and the EIDHR brochure was translated into Arabic
and Russian, in order to provide access to a broader public and to reinforce
publications produced by EU delegations.

Protection and promotion of human rights
through mainstreaming

The Commission is committed to
mainstreaming human rights throughout its activities, as outlined by the
European Consensus on Development.

As an example, the EU supported several
projects in 2010 in the justice sector within the bilateral cooperation
framework. Tailored to each country's legal system, social values and accepted
principles, these projects were centred on ensuring better access to justice
for people and guaranteeing respect for the human rights of persons processed
through the justice system.

Various approaches were designed for this
purpose, from support to institutional reforms aimed at strengthening the
independence, impartiality and professionalism of the judiciary (Moldova and
Ukraine), to better compliance with European standards concerning democracy, human
rights and rule of law, both in legislation and practice (via the Council of
Europe facility for eastern partnership countries), as well as promoting the
liberalisation of sentencing policies and practices and the rights of detainees
(Georgia).

Based on the
review of EU support for justice reform in ACP countries since 2000, a first
reference document on justice was produced in 2010. It provides an overview of
the main features of the justice sector and the approaches of other donors as
well as an analysis of the justice sector components and its major actors. It
should provide the European Commission with strategic and operational guidance
including for countries in a fragile situation. Its main purpose is to assist
staff in EU Delegations and at headquarters level in the design and
implementation of justice reform programmes. This will
be followed in 2011 by a complementary analysis covering the EU support for
justice reform in other regions.

Democracy support

In November
2009, the EU Council adopted Conclusions[77]
dedicated to democracy support. These provided the first strategic, concrete
orientations for a broader and more coherent policy to support democracy in the
EU’s external relations, going further than earlier more general policy
statements. They acknowledged that the EU has a wide array of financial and
political instruments at its disposal, but that there is room for improvement
in how existing policies are implemented. The Council Conclusions also
contained an agenda for action focused on six areas: country-specific approach;
dialogue and partnership; EU coherence and coordination; mainstreaming;
international cooperation and visibility. In December 2010, the Commission
presented a first report. The Council followed by adopting a new set of conclusions.[78]. These also identify 12 pilot
countries where the agenda of action is to be implemented as well as a request
for immediate further action and regular feedback to the Council on progress.

Electoral
processes

Elections are an essential component of
democratic governance. Actions supporting genuine elections can make a relevant
contribution to peace and development objectives. EU support for elections is
provided in two complementary forms: electoral assistance and EU election
observation missions.

The importance of ensuring an appropriate
follow-up to recommendations from EU Election Observation Missions (EU EOM) has
been acknowledged. Follow-up missions are systematically organised to discuss
the EU EOM final report and its recommendations with stakeholders. Positive
reactions to the final reports and recommendations were received from the
national authorities in countries like Bolivia, Mozambique and Yemen.

Over the last
six years (2005-2010), the EU has spent nearly €600 million or about €100
million a year on electoral assistance. The money comes from geographic
programmes, the Instrument for Stability and the EIDHR. It delivers
capacity-building and technical and material support to electoral processes in nearly
60 countries. Almost two thirds of the support was geared towards Sub-Saharan
Africa. A big part went to post-conflict countries such as the DRC,
Afghanistan, Sudan, Ivory Coast and Iraq.

Efforts are
increasing to create more synergies between observation missions and electoral
assistance by integrating EU EOM recommendations into electoral assistance
operations, making sure such recommendations are feasible and realistic for the
country concerned, and ensuring that EU EOMs also benefit from the experience
gained through electoral assistance.

Sudan: Towards active participation in the election process

A good example of promoting the electoral participation of women in
Sudan is the 2009 project “Towards active participation
in the election process”, which is still ongoing in Nuba/South Kordofan. The
aim was to raise awareness among rural people and women, provide education on
civil rights, census, voter registration, and the use of local radio and
cassettes to spread voting information. It also sought to empower local
community leaders to participate and monitor elections, promote dialogue
between political parties and encourage the participation of women and
marginalised groups. This project was well integrated with the purpose of the
EU electoral observation mission and effectively complemented the work of other
donors.

In 2010, the EU
supported electoral assistance programmes/projects in a number of countries
including Bolivia, Burundi, Comoros, Ivory Coast, Central African Republic,
Ghana, Guinea, Haiti, Kenya, Kyrgyzstan, Liberia, Moldova, Niger, Nigeria,
Sierra Leone, Sudan and the Portuguese-speaking countries through the PALOP-TL
programme. These programmes cost about €100 million which was provided by the EDF,
DCI, and IfS.

Knowledge development and collaboration
with the main actors remain EU priorities. A pioneer thematic workshop on
"Elections, Violence and Conflict Prevention", organised by UNDP,
International IDEA and the European Commission, took place in Barcelona in
March 2010. It was the ninth workshop organised as part of a training
initiative launched by the three partners in 2005. Since then, new partners
have joined through the Train4Development’s subgroup on effective electoral
assistance and the global training platform: the Canadian International
Development Agency, the Organisation of American States, the International
Organization for Migration and the Spanish ministry of foreign affairs and
cooperation.

Electoral
assistance is often an entry point for wider action to support democracy and
should be seen as complementary to other democratic governance activities. Some
current electoral assistance programmes already include a media component to
provide equal access to information and exposure for all parties and views
involved in elections. They usually also aim at strengthening the participation
of civil society via support for domestic observer missions and civic
education. Efforts are ongoing to make parliamentary development an integral part
of electoral assistance. In this way, stronger elected
institutions can play their part in delivering the dividend of democratic
elections. While this has happened in a few countries
(e.g. Tanzania and Pakistan), it is not yet a common practice and needs
therefore to be further encouraged.

Scaling up
work with parliaments worldwide

Effective
parliaments are at the heart of democratic systems. A study was completed in
2010 to review how the EU supported parliaments in ACP countries over the past
decade and to provide practical guidance for future support to parliamentary
institutions.

The assessment
offers a mixed picture. A little more than €100 million
was spent to strengthen ACP parliaments between 2000 and 2009 in 30 countries. The level of EU funding and the quality of contributions varied
widely. The assessment reveals that successful projects were those based on
careful groundwork, where there was an understanding of the overall governance
environment and of the motives of political actors. Too often activities to
strengthen institutions have focused on the executive branch of government at
the expense of the legislature. The EU needs to do more to meet its policy
commitments in terms of support for democracy, aid effectiveness and domestic
accountability.

Successful projects tended to take a
longer-term approach and occurred where there is a positive environment for democratic
development. They demonstrate strong national ownership, clear objectives,
strong delegation of ownership, and thorough programme planning.

As part of the assessment, field studies
were carried out in Senegal and South Africa. The South African example
underlines the value of long-term, intensive EU involvement. The sector
approach used by South African national and provincial parliaments facilitates
a common development agenda across national and sub-national legislative
institutions. It is an innovative approach that offers a good practice example
for other political systems with national and sub-national legislatures. The
EU-supported South African legislative sector projects placed a strong emphasis
on the representative functions of parliament and helped extensive
participatory approaches to be institutionalised. In the current (2009-2013)
third phase, support is provided through sector budget support and
complementary support is currently been prepared to leverage some of the good
practice of South Africa’s legislative sector with other parliaments in the
region.

Strengthening parliament’s representative role in Tanzania

Context: National elections in 2007 and
Tanzania’s renewed commitment to democracy created momentum to consolidate and
intensify good and accountable governance practices.

Programme: The programme supports the
Tanzanian-led Deepening Democracy initiative to build the capacity of national governance institutions
and political parties. The four-year programme began in 2008. The EU is
contributing €1.4 million of
the programme’s €9.5 million
budget. The strategic plan supporting the parliamentary component is complete
and is guiding multi-donor support for the parliament's corporate plan.
Particular emphasis is being placed on strengthening the capacity of key
parliamentary committees and parliament’s responsiveness to civil society.

Main activities: Training for the
secretariat of the national parliament and the Zanzibar house of
representatives, constituency
outreach seminars to support public understanding of the role of
representatives and constituents, wide dissemination of issues around
parliamentary work through Speaker’s forums, and focusing media attention on
events and key messages promoting citizen-parliamentary engagement.

Key findings: This programme has made
chairpersons of parliamentary committees more competent to review the budget
and scrutinise bills. It has also increased dialogue between parliament and
civil society. The involvement of civil society in the review of bills has
increased its influence on legislation. The strengthening of civil society has
proved to be a positive factor underpinning the sustainability of the
programme.

Building on the
assessment and on existing parliamentary development expertise, a reference
document was completed “Engaging and Supporting Parliaments Worldwide: EC
strategies and methodologies for action to support parliaments”[79]. The publication serves as a
practical tool for EU staff and other stakeholders, presenting ways of engaging
with and supporting parliaments in partner countries. Together with a training
module, organised in collaboration with the European Parliament's office for
promotion of parliamentary democracy, this will help to enhance results of
parliamentary support[80].

3.3.
Stability
3.3.1.
Crisis response and preparedness

In its first four years, the EU’s
Instrument for Stability (IfS) allocated €482 million to 154 actions worldwide
in response to short-term crisis situations. During 2010, the entire budget of
€135.9 million was committed for a wide range of measures. The following
examples show how the IfS provides significant and visible EU responses to many
crisis situations around the globe.

Haiti – following on the devastating earthquake in January 2010:

·
IfS support enabled the EU to take part in the
intensive and high-profile Post-Disaster Needs Assessment undertaken with the
UN and the World Bank in preparation for the Haiti donors’ conference in
Montreal.

·
A new €20 million EU IfS programme is working in
partnership with experts from civil protection services in five Member States
to improve the disaster preparedness capacities of the Haitian civil protection
services. The IfS programme also contributed to a ‘Cash for Work’ scheme
(through UNDP), providing the Haitian national leadership with strategic advice
on issues related to the reconstruction of the country.

·
A further €5 million IfS action provided support
for the crucial presidential and parliamentary elections, complementing the
efforts of the EU election observation mission.

Pakistan -
the case of Pakistan demonstrates the versatility of the IfS as a crisis
response tool. Two emergency response measures were mobilised to respond to:

·
The political crisis in the north-west region
bordering on Afghanistan, where a €15 million post-conflict recovery package
has been put in place; and

·
The unprecedented flooding disaster, where the
IfS funded an €18 million early recovery programme in addition to the EU’s humanitarian
aid effort.

Sudan - in
advance of the January 2011 referendum on self-determination for southern
Sudan, the Commission decided in May on an IfS contribution of €15 million so as to:

·
provide EU experts and other support for
organising the referendum process and the ensuing negotiations between the
north and south to seek an agreement on sensitive post-referendum
arrangements. This IfS action was complemented by an EU observation mission for
the referendum;

·
secure a stable ‘peace dividend’ to the rural
population of south Sudan (through delivery of basic services in cooperation
with DfID/UK), thus bridging a gap until longer-term EU development funding (via
the EDF) can be provided later in 2011.

Philippines
– at the request of the parties concerned, the government of the Philippines
and the Moro Islamic Liberation Front (MILF), the EU contributes to their peace
process through:

·
a politically significant IfS action (€3
million) put in place to help monitor the parties' compliance with their
commitments on humanitarian, rehabilitation, and development activities in the
south of the country;

·
IfS support for NGOs monitoring protection
activities and backing for the political dialogue process through an
international contact group chaired by Malaysia.

