Brussels, 8 October 2003
The European Commission today adopted a communication putting the strong case for the incorporation of aid to African, Caribbean and Pacific Countries (ACP) as well as Overseas Countries and Territories (OCT) from the European Development Fund (EDF) into the EU budget. Such a move would increase public accountability of EU aid to the ACP and OCTs, increase transparency and efficiency, make the aid more flexible and adaptable to realities on the ground, cut red-tape, give a more prominent place to aid in EU external relations policy and modernise our relations with the ACP countries. All in all, EU aid would come out better able to assist with poverty alleviation the prime objective of the EU's external aid. The Commission is optimistic that its arguments will convince EU Member States as well as ACP countries and OCTs about the need to fully incorporate the EDF in the budget under the new EU multi-annual financial framework which will guide the EU-budget after 2006.
Michaele Schreyer, European Commissioner for the Budget, said: "The EU is the biggest international development aid donor ( €31 billion out of 60 billion in 2002) and is committed to strengthening its instruments to maximise the impact. This includes bringing the EDF into the budget and ending the separation that has existed in the EU financial system for too long. This will harmonise applicable rules for financing and spending, and allow the European Parliament more of a say on this important part of the external aid budget. I am optimistic that this time the proposal to include the EDF into the budget and the new financial perspectives after 2007 can be accepted by stakeholders".
Poul Nielson, European Commissioner for Development and Humanitarian Aid, added: « The case for fully incorporating the EDF into the budget has never been stronger. Now is the time to press ahead. It would provide us with a number of advantages in the management of our external assistance while fully preserving its qualities that have been build up and consolidated throughout our 45 year long co-operation with the ACPs : focus on poverty alleviation and sustainable development, partnership, ownership of development strategies, political dialogue, predictability of the multi-annual framework. These are qualities that have stood the test of time and will provide the context in which the incorporation of the EDF into the budget would be realised. And let there be no misunderstanding: We are not seeking to reduce aid to ACPs and OCTs. Volume must still go hand in hand with quality. »
Since it took office, the Commission has put in place a single coherent policy framework to guide all its external aid related activities and has constantly been working to improve the efficiency of its delivery mechanisms. There are currently two main channels of EU assistance to the ACP countries administered by the EC : (i) Funds from the EU-budget (heading 4 for external actions); and (ii) funds from the EDF. In 2002, aid from these two sources amounted to €0.7 billion and €1.9 billion respectively. Different administrative rules and decision-making structures apply to these. Funds from the EU budget are administered in accordance with existing EU financial regulations. Funds from the EDF are administered in accordance with rules laid out in the Cotonou agreement, which is the general framework for EU/ACP co-operation. The present communication argues that there are a number of advantages to be gained from abolishing this two-tier system by fully incorporating the EDF funds into the EU-budget. The main advantages of this proposal are summarised below :
Efficiency: One set of administrative rules and decision making structures instead of two will inevitably simplify reporting and accounting requirements reducing the administrative burden not the least on the recipient countries. Time not spent on administration can be meaningfully invested in reaching our common goal : Eradication of poverty and creating sustainable development.
Transparency: One budget including all external aid expenditures offers the possibility of providing a global picture of the EU's external assistance and of EU development policy, in terms of both size and geographical repartition. Citizens will have to refer to only one single