Somalia -
The EU has given priority to a comprehensive approach to tackle the scourge of
piracy off the coast of Somalia. The IfS has made an essential contribution
through jointly developed EU-UNODC programmes to support piracy trials in Kenya
(since May 2009) and the Seychelles (from early 2010). This provides a
necessary complement to the EU’s Atalanta naval operation carried out under the
Common Security and Defence Policy, which relies for its success on being able
to transfer suspected pirates for trial in these regional countries.

Other IfS activities in 2010 included
support for stabilisation efforts in Georgia and Nagorno-Karabakh, as well as
in Kyrgyzstan (following the political crisis of summer 2010) and northern
Ecuador (where there is a large presence of Colombian refugees).

Reconciliation, mediation, dialogue and
other peace building processes have been supported in areas such as Aceh in
Indonesia, in Laos where support is given to dialogue between the Lao
administration and the displaced Hmong, and for the wider Middle East.

The implementation of peace-building
measures at inter-community level in the east of the Democratic Republic of Congo has been completed,
as has IfS support for cross-border cooperation with Rwanda and Uganda on
patrolling national parks straddling their borders, as a way to help smooth the
often difficult relations between these countries.

Concerning crisis preparedness
measures to build and consolidate civilian expertise for global peace-building
work, the IfS ‘Peace-building partnership’, with a budget of €20 million in
2010, has focused on:

·
establishing a civil society
dialogue network on peace-building issues and capacity-building support
for civil society actors active in this field;

·
cooperating with UN bodies (UNDP, UNISDR)
on activities related to natural resources and conflict, disaster risk
reduction, and disarmament, de-mobilisation and re-integration (DDR);

·
training police and civilian experts for
deployment in international stabilisation missions to conflict areas. This is
done at police training academies with a range of leading civilian training
bodies from EU Member States.

3.3.2.
Global and regional trans-border challenges

Global and regional trans-border challenges
are addressed by actions funded under the long-term component of the Instrument
for Stability[81].
These cover trans-regional security threats, as well as chemical, biological,
radiological and nuclear (CBRN) risks. Two annual action programmes on trans-regional
threats and non-proliferation of weapons of mass destruction were
implemented in 2010.

CBRN risk mitigation

Support was agreed for a second phase of a
project to establish regional centres of excellence on chemical, biological,
radiological and nuclear threats in cooperation with the United Nations and
other major donors. A total of €21.5 million has been earmarked for up to four
new centres in the Middle East, the Mediterranean basin, the southern Caucasus
and central Asia. These centres could also play a role in linking the external
and internal dimensions of CBRN risk mitigation.

To strengthen the analytical capacity of
the International Atomic Energy Agency (IAEA) the Commission agreed to
contribute €5 million to support the IAEA Safeguards Analytical Laboratory.

Trans-regional threats

On 1 March 2010, the EU launched its
cooperation with the Regional Centre on Small Arms and Light Weapons (RECSA) in
southern and eastern Africa. RECSA is engaged in the fight against illicit
trade in and excessive accumulation of firearms, including activities to
strengthen law enforcement agencies’ cooperation, training on marking and
tracing techniques, and awareness-raising. The IfS is supporting the
establishment of a database managed by Interpol to track illicit trafficking of
stolen or lost small arms and light weapons.

A first EU-sponsored counter-terrorism
programme for the Sahel region, including Mali, Mauritania, and Niger, was
launched in December 2010 at a high-level seminar in Nouakchott. The first
phase of the programme has a budget of €4.5 million. It is timely, given
deteriorating security in the Sahel, and is part of a broader EU effort to
support this volatile region.

The second phase of the trans-regional
cocaine route programme, with a total budget of €19 million was successfully
launched. It funds capacity-building measures in Latin America, the Caribbean
and, in particular, west Africa. It involves law enforcement authorities from
EU Member States.

In addition, the IfS critical maritime
routes programme, with a total budget of €14 million, entered its second phase
with the establishment of a training centre in Djibouti and a regional
information centre in Sana’a (Yemen). The programme helps build capacities of
coastal states around the Horn of Africa to counter piracy and other forms of
organised crime by improved maritime surveillance and training in maritime law
enforcement Support for investigations into piracy organisers and funders has
been initiated with Interpol.

Beyond the western Indian Ocean, the IfS contributed €500 000 to a project of the
International Maritime Organisaion in the Straits of
Malacca and Singapore to increase the preparedness and response capabilities of
coastal states against incidents involving hazardous and noxious substances.
The programme has also started work in the Gulf of Guinea.

Through the IfS expert support facility on
trans-regional threats and threat-preparedness, about 100 experts from 17 EU Member
States belonging to 60 organisations and institutions have carried out more
than 100 fact-finding visits and missions to west Africa, north Africa and the
Middle East, the Sahel, southeast Asia, central and south America and the
Caribbean.

3.4.
Nuclear Safety

The EU continued its support for nuclear
safety projects in the countries of the former Soviet Union under the TACIS (Technical Assistance to the Commonwealth of
Independent States) programme. The main current challenges
are to:

·
strengthen the regulatory authorities in Russia,
Ukraine, Armenia, Belarus and Georgia;

·
promote an effective nuclear safety culture at
all levels;

·
improve the management policies on spent fuel
and radioactive waste.

In 2010, the Commission transferred the
balance of the 2009 pledge to the Nuclear Safety Account (€15 million). An
additional contribution of €17 million to the Chernobyl shelter fund was
transferred, following the adoption of the 2010 annual action programme of the
Instrument for Nuclear Safety
Cooperation (INSC). TACIS nuclear safety projects on radioactive waste
management are still ongoing at the Chernobyl site, with a total budget of
around €14 million. The establishment of a comprehensive radiation monitoring
and early warning system in the Chernobyl exclusion zone has been completed.
Almost all the radioactive waste management projects foreseen in the 2008 INSC
annual action programme have been contracted (total commitment of €5.3
million). In Armenia, the EU provided on-site assistance to the Medzamor
nuclear power plant and to the Armenian regulatory authority.

The Instrument for Nuclear Safety
Cooperation came into force on 1 January 2007. Its main objectives are to
promote high level nuclear safety and radiation protection, plus the
application of efficient and effective safeguards of nuclear material in non-EU
countries, worldwide. The 2010-2011 indicative programme has been adopted.
Following exploratory missions to Jordan and Egypt in 2008, the EU conducted
similar expert missions in southeast Asia, the Maghreb and Latin America in
2009. In 2010, the first visits to Mexico and Argentina took place. As a result
of these missions, projects to support regulatory authorities have been defined
for Vietnam, Philippines, Morocco, Mexico and Brazil. A project to train the
staff of the nuclear regulator in China was transferred from the International
Atomic Energy Agency (IAEA) to the INSC programme. New projects for Morocco and
Jordan have been included into the 2010 AAP. Additional projects for activities
in Brazil were prepared.

Cooperation with the IAEA included the
final phase of implementation and the subsequent reporting of a joint project
on the safety evaluation of Ukrainian nuclear power plants with all assessments
based on IAEA safety guides. Funding of €4 million was also agreed, mainly for
projects with the IAEA in non-CIS countries.

In addition,
radioactive waste management projects have been adopted for Uzbekistan, Mexico
and the Ukraine. A regional project aimed at the remediation of uranium legacy
sites in central Asia was agreed.

In Ukraine,
on-site assistance projects foreseen under the 2008 and 2009 AAPs are being
implemented in all nuclear power plants. An additional €9 million has been allocated
to operational and maintenance projects.

The national
training centre for maintenance and management in Zaporozhye (Ukraine), has
been the object of a major project to provide training to all staff of the National Nuclear Energy Generating Company of Ukraine (NNEGC Energoatom).

A new activity
for training and tutoring staff of the national regulatory authorities and
their technical support offices has been launched. For this first year of
implementation, €2.5 million have been allocated to this activity. It will
concern all candidate countries eligible under the INSC.

3.5.
Humanitarian assistance
3.5.1.
Introduction

The aim of the
Commission’s Directorate-General for humanitarian aid and civil protection (DG
ECHO) is to save and preserve life, prevent and alleviate human suffering, and
safeguard the integrity and human dignity of populations affected by natural or
man-made disasters. The mandate is to ensure rapid and effective delivery of EU
relief to people faced with the immediate consequences of disasters.

The aspect of
civil protection has been included in this policy area so as to facilitate cooperation in civil protection
activities associated with major emergencies which may require urgent response
action.

3.5.2.
Implementation of humanitarian aid

The EU intervenes when and where crises or
natural disasters occur, helping millions of affected people around the world.
In 2010, the Commission's response to new or protracted crises totalled €1.1 billion
and provided humanitarian assistance in 80 third countries and activating the
civil protection mechanism for 28 crises inside and outside the EU.

The initial budget was increased on several
occasions in order to respond to new crises and natural disasters occurring during
the year, like those in Haiti and Pakistan.

Humanitarian assistance was provided to cope
with the consequences of the following disasters:

·
floods in Benin, Burkina Faso, Bangladesh,
Colombia and Pakistan;

·
earthquakes in Chile, Haiti and Indonesia;

·
cyclones in south Asia, central America and
Laos;

·
droughts in Bolivia, Djibouti, the Greater Horn
of Africa, Sahel region;

·
epidemics in DRC, Haiti, Malawi, Zimbabwe and
southeast Asia.

·
Specific assistance was also provided to
Mongolia (affected by the Dzud[82]
phenomenon), Bangladesh (rodent crisis), Philippines (El Nino) and Guatemala (hit
by a series of natural disasters - volcanic eruption, tropical storm, tropical
depression after a severe drought in 2009).

The civil protection mechanism was activated 28 times
during the year, within and outside the EU, to cope with floods in Albania, Benin,
Bosnia & Herzegovina, Colombia, Hungary, Montenegro, Poland, Romania,
Tajikistan and Pakistan; earthquake and cholera epidemics in Haiti; an
earthquake in Chile; oil spill in the Gulf of Mexico; violent windstorm
(Xynthia) affecting western Europe; forest fires in France, Portugal and
Israel; snow storms in the UK and the Netherlands; hurricanes and tropical
storms in Guatemala and Haiti; and finally an industrial accident in Hungary.

To deal with 'man-made crises', the Commission intervened
after inter-ethnic clashes in southern Kyrgyzstan in June 2010 to supply
shelters, food assistance, legal counselling and protection. In Yemen, the
political and humanitarian situation deteriorated with several open internal
conflicts across the country. Instability in the Horn of Africa, particularly
in Somalia, increased the flow of persons landing on Yemen's shores as refugees
and asylum seekers. Military operations in Pakistan worsened the plight of
people displaced by the unrest in the northwest of the country in 2009 making
about three million people dependent on humanitarian assistance. At the end of
the year, the Ivory Coast faced a post-electoral crisis leading to a civil conflict
which also affected neighbouring countries.

In addition to these crises, the Commission had
to manage several protracted and complex emergencies such as:

·
Sudan where increased insecurity, including
frequent targeted kidnapping and harassment of humanitarian actors, and
extremely limited access has contributed to the almost complete disappearance
of humanitarian activities in Darfur. Interventions are largely limited to
camps via partner organisations who are working in extremely precarious
conditions;

·
The occupied Palestinian territory where the
population continues to live in hardship and social distress. In the West Bank,
Israeli settlements growth, settler violence against Palestinians, and the
security barrier continue to affect everyday life. One quarter of the
Palestinian population is considered as being food-insecure;

·
The Democratic Republic of Congo, where fighting,
sexual violence and displacement of populations have persisted throughout the
year although a gradual stabilisation has been noted in some parts of the
country.

The Commission also pays particular attention to forgotten
crises that have been neglected or overlooked by the international humanitarian
community and/or media. In 2010, 13% of the initial operating budget was
dedicated to these crises.

One of its main
supporting roles is to ensure access in situations where humanitarian
operations are under threat. This is particularly the case in protracted
conflicts. The general lack of security and increased targeting of humanitarian
workers remained major sources of concern.

Following the
needs-based approach, humanitarian assistance and civil protection assistance
were provided to the following regions.

Table 36 -
Humanitarian assistance and civil protection assistance per country (€ million)

More details on EU
operations in the field of humanitarian aid and civil protection in 2010, are
available in the annual report on implementation of humanitarian aid[83].

3.5.3.
Humanitarian assistance policy

Many of the overarching policy issues regarding
humanitarian aid are reflected in the 2007 European Consensus on humanitarian
aid and its action plan. A mid-term review of the Consensus action plan was
completed in autumn 2010[84],
which confirmed solid progress in all areas[85].

Acute food and nutrition insecurity
continued to affect a large number of vulnerable populations, who make up about
10% of the close to one billion food insecure people in the world. In March,
the Commission adopted a Communication
on Humanitarian Food Assistance[86].
It lays out the policy framework for EU action to strengthen efforts to address
food insecurity in humanitarian crises, looking for the most appropriate mix of
response tools to provide efficient and effective food assistance in a given
humanitarian context.

The Commission also adopted
a communication[87]
on European disaster response capacity which aims at improving its effectiveness,
coherence and visibility by building on the main components – humanitarian aid
and civil protection – as well as military support where needed and
appropriate, within and outside EU. Lessons learnt from Haiti, Pakistan, and
recent natural disasters within Europe will shape proposals for the way ahead.

In line with the Lisbon
Treaty (article 214.5), the Commission plans to set up a European Voluntary
Humanitarian Aid Corps (EVHAC).[88]
It adopted a Communication in November on how EU citizens can contribute to aid
efforts and how the EU can express its solidarity with people in need. The
Communication will be followed in 2011, the European Year of Volunteering, by a
legislative proposal to set up the EVHAC.

A special Eurobarometer
survey carried out in 2010 on humanitarian aid revealed a high level of
solidarity among EU citizens with victims of conflict and natural disasters
outside the Union. Eight out of ten citizens think it is important that the EU
funds humanitarian aid outside its borders.

3.5.4.
Disaster preparedness

The Commission supports disaster preparedness actions in
regions prone to natural disasters, so as to help local communities to react
rapidly and efficiently when disaster occurs. The Commission continued its
support to the disaster preparedness (DIPECHO) programmes launched in 2009 and
new ones in southern Africa, central Asia, southeast Asia and central America.
Many of the Commission's major humanitarian financing decisions include
disaster preparedness or mitigation of disaster impacts as an objective.
Mainstreaming is based on activities related to infrastructure support,
advocacy and public awareness, small-scale mitigation, mapping and data
computerisation, early warning systems, education, institutional strengthening
and climate change activities.

3.5.5.
Civil protection

The Commission encourages and facilitates
cooperation between the 31 states[89]
participating in the civil protection mechanism and financial instrument. In
doing so, it seeks to improve the effectiveness of systems for preventing and
protecting against natural, technological or man-made disasters in Europe. The
implementation of this mechanism ensures better protection of people, the
environment, property and cultural heritage in the event of disasters.
Assistance based on resources made available by Member States is provided
within the EU and third countries struck by disasters, following a request from
the government of the country concerned. Beyond disaster response, the
Commission strives to enhance disaster prevention and preparedness, both within
the EU and beyond.

3.6.
Macro-financial assistance

The Commission implements macro-financial
assistance (MFA) in association with the support programmes of the IMF and the
World Bank. The individual MFA programmes are governed by ad-hoc
legislative acts. The MFA instrument is governed by a set of principles which
underline its exceptional character, its complementary role to support
financing from international financial institutions and its macroeconomic
conditionality. It is designed to help beneficiary countries experiencing serious,
but generally short-term macro-economic imbalances (balance of payments and
fiscal difficulties). In close coordination with IMF and World Bank programmes,
MFA has promoted policies to meet specific country needs with the overall
objective of stabilising the external and internal financial situation and
establishing market-oriented economies.

Two new operations were approved in 2010.
The European Parliament and the EU Council decided in July[90] to provide MFA assistance to
Ukraine in the form of a €500 million loan. Together with €110 million from a
2002 decision, this brings to €610 million the amount made available to
Ukraine. On Moldova, a decision[91]
to provide MFA assistance of up to €90 million in the form of grants was
adopted in October. The first disbursement to Moldova (a €40 million grant)
took place in December. Discussions with Ukraine on the policy conditions
related to its loan were not completed at the end of 2010.

Concerning ongoing assistance, payments of
€7.7 million and €23 million in favour of Georgia were made in January and
August, both in the form of grants. This was part of the €46 million MFA
assistance approved in 2009 to help Georgia overcome the impact of its 2008
conflict with Russia and the global financial crisis.

The Council decision[92] to provide up to €80 million
of MFA to Lebanon expired in 2010 after the failure of Lebanese authorities to
ratify the one-year extension proposed by the EU. Only €40 million were disbursed
(a grant of €15 million in December 2008 and €25 million in the form of a loan
in May 2009), reflecting insufficient implementation of some policy conditions
by Lebanon and the expiry of the IMF's financial arrangement.

4.
MANAGING AID FOR RESULTS
4.1.
Monitoring and evaluating projects

For several years the European Commission
has been assessing the effects of EU development policy and the results of its
implementation. The Commission uses two major tools to evaluate the impact of
its actions in partner countries:

·
The results-oriented monitoring system which
provides a harmonised overview of the portfolio of projects and programmes
under five evaluation criteria (relevance, effectiveness, efficiency, impact,
sustainability). This system answers the main question: "are projects and
programmes on target to deliver the intended results?"

·
The evaluation of results of geographic,
sectoral/thematic policies and programmes, as well as of aid delivery and
programming performance. This exercise is crucial for the external assistance
policies as a whole and needs to feed back into the programming cycle.
Evaluations are important for accountability towards the public and provide
lessons about what has worked and not worked and the reasons why.

4.1.1.
Results-oriented monitoring

In 2010 the Commission's Results-Oriented
Monitoring (ROM) system celebrated its 10th anniversary. The system
has produced more than 12 000 reports providing a large amount of data,
while the methodology reached a high level of maturity. The ROM system plays a
vital role in ensuring the quality of EU development aid. It forms part of the
overall quality assurance cycle, which starts during the design of projects and
ends once they have been completed.

The ROM system is based on onsite visits
where monitors interview project and programme staff, review key project
documents and, most importantly, interview relevant stakeholders including the
beneficiaries. Based on empirical data, the system produces and delivers
objective, impartial and comparable reports. The methodology is based on
internationally (OECD/DAC) agreed evaluation criteria. These are relevance,
efficiency, effectiveness, impact, and sustainability. It is firmly focused on
results, both short-term and long-term. To promote transparency, ROM reports
are disseminated by the EU to project managers, partner governments and other
stakeholders.

The ROM brings benefits:

·
At the micro level, it gives feedback to project
managers on the performance of operations under their responsibility and
presents recommendations for improvements, if necessary.

·
At the macro level of general policy context,
implementation and review, ROM provides a statistical overview of the
performance of the EU development aid portfolio with data allowing comparisons
over time, across regions, between sectors etc.

·
At the level of programming and learning,
quantitative and qualitative studies based on ROM data contribute lessons
learned and best practices for programming and planning new projects.

ROM performance in 2010

In 2010, the number of Commission ROM
reports exceeded 2 000 for the first time. This follows a steadily rising 10-year
trend – from 50 reports in 2001 to 2 119 in 2010. The upward trend concerns all
types of ROM activities:

–
ROM of regional programmes (+34%);

–
a specific ROM exercise covering the EU Food Facility
which was operating at full capacity in 2010 (135 reports);

–
monitoring of completed projects, i.e. ex-post
ROM (+25%);

–
testing phase of ROM of sector policy support
programmes (29 reports).

Table 37 - ROM outputs 2010

Number of ROM reports || ONGOING || EX-POST || TOTAL

National projects || 1284 || 202 || 1486

Regional programmes:consolidated reports || 213 || 13 || 226

Regional programmes: (national) component reports || 360 || 18 || 378

Sector Policy Support Programme || 29 || N/A || 29

Total in 2010 || 1886 || 233 || 2119

Total in 2009 || 1556 || 174 || 1730

Table 38 - Overview of ROM activities

|| Number of projects & programmes monitored || ENPI East || ENPI South || Africa || Asia || Latin America || CMTP || Caribbean || Pacific || Food Facility || Total 2010 || Total 2009 || Change

Ongoing || National projects || 178 || 130 || 395 || 195 || 152 || 3 || 51 || 41 || 119 || 1264 || ||

Regional programmes (as a whole) || 35 || 58 || 8 || 25 || 17 || 45 || 8 || 12 || 3 || 211 || ||

Regional programme components || 107 || 17 || 32 || 72 || 11 || 86 || 12 || 12 || 11 || 360 || ||

Sector Policy Support Programme || 1 || 7 || 13 || 2 || 1 || - || 3 || 2 || - || 29 || ||

Million € covered for ongoing projects || 495 || 1,185 || 2,753 || 1,195 || 663 || 184 || 436 || 263 || 455 || 7,631 || 8,053 || -5.2%

Ex-Post || Closed projects/programmes || 36 || 12 || 65 || 38 || 44 || 3 || 8 || 9 || 0 || 215 || 174 || 23.6%

Million € covered Ex-Post || 74 || 73 || 542 || 176 || 169 || 4 || 38 || 30 || - || 1,107 || 805 || 37.5%

Table 39 - Overall performance of ongoing
national projects by category

Performance of projects is classed in four
categories as given in the table. The overwhelming majority of projects
performed well or very well (73% for both categories in 2010). This is a recurring
pattern, with a fairly constant score for good performers, while projects
facing major difficulties fluctuate annually between 6% and 8%.

A closer look at category ii ("good
performance"), which contains the large majority of projects/programmes,
provides a useful insight. In this group, nearly half the projects recorded
good scores in all five DAC criteria, which means that they were fully on
track, while retaining some scope for improvement. However, fewer than a
quarter of “good” projects had problems with two DAC evaluation criteria, which
needed to be addressed to ensure full success of the project.

Table 40 - Performance by evaluation
criteria

Projects screened by ROM performed
particularly well in terms of potential impact and relevance. However it should
be noted that the relevance score takes into consideration two specific issues
(the project's actual relevance and its design). In fact the score of 81% for
the whole criterion is an average of two scores: the relevance itself scored
96% (of good and very good) while the design score was lower (67% of combined
good and very good). This underlines the importance of ensuring proper project
design which Commission services address through a ex-ante peer review
system called oQSG (office Quality Support Group).

Table 41 - Project performance by ODA sector

Performance category of ongoing (national) projects by sector || Very good performance || Good performance || Performing with Problems || Not performing, major difficulties || N° reports produced || Million € covered

|| I || II || III || IV || ||

Education || 4.8% || 74.2% || 17.7% || 3.2% || 62 || 362.49

Health and Reproductive Health || 4.4% || 67.6% || 22.1% || 5.9% || 68 || 286.03

Water and Sanitation || 1.3% || 63.8% || 22.5% || 12.5% || 80 || 507.96

Government and Civil Society || 2.7% || 75.4% || 16.5% || 5.4% || 333 || 952.75

Other Social Infrastructure and Services || 3.6% || 78.2% || 12.7% || 5.5% || 55 || 212.60

Economic Infrastructure and Services || 3.5% || 74.5% || 17.0% || 5.0% || 141 || 1,008.03

Production sectors || 4.7% || 64.4% || 21.5% || 9.4% || 191 || 697.64

Multisector - Crosscutting || 1.8% || 78.2% || 13.6% || 6.4% || 110 || 493.12

Commodity Aid + General Programme Assistance || 3.3% || 59.3% || 26.9% || 10.4% || 182 || 592.63

Table 42 - Performance by project budget
size

The above table provides the first
comparison of ROM scores of projects of different size. It shows that bigger
projects tend to get worse scores. However it would be premature to use this
table as definite proof of a link between project size and quality. This would
require a more in-depth analysis, taking account of the specificities of the
ROM methodology.

New developments in 2010

Three main topics were developed in 2010:

·
Cost/benefit analysis of ROM and project
evaluations

During project and programme
implementation, Commission services use two different tools to assess
performance and to identify potential for improvement. These are, firstly, the
ROM system with its brief, highly structured format, managed centrally from
Brussels; and secondly, project/programme evaluations, which are largely
managed by delegations and which are larger and more in-depth. Although both
tools provide benefits on similar levels – project management, accountability
and lessons learned – and use the same criteria to analyse performance, there
has been no systematic coordination or a clear division of labour between the
two tools.

The Commission has embarked on a critical
reflection on the strengths and weaknesses of ROM and project evaluations. A
study based on expert experience and a broad survey of staff members has
identified the need to disentangle the different purposes served by ROM and to
streamline project evaluations managed by delegations. While accountability
calls for an objective and independent assessment, support for project
management is more effective if an evaluation is participatory, makes use of
the experience and expertise of the people involved, and assures that the
results are agreed upon by all stakeholders. In this sense, EuropeAid is
exploring possibilities to develop separate tools, one which will focus on
accountability while another will be designed to increase participation and
ownership at project level.

·
ROM/ project evaluation database

The Commission is developing a new database
for both project/programme evaluations and ROM reports. This database will be
an integrated module of the larger PCM platform which will serve as the central
tool for operational management of Commission-managed actions throughout their
lifecycle. The evaluation and ROM database will facilitate planning and
coordination, support the management of evaluations, serve as central storage
point for all reports and enable advanced search and analysis functionalities
in terms of aggregation and lessons learned. The concept for this database was
drafted in 2009 and drawn up in detail in 2010. The IT development is ongoing
with pilot testing expected in the second half of 2011.

·
Multi-donor monitoring

In April, the Commission organised a seminar
on how to monitor multi-donor programmes. Several European aid agencies plus
four UN agencies and the World Bank attended. The purpose was to propose
concrete steps for better harmonisation between donors when monitoring common
projects. The participants agreed to:

a) increase the inter-agency dialogue by
nominating a focal point in each agency for monitoring and evaluation and to
exchange planning information;

b) provide greater transparency – the
Commission agreed to make multi-donor monitoring
reports accessible online. (The other agencies are invited to upload their own
reports);

c) analyse the results of monitoring
reports and decide on follow-up action. The long-term aim here is to organise
joint missions.

These three first steps will serve as a
transitory stage where each agency will have the opportunity to understand
better the way the others work.

4.1.2.
Evaluations

In 2010, the Evaluation Unit carried out
joint evaluation functions for three Commission DGs: (Development, External
Relations and EuropeAid)[93].
This was based on the multi-annual programme for 2007-2013, approved in 2007 by
the Commissioners concerned. The programme established three main activities:
geographic evaluations (partner countries and regions); thematic and sectoral
evaluations; and evaluations covering aid delivery mechanisms.

The 2010 work programme

Nine country-level evaluation reports were
completed in 2010: El Salvador, Egypt, Ukraine, Maldives, Burkina Faso,
Nigeria, Liberia, Senegal (jointly with Spain) and Niger (jointly with four Member
States). One sector evaluation report was completed in education. The second
part (concept study) of the conflict-prevention and peace building evaluation
and the feasibility study for evaluating the European Consensus were also
completed. Full texts of these reports are available on the evaluation website[94].

Ten geographic evaluations were initiated
in 2010: Ecuador, Colombia, Nepal, the north and south regions of European
Neighbourhood Policy, Malawi, Jamaica, Congo (Brazzaville), Caribbean region
and Burundi (jointly with Belgium and France). At the end of 2010, seven
geographic evaluations were still ongoing: Tunisia, Philippines, Honduras,
Dominican Republic, Ethiopia, Djibouti and OCTs.

In view of preparations for setting EU
financial perspectives post-2013, six thematic and sectoral evaluations are due
to be finalised in the first half of 2011: conflict prevention and peace
building, employment and social inclusion, human rights and fundamental
freedoms, judicial and security sector reform, support for decentralisation,
and visibility of EU external action. Four sectoral and thematic evaluations
were launched in 2010 with results available in 2013: health (relaunched), the
private sector, trade-related assistance and integrated border management.

On aid modalities, an evaluation of
activities financed through the Council of Europe was launched in 2010. The
evaluation on technical cooperation was still under way at the end of 2010 and
due for completion at the end of 2011. For budget support, the two pilot
studies conducted in Tunisia and Mali should be finalised by March 2011. It is
planned to refine budget support methodology to take account of lessons learned
from these pilots. The new methodology could be applied from autumn 2011.

With regard to dissemination and feedback
mechanisms, nine seminars were organised in-country to discuss evaluation
report findings for Niger, Burkina Faso, Nigeria, Senegal, Liberia, El
Salvador, Egypt, Maldives and Ukraine. Nine "fiches
contradictoires" (which follow up on earlier evaluation
recommendations) were published for the evaluation reports on: Chad, Guyana,
west Africa, SADC, United Nations, Development Banks, energy, water and
sanitation, and Jordan.

Results from evaluations finalised in
2010

·
Geographical evaluations

El Salvador: The evaluation report covered the period 1998-2008. It found that EU
aid strategy was in line with the main needs of the population and demonstrated
flexibility over time. Positive results were achieved in the field of social
violence, secondary technical education and access to drinking water and
sanitation. But results for support to small enterprises and for the
development of a legal framework in the water sector were more limited. The
report highlighted the flexible use of budget support, demonstrating the
leading role of the Commission and allowing EU involvement in the new national
poverty reduction programme. It was noted that demand-driven pilot projects
with significant financial support had shown positive results, encouraging
changes in national policy.

Egypt: Covering
the 1998-2008 period, the evaluation report showed that EU cooperation strategy
has increasingly benefited from a consultation with the government and various
stakeholders, which improved its relevance. But areas of support are still
insufficiently prioritised. The greater use of budget support and the mix of
implementation tools helped to improve efficiency. However, this was sometimes
undermined by not taking account of the institutional constraints of
implementing agencies or the complexity of EU and partner procedures. In the
three main areas of support, the evaluation report indicates important recent
progress in the implementation of reform measures in social sectors, positive
specific contributions to economic change, but few tangible results in the area
of governance. The use of budget support has facilitated reforms affecting the
institutional, regulatory and managerial framework of key sectors but it did
not influence the policy and budgeting framework of the sectors concerned, as
it was often used by the government of Egypt as a project fund.

Ukraine: The
evaluation report for 2002-2009 followed on from the previous country-level
evaluation. It says EU assistance to Ukraine underpins institutional, legal and
economic reforms which facilitate Ukraine’s rapprochement with the EU for the
benefit of both parties. Significant results have been achieved in assistance for
legal reform, economic activity and trade, development and modernisation of the
energy sector, improving nuclear safety and fighting illicit cross-border
activities. In the absence of structural reforms, the expected impact in the
areas of justice, health and local development did not fully materialise. Civil
society organisations have been supported but sustainability is at risk. It is
only recently that policy dialogue on environmental governance has been set up.
Budget support, which was launched in 2007, has not yet delivered on its
potential impact. Most of the projects delivered their expected outputs, but no
attempt was made to assess their outcomes and impacts. Negotiations on the
association agreement and on the deep and comprehensive free trade area have
given a new impetus to policy dialogue.

Maldives:
The evaluation report covered the period 1999-2009. While the strategy has been
relevant and in line with the national requests and needs, EU support was
dispersed over too many sectors and islands which diluted impact and
visibility. Projects managed at national level tended to perform better than
those managed from outside. The EU was very successful with support for the
preparation of presidential and parliamentary elections. Some programmes had
efficiency problems, with inconsistencies between programming and
implementation and a lack of internal monitoring.

Burkina Faso: The evaluation report for 1999-2008 said EU assistance had
substantial impact in some sectors (roads, water and sanitation). In others,
the low efficiency of project management (culture), or the lack of a clear
national strategy (rural development) kept results below expectation. General
budget support has enabled the EU to adopt a leading role, with a positive
knock-on effect on other technical and financial partners. It has encouraged
the government to improve public finance management and to increase its
performance in the social sectors. Monitoring and measurement of results
remained insufficient and do not provide a clear understanding of the main
drivers of change and the extent to which the donor community has contributed
to it.

Nigeria: The
evaluation covered the 7th and 9th EDF. The 8th
EDF did not apply to Nigeria because EU assistance was suspended while Nigeria
was under military rule. The EU interventions were relevant and the Nigerian
partners appreciated the responsiveness of the EU co-operation. The most
successful areas for EU assistance have been vaccination, micro-projects and
support for the anti-corruption unit. The effectiveness and impact of EU
interventions in two key sectors (institutional and economic reform, water
supply and sanitation) have been limited. Support for democracy and human
rights through various instruments was not coordinated with EDF-funded support
and potential synergies were not created. Time-efficiency was poor because of a
complicated and over-ambitious EU strategy design and a lack of ownership on
the Nigerian side.

Liberia: The
evaluation report covered the period 1999-2008, including the period of civil
war which lasted until 2003. The EU was an active participant in key events
that helped to bring Liberia out of decades of conflict and violence. However,
EU programming was too ambitious and the EU's financial and political commitment
was not backed up by sufficient managerial resources. In consequence, the EU's
contribution lagged significantly behind its potential value-added for
assisting post-conflict societies and its commitment to focus support on the
most vulnerable marginalised people. The Commission's procedures and mechanisms
for design, planning and implementation did not adequately take into account
the difficult conditions, risks and operational constraints of Liberia's
post-conflict environment.

Senegal:
This evaluation was carried out jointly with Spain and covered the period
1996-2008. Fragmented at the outset, EU aid strategy gradually became more
focused. But complementarity and synergies between the various instruments and
aid delivery mechanisms remained weak. Some positive impacts have been noted on
road building and on urban drinking water, but with fragile sustainability.
Sanitation lacks a strong sector strategy. The Commission and Spain have
invested in employment with positive results at institutional level but with
uneven results for job creation in a country with fast population growth. In
Casamance, the two aid programemes have been complementary and synergies exist
which assure better access to social services and to the economic support.
Support for civil society has been effective and the leading role of the EU
delegation for implementing the division of labour between the Member States is
recognised. The rapid introduction of budget support has led to an increase in
the absorption of funds but the impact on the budget and the social sectors,
especially on the poorest, still need to be demonstrated.

Niger: This
joint evaluation between the Commission, Belgium, Denmark, France and
Luxembourg covers the period 2000 to 2008. Due mainly to Niger’s limited
agricultural potential and the high population growth, its people remain very
poor. In the period covered, the five donors provided more than 50% of Niger’s
total ODA. Projects and budget support had positive results in institutional
reform, technologies, health, education and water supply. However, this level
of aid and the individual donor strategies have not helped reverse the poverty
dynamic. In 2007, the government proposed an ambitious strategy aiming at an
annual growth per capita of more than 3%. The five donors do not appear
to have set up a common framework to use their aid to underpin this growth. The
report questions the fragmentation of aid from EU member states and the
Commission and recommends a common long-term strategy both for supporting the
government’s growth targets and providing help on social issues for the poorest
part of the population.

·
Thematic and sectoral evaluations and analysis

The evaluation of support to the education
sector covered the period between 2000 and 2007. The European Commission
contracted €1.9 billion for direct support to primary and secondary education
and an additional €3.2 billion in general budget support with education as a
conditionality. EU support focused mainly on primary and basic education,
supporting secondary levels in countries with a medium Human Development Index.
EU investments were successful in increasing school enrolment but the quality
of schooling was often poor and learning achievements remain limited. The fast
track initiative has not consistently delivered results. It also faces the
problem of a lack of mutual accountability and aid fragmentation. Capacity
development support to improve the delivery of educational services is often
impeded by the lack of adequate resources and realistic timetables to allow
real ownership by partner governments. The Commission's shift to sectoral and
general budget support has helped partner countries to start education reforms
but these depend on being integrated into wider public reform including
decentralisation and public finance management. EU Delegations need to improve
their capacity to deal with this new cross-sectoral approach.

Road transport sector analysis: 21 country-level evaluation reports in Sub-Saharan Africa published
between 2003 and 2010 addressed road transport as a focal sector. An analysis
of these reports, based on projects funded by the 7th and 8th
EDF, has shown that EU assistance went mainly to the construction or
maintenance of trunk roads, and to institutional reform in the road transport
sector. Impacts on employment (direct or indirect), on the environment or on
health were not monitored. In most cases, transport time and cost were reduced
but the gains were often diverted by special interests. Therefore, in numerous
cases the potential for increased competitiveness has not been realised. When a
network of trunk roads associated with feeder or rural roads exists,
accessibility to rural markets or social facilities is improved, thus
contributing to poverty reduction. The sustainability of infrastructure remains
a major challenge. The trade-off between the costs of quality road building,
the use of overloaded (and overweight) trucks and a road's life expectancy
merits an in-depth analysis. At the regional level, the EU contributed to a
better road network and to a greater effort to harmonise national road sector
policies. These efforts encountered several drawbacks: lack of road
maintenance, weak implementation of road regulation, reluctance at state level
to eliminate some traffic barriers and to put an end to illegal taxes or their
equivalents. To correct the situation, the Commission has changed substantially
its approach by switching to sector support from project support and by making
use, whenever possible, of sector budget support as a financing mechanism.
However, further work is needed to shift the focus from road to transport
logistics and to address inter-modality, trade facilitation and governance.

Evaluating budget support: The decision to test the methodological approach for evaluating
budget support was taken by the OECD/DAC evaluation network. In 2010, three
pilots were under way: Tunisia and Mali under the leadership of the European
Commission, and Zambia under the leadership of the Netherlands, Germany and
Sweden. Final test results are expected by March 2011. The first indications
from the Tunisian case seem to demonstrate that general budget support has had
a significant impact, while there has been less impact for SBS in the education
sector, and that the evaluation methodology has worked.

Based on the Commission's geographic
evaluations finalised in 2010 (Burkina Faso, Egypt, El Salvador, Niger), the
preliminary findings announced in last year's annual report have been
confirmed. These four reports highlighted the leading role of the Commission
with positive knock-on effects on other donors in encouraging partner
governments to improve public finance management and in facilitating reform
measures to increase the performance of key areas, in particular the social
sectors.

Synthesis of main lessons learned

–
Commission programming and implementation
addressed the needs of partner countries and remains consistent with EU goals,
but priorities need to be ranked in order of importance.

–
Country strategy papers are sometimes too
ambitious for EU Delegations' capacities to handle. The choice of sector does
not always reflect the priorities of the partner country.

–
Effectiveness is positive for most activities.
However, improved coordination and synergy between activities, as well as
clearer strategy in the choice of aid mechanisms, is still needed.

–
Efficiency appears as the weakest element of EU interventions.
Delays and cumbersome procedures have been noted. The lack of internal
monitoring and historical memory are also frequently cited in the evaluation
reports.

–
Commission activities do generate positive
impacts, as described in the various evaluation reports. To make them more
visible, the Commission should develop a comprehensive system for measuring
results.

–
Sustainability of EU interventions, especially
at project level, is at risk because of lack of ownership by partners and the
absence of an exit strategy.

–
An emerging challenge for the Commission is to
look for synergies between sectors and to develop a multi-sector approach.

Outlook for 2011

The evaluation programme for 2011 will
follow the structure laid out in the multi-annual evaluation programme for
2007-2013. The following evaluations are planned for 2011: ten geographic
evaluations (Cameroon, China, India, Kenya, Madagascar, Mexico, Morocco, Sudan,
Yemen and budget support in Tanzania), and four thematic evaluations (food
security, environment mainstreaming, research and development, governance). The
synthesis of results from the pilots evaluating budget support will produce
guidelines for other budget support evaluations.

4.1.3.
Integrating lessons from monitoring and
evaluation

A number of changes to ROM methodology were
agreed during 2009. A specific methodology for regional programmes was
introduced; the ex-post methodology was fine-tuned; the feedback on the
reports was strengthened, while additional information on horizontal and
cross-cutting issues (environmental aspects, gender issues, and technical
cooperation) were added to the list of questions to be checked.

These new features were implemented in
2010. The data collected will allow for additional analysis in 2011. Over 1 200
online response sheets were completed by task managers in delegations,
providing an important follow-up to the ROM reports themselves. The responses
help validate the quality of the reports and ensure the subsequent application
of their recommendations. The regional ROM methodology was successfully applied
to monitor 213 programmes based on field visits to 360 national entities. This
specific methodology will allow a better assessment of the regional dimension
of programmes and of the challenges of regional cooperation. Finally the
information on horizontal and cross-cutting issues collected with the
re-designed ROM templates constitutes a wealth of data for analysis in 2011.

In 2011, two specific developments will be
followed up:

·
The findings and conclusions of the cost/benefit
analysis of ROM and project evaluations will be translated into action. The
action plan will take into account the recommendations of the special report of
the Court of Auditors on the results of the devolution process.

·
Day-to-day monitoring by delegation staff in the
country of implementation is crucial for the success of a project. The
Commission will therefore, in 2011, review and strengthen different tools used
by EU Delegations for internal monitoring. Standardised templates will be
introduced (e.g. for field visits) while a specific monitoring process for the
inception phase will be proposed for new projects and programmes. During this
process, the conclusions of the oQSG peer review will be used to fine-tune and
quantify the indicators.

In addition, the Commission will strengthen
its internal control system, making sure that a proper quality reporting system
is put in place. Task managers in delegation will assess the performance of
projects and programmes through a new, IT-based "traffic light"
system. This will serve as an early warning to identify projects with
performance issues that need to be addressed. Finally, EU Delegations will be
required to produce and regularly update a monitoring workplan, covering
internal monitoring actions, upcoming ROM missions and the pipeline of project
evaluations. The monitoring/evaluation workplan will be part of the ROM/project
evaluation database.

4.2.
Toward better aid delivery
4.2.1.
Developments in aid delivery modalities and
channels

The Commission sought to raise its
standards in recent years for aid implementation, quality control,
accountability and results monitoring. It is reforming its processes to make
them simpler and more focused on quality and results, and to bring them in line
with internationally agreed objectives on aid effectiveness. The Commission has
also developed more dynamic forms of partnership with beneficiaries and with
other donors.

In 2010, efforts concentrated on:

·
A reform of the main quality tool during the
design phase of the project's lifecycle (a peer review by quality support
groups), was to include an enhanced focus on the quality of technical
cooperation in project design from January 2010.

·
The implementation of technical cooperation (TC)
reform to improve aid effectiveness at operational level. Key steps so far have
been: the mainstreaming TC principles into the project cycle; the use of a
quality-control approach through a TC quality grid during project design phase;
and the inclusion of TC reform among the issues monitored in ROM (see further
information below).

·
A revamped, more user-friendly and extended
version of the thematic knowledge-sharing platform www.capacity4dev.eu was launched in
October 2010. The goal of the new version is to cover progressively all
development cooperation topics.

·
Cooperation and partnership with other donors
and especially with Member States to enhance effectiveness and efficiency of
aid delivery and to impact positively on beneficiaries.

The ‘Backbone Strategy’ for reforming technical
cooperation and capacity4dev.eu

In July 2008, the
Commission launched the so-called backbone strategy for reforming technical
cooperation. The strategy provides a set of principles including the
development of local capacity, demand-led approach, part­ner country ownership,
and strong result orientation. Special attention is paid to innovative options
for the provision of technical cooperation including the use of national and
regional resources and of public sector expertise, as well as various forms of
twinning. In 2010, the Commission continued to work intensively to implement
the reform at operational level:

·
Delegations regularly use the guidelines on
making TC more effective as a reference tool and the TC quality criteria are
mainstreamed in the project cycle;

·
The tools put in place for TC quality checks (TC
quality grid, quality support groups, ROM) are used during identification,
formulation, monitoring and evaluation of TC programmes;

·
The mapping of ongoing and pipeline programmes
showed that the backbone strategy implementation was used to ensure the quality
of these programmes. The mapping also confirmed that in most cases the purpose
of TC is capacity development;

·
The toolkit for capacity development has
been distributed at headquarters level and through a seminar and the capacity
development approach is progressively becoming a core tool;

·
Training on TC at headquarters and delegation
levels remains intensive. In 2010, nine in-country learning events focusing on
local case studies took place in Afghanistan, Ghana, Papua New Guinea,
Suriname, Sierra Leone, Tanzania, Ukraine, Vietnam and Zambia plus five headquarters
training sessions and one workshop on the comprehensive institutional building
programme for the ENP east region.

·
Information activities for other donors (UN
& World Bank) and EU Member States have been pursued to make them aware of
the Commission TC quality approach for example in view of jointly managed or
delegated operations.

Capacity4dev.eu[95], the website initially focused
on technical cooperation reform at its launch in October 2009, underwent a
major overhaul in 2010 in terms of look, structure and improved navigability.
Capacity4dev.eu has expanded to incorporate a host of topic areas relevant to
the development community. The new look has been designed with the user in
mind. The site offers a regularly updated magazine, with news and views on the
latest thinking in a given field. It offers development practitioners the
option to participate in or set up their own collaborative working groups. At
the end of 2010, capacity4dev.eu had more than 2 500 registered users,
55 000 unique visitors from over 6 500 cities in 212 countries, more
than 20 topics areas and more than 50 working groups with wide-ranging
interests.

4.2.2.
Budget support

Budget support is the mechanism used to
transfer aid funds to the national treasury of the beneficiary country if it meets
agreed conditions for payment. During 2010, the Commission continued to use budget
support, which represented 26% (€1.8 billion) of all commitments from the EU
budget and the EDF.

The funds are provided either as general
budget support, where the EU supports the implementation of a national
development strategy, or as sector budget support, where EU funds help the partner
country in a given sector.

In 2010 GBS commitments made up 28% of all
new budget support operations, amounting to €494 million. This was
significantly down on the figure of 35% in 2009. The beneficiaries were 34 ACP
countries and two ENPI countries.

Sector budget support also fell in 2010.
Total SBS commitments amounted to €1.3 billion, about 73% of new budget support
operations committed in 2010, compared to €1.5 billion in 2009.

For more information on evaluation of budget
support, see 4.1.2.

Green
paper on the future of EU budget support to third countries

In October
2010, the European Commission adopted a Green Paper on the future of EU budget
support to third countries[96].
It identified issues and questions around a series of themes: political governance
and the role of political dialogue, policy dialogue, the role of
conditionality, links to performance and results, domestic and mutual
accountability, programming of budget support and its coherence with other
instruments, strengthening risk assessment and dealing with fraud and
corruption, budget support in situations of fragility, growth, fiscal policy
and mobilisation of domestic revenues.

The
Commission also organised several consultation events to collect contributions
from stakeholders. At the same time, it worked with budget support experts from
Member States to develop proposals on a more coordinated EU approach as
requested by development ministers in November 2009[97].

The results
of the consultation, together with results from external evaluations,
analytical studies and the recommendations on a more coordinated EU approach,
will provide input for a new communication on how budget support can contribute
more effectively to the development objectives of partner countries.

Public finance management

Having a credible and relevant public
finance management reform programme in place or under implementation is an
eligibility condition for budget support. This condition must then remain in
place during the life cycle of the budget support programme.

The key diagnostic tool used by the
Commission to assess PFM eligibility for budget support is the public
expenditure and financial accountability (PEFA) methodology. PEFA is a
multi-donor partnership programme established, sponsored and supervised by the
World Bank, the IMF, the European Commission, and four bilateral donors. The
PEFA methodology identifies the critical dimensions of performance of an open
and orderly PFM system as follows: (i) credibility of the budget, (ii)
comprehensiveness and transparency, (iii) policy-based budgeting, (iv)
predictability and control in budget execution, (v) accounting, recording and
reporting, (vi) external scrutiny and audit.

From June 2005 to the end of 2010, PEFA
assessments were undertaken in 122 countries, 63 of them from the ACP region.
Almost all countries benefiting from EU budget support had completed a PEFA
assessment by 2010. In some countries, repeated PEFA assessments have been
carried out.

In 2010, the Commission strengthened its
monitoring system to follow up PFM developments achieved by partner
governments. New updated guidance for EU Delegations creates a more structured
monitoring framework for assessing PFM improvements.

Strengthening human resources quality

To enhance the capacities of European
Commission staff to design, implement and monitor budget support programmes,
and their ability to take part in related discussions on public finance or
macro-economic policies, training courses take place in Brussels and at country
level. Courses are open to officials from partner governments and staff from
other donor agencies, as well as the EEAS. In 2010, 46 training events were
organised for 2 600 participants in areas such as: (i) dialogue on national and
sector development policies, (ii) performance measurement, (iii) budget support
methodology, (iv) macroeconomic programming, (v) public finance management,
(vi) fiscal management, and (vii) debt management.

The
Commission response to the financial crisis: Vulnerability FLEX

The
Communication of 8 April 2009[98]
sets out the overall strategy to support low-income countries (LICs) affected
by the crisis. As part of that strategy, the Commission established the
Vulnerability Flex (V-FLEX) mechanism in August 2009. Its main objective is to
help ACP countries faced with a fall in revenue to maintain the level of
priority public expenditure (health, education, key infrastructure). V-FLEX
resources go to countries that have the right policies in place, but face a
fiscal shortfall as a result of the crisis and where EU support can make a
difference.

As a result
of the crisis, LICs saw the sharpest decline in their economic growth rate for
the last four decades. Along with the drop in growth, fiscal and current
account deficits widened and public debt ratios increased. As a consequence of
the major economic slowdown, the World Bank has estimated that an additional 64
million people will have been pushed into extreme poverty by the end of 2010.

From the
€500 million V-FLEX budget, €236 million were disbursed in 2009 and a further
€173 million in 2010. The remaining amount will be disbursed in 2011.

V-FLEX
supports a counter-cyclical approach (in contrast to past crises when fiscal
discipline was tightened) as part of an IMF-led coordinated international
response to the crisis. The counter-cyclical approach has been an important
factor in limiting the impact of the crisis in LICs.

Moreover,
the composition of spending improved in favour of the social sectors and public
investment. According to budget outturn numbers, health and education spending
increased in real terms in 20 of the 29 low-income countries in Sub-Saharan
Africa in 2009. Government capital spending also seems to have held up and even
increased in real terms in more than half the countries in the region.

4.2.3.
Blending of grants and loans

The EU is the
leading donor worldwide and is committed to increase its external aid
effectiveness and donor coordination amid growing global needs and challenges.
The European Consensus on Development, the European code of conduct and the
division of labour between the Commission and EU national aid agencies have
paved the way for new partnerships and operating methods amongst EU
institutions and Member States.

In this
context, loan and grant blending mechanisms have proved to be an effective and
efficient way to combine forces and to leverage grant resources so as to
enhance support for EU external policies and promote regional initiatives and
partnerships. Given today’s scarcity of grant resources (made worse by the
financial crisis), blending mechanisms can benefit both beneficiaries and
donors in helping achieve easier and faster access to financing with high
leverage effect and more flexibility to adapt to changing conditions. While
optimising financing packages for beneficiaries, blending mechanisms can also
be a tool to increase donor cooperation and raise the visibility of European
external assistance. This also reinforces the overarching objective of increasing
aid effectiveness in line with the Paris Declaration and the Accra Agenda for
Action.

Blending mechanisms associate grants from
the EU budget, the EDF or voluntary additional contributions from Member States
with loans from multilateral European development banks like EIB, EBRD, NIB and
CEB, and national development banks or agencies of the Member States. Depending
on the regions, they provide a range of products to foster infrastructure
investments and to support the private sector, including:

–
direct investment grants

–
loan-guarantee mechanisms

–
risk-capital and structured finance

–
technical assistance and preparatory studies

–
interest-rate subsidies.

Their governance structures are based on a three-tier
architecture agreed between the Commission and the Member States comprising:

–
An informal technical advisory body composed of
the Commission (which generally chairs it), eligible European finance
institutions and, in some cases, regional development banks. The advisory body
assesses the eligibility and justification of the grant request.

–
A decision-making body (operational board,
executive committee), composed of the Commission (chair) and Member States with
the participation, as observers, of eligible European finance institutions and,
in some cases, regional development banks. The decision-making body decides on
grant allocations on the basis of the assessment made by the advisory body.

–
A policy body (strategic board, steering
committee) composed of the Commission and the Member States with the participation,
as observers, of beneficiary partner countries, eligible European finance
institutions and, in some cases, regional development banks. The policy body
decides on the strategic orientations and priorities of the blending facility
concerned.

Since 2007, four loan-grant blending
instruments have been set up by the EU:

–
The oldest is the EU-Africa Infrastructure Trust
Fund (ITF). Created in 2007, the ITF seeks to promote regional integration as
part of the EU-Africa partnership on infrastructure by supporting regional or
national infrastructure contributing to regional integration in transport,
energy, water and information technology. Since its launch, the ITF has been
endowed with grants resources worth nearly €393 million (€308.7 million
from the EDF and €84 million from the Member States). It has approved grant
contributions to 32 projects for a total value of nearly €210 million,
leveraging €940 million of loans from European finance institutions to reach a
total investment volume of over €2.4 billion.

–
The Neighbourhood Investment Facility (NIF) is
the biggest. The NIF provides funding to infrastructure investment in
transport, energy (with a focus on renewable energy and energy efficiency),
water and sanitation, environment and social sectors, as well as to the
financial and private sectors, with a focus on SMEs. Since its creation in May
2008, the NIF has been endowed with nearly €308 million in grant resources
(€245 million from the EU budget, €62.5 million from the Member States)
and has approved grant contributions to 39 projects worth about €277 million,
leveraging over €5 billion in loans from European finance institutions for
a total investment effort of more than €10 billion. An additional €450
million in grant funding from the EU budget is programmed for 2011-2013.

–
The Latin America Investment Facility (LAIF) and
the Investment Facility for central Asia (IFCA) are the most recent. These
facilities created in 2010 support the regional strategies of the EU in the two
regions, with a focus on sustainable energy and the fight against climate
change. The LAIF has received nearly €35 million from the EU budget and
additional funding of €100 million is programmed for 2011-2013. The IFCA has
received €20 million funds from the EU budget and additional funding is
foreseen during 2011-2013. In 2010, the LAIF approved five projects for a total
grant amount of €21 million and a total investment amount of about €1.1
billion. The IFCA approved a first operational grant of €5 million and a total
investment amount of €30 million.

In addition to these facilities, two
blending tools, the "pooling mechanisms", have been set up under the
ACP-EU energy and water facilities, with a grant contribution from the EDF of
€40 million each.

4.3.
Progress in aid management
4.3.1.
Progress on qualitative issues in aid management

Methodological work and training

Developing skills and capacities of key actors involved in
the design and implementation of EU-funded programmes is essential for
improving quality, impact and sustainability. The Commission is investing in
capacity-building for its staff and other stakeholders through methodological
work and training. In 2010, particular attention was paid to the revision of
both project and programme cycle management (PPCM) and budget support guidance.
Substantial work was carried out, respectively, in the fields of political
dialogue and political economy for the PPCM guidelines and on the annexes on
public financial management and macro-economics for the budget support
guidance.

Three new documents have been issued in the Tools and
Methods series:

·
Engaging and supporting parliaments worldwide –
Strategies and methodologies for EC action in support to parliaments[99]: This
document responds to the EU’s development policy framework, which requires the
Commission to engage with parliaments in partner countries on development
policy and support dialogue, and which recommends support for parliaments as
part of a larger democratic governance agenda. It should be seen as a practical
contribution to increase efforts to work with parliaments and to strengthen the
quality of the Commission's work in this area.

·
Water sector development and governance:
Complementarities and synergies between sector-wide approach and integrated
water resource management[100]: The purpose of this document is to highlight
common principles and synergies between sector-wide approach and integrated
water resource management in order to show how these two processes can make a
joint contribution to the development of the sector.

·
Sector approaches in agriculture and rural
development – short version[101]: As awareness of its contribution to poverty
reduction increases, agriculture and rural development is again becoming
central to national and international development agendas. Commission support
for these sectors has increased substantially. This reference document offers
guidance on how to introduce the necessary flexibility in the use of sector
approaches in agriculture and rural development and on how this may benefit
sector development and outcomes.

EuropeAid provides training and learning events in various
areas related to the design and implementation of EU assistance. On aim is to progressively improve the dialogue
with partners, the context analysis and the choice of the aid modalities.

In 2010, over 2 300 participants attended more than 115
sessions of methodological courses held in Brussels and in various partner
countries. Seminars on anti-corruption, hot topics in agriculture, value chain
and transport were also organised as well as workshops on sector approaches on
energy.

In 2010, the Commission continued its active involvement in
the joint donor’s competence development network, known as Train4Dev, which it chaired
in 2008-2010. Train4Dev sets out to promote the goals of the Paris Declaration
through joint learning events addressed mainly to donors’ staff.

Quality of design

The Commission developed and is constantly improving a
structured system to screen and support the quality of operations at design
stages – dentification and formulation – based on a peer review by the office
Quality Support Groups. The aim is to ensure that
effective and efficient support is provided to EU Delegations and headquarter units
which manage operations. In 2010, 168 meetings took
place which conducted 834 quality reviews at either the identification stage or
the formulation stage of project design.

At the start of the year, a new set of rules for these
reviews was introduced which simplified templates and focused on the essential
elements for well-designed operations based on the experience of practitioners
and stakeholders. The transition to the improved system was managed smoothly
and has been welcomed by users.

In parallel, the
Commission is working on new IT architecture called the Project Cycle
Management Platform to facilitate access to project data and lessons learnt, as
well as allow interaction between staff in charge of project/programme design,
implementation and evaluation. Better on-line tools should lead to better use
of human resources.

4.3.2.
Simplification of procedures

In May 2010, the Commission adopted a
proposal for revising the EU Financial Regulation. The intention is to simplify
procurement and grants procedures for implementing assistance programmes and
projects. The proposal also reviews the so-called management modes by which the
Commission delegates the execution of the implementation of EU funds to
beneficiary countries, international organisations, national agencies, etc. A
new regulation is expected to be adopted by mid-2012.

The proposal reduces the existing five
management modes to just two: direct management when funds are managed
by the Commission and indirect management when EU funds are managed by,
and therefore delegated to, a partner (e.g. a Member State, beneficiary
country, international organisation). The conditions for indirect management
will be roughly the same, regardless of the type of entity managing the EU
funds.

The proposal also creates new tools for
more efficient and effective delivery of EU aid, such as the possibility for
the Commission to establish EU trust funds, like those already used by other
organisations including the World Bank and the UN. EU trust funds would only be
for emergency aid and thematic actions.

For its part, the Commission radically
simplified its operational procedures in 2010. More flexibility was introduced
into the “PRAG”, the Commission’s practical guide to contracts procedures for
EU external actions. Most importantly, the financial guide of the EU budget and
about 20 instruction notes on procedural and financial issues were merged into
a new single manual called the "DEVCO Companion". The Companion
explains from A to Z the internal financial and contractual procedures to be
applied by the Directorate-General for Development and
Cooperation - EuropeAid and EU Delegations.

4.3.3.
Cooperation with international organisations and
other donors

Cooperation and partnership with the UN and
the World Bank Group remained significant in 2010, with contributions amounting
to €597 million to the UN and €192 million to the World Bank. The UN and the
World Bank work with the Commission to support programmes in areas such as
election monitoring and assistance, institution building, rehabilita­tion,
rural development, education and health. Cooperation with the UN and the World
Bank Group makes more and bigger projects possible, with positive impact on
beneficiaries and on effective and efficient aid delivery. By working with
these partners, the Commission has benefited from their expertise and
experience and from synergies created.

EU financial regulations allow EU funds to
be managed by international organisations in accord­ance with their own
procedures. The Commission checks that these procedures meet inter­national
standards, and has the right to verify (by on-the-spot checks if necessary),
that the funds have been correctly managed. This robust framework is complemented by monitoring individual
projects and results-oriented reporting.

The Commission also works closely with the
EIB and regional development banks such as the European, African, Asian and
Inter-American development banks. This covers different aspects from policy
dialogue to joint programmes, and involves areas like the financial sector,
infra­structure, rural development, education, debt relief and results
measurement.

More information on the political aspects
of the Commission’s cooperation with international organisations is provided in
section 1.3.2.

The United Nations

The European Commission and the UN work
together in over 100 countries. In 2010, they continued
to streamline the way they work under their 2003 financial and administrative
framework agreement. The annual meeting resulted in improvements to the planning
and conduct of EU verification missions to UN-implemented projects. Revised
guidelines for reporting were agreed in December for implementation on a trial
basis.

In 2010, the UN-European Commission
Partnership Report[102],
produced by the UN with Commission support, showcased the results of the
partnership between the UN and the European Union. This fifth report gives
details of joint actions with a wide array of examples spanning the globe: from
mine clearance in Albania to hygiene improvements in Uganda.

During the year, the European Court of
Auditors carried out the second part of its performance audit on EU assistance
implemented through UN bodies. This phase examined the effectiveness of the aid
and whether objectives were achieved in an efficient and sustainable way. The
report was due to be adopted at the beginning of 2011.

The UNDP remains the Commission’s main
partner on major rehabilitation and reconstruction programmes. Election support
is another area where the Commission and UNDP continue to
cooperate. The Commission has also worked with the UN on improving standards in
the fishery and textile sectors in Asia, through partnership with UNIDO (UN
Industrial Development Organisation), strengthening the education sectors in
Somalia and Zimbabwe with UNICEF, and election monitoring in Guinea with UNOPS
(UN Office for Project Services).

The World Bank Group

The European Union remains a major donor to
trust funds managed by the World Bank Group, with an average contribution of €410 million per year
since 2001. Cooperation
between the Commission and the World Bank Group has proved particularly
important when dealing with a number of natural or man-made disasters and in
post-crisis situations. This is where the World Bank’s ability to manage large
multi-donor trust funds allows it act fast to mobilise a critical mass of
resources. In 2010, the Commission and the WBG continued to work together to
assist in the economic and social recovery of conflict-affected regions in
Pakistan, the Philippines, Georgia, Afghanistan and Iraq and to support
post-disaster recovery operations in Indonesia, Pakistan and Jamaica.
Cooperation with the WBG has also continued to support global initiatives like
the response to major pandemics (as with the Avian and Human Influenza Facility
and the Global Fund to fight aids, tuberculosis and malaria) or to mitigate the
effects of the financial and food crises. World Bank Group expertise has been
particularly valuable for budget support, public finance management, debt
reduction and private sector development.

The trust fund and co-financing framework
agreement signed in 2009 has helped simplify negotiations for Commission
contributions to WBG-administered trust funds. It ensures consistency, more
transpar­ency and sound management of EU money while raising EU visibility. The
framework agreement was reviewed by both sides, one year after signature. These
annual meetings provide a useful forum to address administrative and operational
issues and explore new opportunities for cooperation. Coordination also takes
place at the regional and in-country level. Operational relations between EU delegations
and WBG country offices reinforce the frequent contacts at headquarter level.

OECD

The satisfactory cooperation between the
Commission and the OECD continued on the basis of a 2006 framework agreement,
which is currently under review.

In 2010, the Commission was active in the
preparations for the fourth high-level forum (HLF IV) on aid effectiveness in
Busan in 2011.

Council of Europe

The total value of EU joint projects with
the Council of Europe is about €64 million. The Commission and the Council of
Europe work together in areas like human
rights and fundamental freedoms, rule of law, legal cooperation, democracy and
good governance, intercultural dialogue and cultural diversity, education and
social cohesion. A framework agreement, in place since 2004, covers financial
cooperation. It was reviewed in 2010 and found to be operating satisfactorily.
An important example of cooperation with the Council of Europe is the €4
million eastern partnership facility, which supports Council of Europe
involvement in operations related to platforms one (democracy, good governance
and stability) and four (contacts between people) of the eastern partnership.
It was signed in December 2010.

The Commission has also launched an
evaluation of its external cooperation with partner countries through the
Council of Europe. The main objectives are to provide the Commission and the
wider public with an overall independent and accountable assessment of its past
and current cooperation. The evaluation will identify key lessons and thus
provide policy-makers and managers with a valuable aid for evidence-based
decision-making, and for planning, designing and implementing EU policies. The evaluation is expected to be finalised by the end of
2011.

Other international organisations

In 2010, cooperation between the EU and the
OSCE continued both
centrally and between OSCE field offices and EU delegations. Good coordination
efforts and financial support ensured efficient implementation of several EU
and OSCE pro­grammes.

The International Organisation for
Migration (IOM) continued to be
an important partner for the Commission, in particular in implementing election
observation missions where it has developed a specific expertise, but also in
terms of migration policy, border management and police reform. Discussions on
a framework agreement with the IOM are under way.

The Commission contributes to technical
assistance and training activities provided by the International Monetary Fund
in the areas of financial sector stability, macroeconomic, fiscal, monetary and
exchange rate policies, and in the enhancement of macroeconomic and financial
statistics. Such cooperation has been greatly facilitated by the conclusion in
January 2009 of a framework agreement, setting the terms and conditions for
Commission contributions to trust funds administered by the IMF.

Coordination with international
organisations and other donors is crucial and is in line with the EU’s strong
commitment to the Paris Declaration on aid effectiveness. To this end, the
Commission takes part in, and co-funds, several sectoral initiatives related to
agriculture, rural development and livestock, aimed at ensuring that the needs
of the rural poor and the food- insecure feature prominently on international
agendas. The global donor platform on agriculture and rural development made an
important contribution to the Accra high-level forum in 2008 and it continues
its active participation in the OECD working party on aid effectiveness and the
associated joint ventures.

4.4.
Visibility and communication

Providing public information on the
achievements and challenges of the EU’s development assistance is vital,
particularly at times of economic and budgetary constraint.

Reaching EU citizens via the press,
information campaigns and other events showed good results in 2010. The
Commission ran journalist seminars to help them report on aid and development
issues. A press trip to Rwanda was organised on the occasion of a visit there
by the Commissioner for Development. The Commission reached out directly to
journalism students through the Young Reporters Against Poverty[103]
competition. The competition attracted entries from across the EU, with
finalists reporting from the European Development Days in Brussels. The winners
of the competition will visit Africa and report on their experiences and
impressions. Another method of engaging young people in development issues was
through the second edition of the Music Against Poverty[104] contest.

The EU Development Days again provided an
opportunity to inform stakeholders and communicators on actions taking place
and results obtained. This focus on results was reinforced by the continued
expansion of the Commission’s database of operational case studies from around
the world.

A major 2010 information product was a
brochure on the EU's contribution to the Millennium Development Goals. Produced
ahead of the September summit on MDGs, it was distributed to the general public,
with a multi-media version available on-line[105].

The number of visitors to the External
Cooperation Info Point in Brussels rose again in 2010 to more than 8 000. It
organised group visits, a regular series of conferences, film screenings,
exhibitions and other events.

5.
FINANCIAL ANNEXES
5.1.
Introduction to financial tables

This Annual Report provides an overview of
policies, objectives and achievements in 2010. The tables and graphs which
follow present the main data on development assistance in 2010 by country,
region, or sector and per source of funding, such as the different instruments
of EU external assistance.

The geographic cooperation with the ACP countries,
is based on the Partnership Agreement with the ACP signatory states and is
mainly financed, South Africa excepted, from the European Development Fund
which is separate from the EU budget. External assistance for other geographic
areas and the thematic programmes with worldwide coverage are financed from the
general EU budget.

Data for 2010 again show improved overall
Official Development Assistance (ODA) levels.

Figure 5.1 shows
the importance of external assistance in the overall expenditure of the
European Commission. Defined as the resources used to foster programmes and
projects outside the EU, external assistance accounted for 9% of the total
allocation in 2010 (general EU budget and EDF taken together).

A global overview of the share of resources
is given in Figure 5.2. A detailed breakdown of the budget by policy
areas can be found in Table 5.3. A similar
breakdown for the EDF is presented in Table 5.4.

The concept of ODA used throughout the
tables and figures is that defined by the OECD’s Development Assistance
Committee (DAC). The figures are those reported by the European Commission and
Member States. Not all EU external assistance can be reported as ODA. Whether
an action, programme or project is classified as ODA or not depends on the
recipient country and the purpose and content of the aid. Figure 5.5 shows
the share of the EU's external assistance classified as ODA. In all, 96% of EU aid
committed in 2010 is considered reportable as ODA, indicating an increased
focus on development in external financial allocations.

Figures 5.6 and 5.7 show
the evolution from 2001 to 2010 of external assistance and ODA. Figure 5.6 shows
the evolution of the main sources of funding: external assistance from the EU Budget
and EDF, indicating the share managed by EuropeAid. Figure 5.7 shows
the evolution of the sector breakdown of ODA.

Figure 5.8 and Table
5.9 present the breakdown per region and per country. For this
breakdown, it is necessary to differentiate between bilateral and multilateral
aid. Bilateral aid, as defined by the DAC, is direct cooperation by the
Commission with a country (or region) where the Commission controls the
activities and knows how, when and where the resources are being spent.
Multilateral aid comprises direct contributions to the core funding of
multilateral agencies, who report back to the Commission at a later stage on
how the money was spent.

Figure 5.8 provides
a breakdown of EU ODA per region. Africa continues to top the list (38% of ODA)
with, Sub-Saharan Africa receiving 33% of total ODA in 2010.

A more detailed breakdown, per country and
region, in line with the OECD/DAC recipient list, is presented in Table 5.10
(Commitments) and Table 5.11 (Disbursements).

Leaving aside regional programmes, the top
ten ODA recipient countries in 2010 were occupied Palestinian territory, Democratic
Republic of Congo, Turkey, Serbia, Afghanistan, Sudan, Haiti, Kosovo, Ethiopia
and Morocco.

Figure 5.12
focuses on ODA recipients classified under the four UN/OECD categories based on
GNI. The table monitors disbursements in 2010 by DAC recipient and by main OECD
sectors. One indicator shows ODA disbursement per capita.

It is also important to identify the main
sectors of activities that receive support. Table 5.13 shows
this breakdown of EU ODA per main sector as defined by the DAC.

A more detailed sector breakdown of ODA is
provided in Table 5.14 for commitments and in Table 5.15 for
payments.

Tables 5.16 and 5.17 give
an overview of the ODA managed by EuropeAid, with a breakdown per sector and
region. In this table, the definition of region reflects the country groupings
used in the EU instruments and corresponding budget structure.

Tables 5.18 and 5.19 show
the sector breakdown of ODA per EU external assistance instrument and
sub-component within the instruments, with the associated Figure 5.20 providing
a closer look.

Finally, Table 5.21 focuses on
budget support commitments 2010 by EU instruments.

5.2.
Financial tables

[1]               COM(2010) 629 final, 10.11.2010

[2]               COM(2010) 586 final, 19.10.2010

[3]               COM(2010) 634 final, 10.11.2010

[4]               COM(2010)159 final, 21.4.2010

[5]               COM(2010)
127 final, 31.3.2010

[6]               COM(2010)128 final, 31.3.2010

[7]               COM(2010)163 final, 21.4.2010

[8]               SEC(2010)121, 04.02.2010

[9]               SEC(2010) 265 final, 8.3.2010

[10]             "Council Conclusions on
the MDGs for the UN High-Level Plenary Meeting in New York and beyond –
Supporting the achievement of the MDGs by 2015" 11080/10, 14 June 2010,
and European Council Conclusions of 17 June 2010.

[11]             COM(2010)643, 05.10.2010

[12]             COM(2010)128 final, 31.3.2010

[13]             SEC(2010)121, 04/02/2010

[14]             SEC(2010)
265 final, 8.3.2010

[15]             COM(2010)
126 final, 31.3.2010

[16]             COM(2010)
127 final, 31.3.2010

[17]             hereafter Moldova

[18]             The Consensus was endorsed in December 2005 by the
Presidents of the Commission, Council and Parliament.

[19]             More information: http://erd.eui.eu/

[20]             http://ec.europa.eu/europeaid/infopoint/publications/europeaid/149a\_en.htm

[21]             SEC(2010)
265 final, 8.3.2010

[22]             http://www.environment-integration.eu/

[23]             COM(2010)163 final, 21.4.2010

[24]             Agreed by the EU on 18 November
2010

[25]             SEC(2010) 421 final, 21.4.2010

[26]             COM (2007) 545 final, 6.10.2010

[27]             COM (2009) 461 final, 8.9.2010

[28]             Paragraph 41 of the resolution

[29]             http://www.oecd.org/dataoecd/11/41/34428351.pdf

[30]             15912/09 http://register.consilium.europa.eu/pdf/en/09/st15/st15912.en09.pdf

[31]             http://ec.europa.eu/europeaid/how/ensure-aid-effectiveness/documents/10actions-for-2010-accelerating-aid-effectiveness\_en.pdf

[32]             COM(2010) 174, 21.4.2010

[33]             http://www.afdb.org/en/knowledge/publications/african-economic-outlook/

[34]             http://ec.europa.eu/europeaid/who/partners/civil-society/structured-dialogue\_en.htm

[35]             COM(2008) 626, 8.10.2008

[36]             http://portal.cor.europa.eu/atlas/fr-FR/Pages/welcome.aspx

[37]             For more information on CFSP: http://www.eeas.europa.eu/cfsp/index\_en.htm

[38]             For more information on the IPA: http://ec.europa.eu/enlargement/how-does-it-work/financial-assistance/instrument-pre-accession\_en.htm

[39]             For more information on humanitarian assistance, see
ECHO's report: http://ec.europa.eu/echo/media/publications/annual\_reports\_fr.htm

[40]             http://ec.europa.eu/world/enp/policy\_en.htm

[41]             http://ec.europa.eu/world/enp/documents\_en.htm

[42]             COM(2010)207, Commission
Communication on the Implementation of the European Neighbourhood Policy

[43]             For more information: http://eeas.europa.eu/russia/common\_spaces/index\_en.htm

[44]             Regional East supporting the
Eastern Partnership, Regional South supporting the Union for the Mediterranean
and the Inter-Regional.

[45]             http://ec.europa.eu/europeaid/where/neighbourhood/regional-cooperation/enpi-cross-border/index\_en.htm

[46]             http://www.mdgmonitor.org

[47]             http://ec.europa.eu/enlargement/taiex/index\_en.htm

[48]             http://ec.europa.eu/enlargement/taiex/index\_en.htm

[49]             Source for general data on MDGs
provided in this section : 2010 UN MDG report

[50]             Source: 2010 UNFPA State of World Population report

[51]             Figures provided in this section exclude South Africa
(see below, section 2.2.1.7 "South Africa")

[52]             EDCTP: http://www.edctp.org/About\_EDCTP.2.0.html

[53]             Figures include South Africa

[54]             Council Decision No 2010/406/EU
of 12 July 2010 on the allocation
of the funds de-committed from projects under the ninth and previous European
Development Funds (EDF) for the purpose of addressing the needs of the most
vulnerable population in Sudan (OJ L 189)

[55]             http://www.forumsec.org.fj/pages.cfm/strategic-partnerships-coordination/pacific-principles-on-aid-effectiveness/cairns-compact-1.html

[56]             COM(2009)623 final, 6.11.2009

[57]             Mid Term Review, p. 47.

[58]             Sustainable Consumption and Production

[59]             FLEGT: Forest Law Enforcement, Governance and Trade.

[60]             Development Consulting
Services (DECO) was established in Oslo in October 1984

[61]             AWP: Annual Work Plan. Source: Result Oriented
Monitoring (ROM) Report - first half of 2010.

[62]             http://www.eclac.org/publicaciones

[63]             The European Commission's Humanitarian assistance is
covered in more detail by the annual reports on humanitarian aid http://ec.europa.eu/echo/media/publications/annual\_reports\_en.htm

[64]             For more information and annual reports on the IPA: http://ec.europa.eu/enlargement/how-does-it-work/financial-assistance/instrument-pre-accession\_en.htm

[65]             For more information on CFSP: http://ec.europa.eu/external\_relations/cfsp/intro/index.htm

[66]             https://webgate.ec.europa.eu/fpfis/mwikis/aidco/index.php/DEAR\_study

[67]             http://portal.cor.europa.eu/atlas/en-US/Pages/welcome.aspx

[68]             http://www.platforma-dev.eu/en/homepage.htm

[69]             https://webgate.ec.europa.eu/fpfis/mwikis/aidco/index.php/Structured\_dialogue

[70]             https://webgate.ec.europa.eu/fpfis/mwikis/aidco/index.php/Main\_Page

[71]             Reducing emissions from
deforestation and forest degradation (REDD)

[72]             More information on climate and biodiversity related
projects supported by the Commission can be found at the following address: http://ec.europa.eu/europeaid/climate-change-actions/
and http://ec.europa.eu/europeaid/biodiversity-actions/

[73]          COM(2010) 127, 31.3.2010

[74]             Regulation (EC) No. 1889/2006 of 20 December 2006

[75]             http://ec.europa.eu/europeaid/what/human-rights/studies\_evaluations\_en.htm

[76]             http://ec.europa.eu/europeaid/what/human-rights/documents/compendium\_abolition\_of\_the\_death\_penalty\_en.pdf

[77]             Council Conclusions on Democracy Support in the EU’s
External Relations

– Towards
Increased Coherence and Effectiveness, 16081/09

[78]             Council conclusions on Democracy
Support in the EU's External Relations - 2010 Progress Report and list of
proposed pilot countries, 3058th FOREIGN AFFAIRS
Council meeting Brussels, 13 December 2010

[79]             French and
Spanish versions will be available by March 2011.

[80]             For further information on parliamentary development
please visit http://www.agora-parl.org, the reference website on parliamentary development, in which the EC
is a partner, or check the democracy
corner of Cap4Dev.

[81]             Regulation
(EC) No 1717/2006 of the European Parliament and of the Council of 15 November
2006 establishing an Instrument for Stability

[82]             Natural phenomenon arising from continuous heavy
snowfall combined with extreme cold and preceded by dry summers

[83]             http://ec.europa.eu/echo/media/publications/annual\_reports\_en.htm

[84]             COM(2010)722, 8.12.2010, SEC(2010)1505, 8.12.2010

[85]             http://ec.europa.eu/echo/policies/consensus\_en.htm

[86]             COM(2010)126 http://ec.europa.eu/echo/policies/food\_assistance\_en.htm

[87]             COM(2010) 600 final and
SEC(2010)1243/1242, 26.10.2010

                http://ec.europa.eu/commission\_2010-2014/georgieva/themes/european\_disaster\_response\_capacity\_en.htm

[88]             COM(2010)683, 23.11.2010  http://ec.europa.eu/commission\_2010-2014/georgieva/themes/voluntary\_humanitarian\_en.htm

[89]             27 EU Member States, Norway, Iceland, Lichtenstein and
Croatia

[90]             Decision 388/2010/EU

[91]             938/2010/EU

[92]             860/2007/EU

[93]             The mandate of the joint evaluation unit is "the
evaluation of the results of regional and sectoral policies, programmes and
programming performance is crucial for the success of the external aid policies
as a whole, and needs to feed back into the programming cycle. To ensure
objectivity, this level of evaluation should be conducted independently and
serve as a feedback loop for the services responsible for policy, programming
and implementation. The evaluation services would be accountable to the Group
of Relex Commissioners. The Group will decide on the work programme of the
evaluation services and act on its reports recommendations",
(SEC(2000)814/5 of 15 May 2000).

[94]             http://ec.europa.eu/europeaid/how/evaluation/index\_en.htm

[95]             www.capacity4dev.eu

[96]             COM(2010)586 final, 19.10.2010

[97]             15919/09, 13.11.2009

[98]             COM(2009)160 final

[99]             http://capacity4dev.ec.europa.eu/article/engaging-and-supporting-parliaments-worldwide

[100]            http://ec.europa.eu/europeaid/infopoint/publications/europeaid/documents/176a\_water\_dev\_en.pdf

[101]            http://ec.europa.eu/europeaid/infopoint/publications/europeaid/documents/150abis\_en.pdf

[102]            The report, entitled "Improving Lives – Results of
the partnership between the United Nations and the European Union in 2009"
is available at http://www.unbrussels.org/

[103]            http://platform.youngreporters.net/

[104]            http://www.ifightpoverty.eu/act/music-contest

[105]            http://ec.europa.eu/europeaid/what/millenium-development-goals/e-booklet/index.html

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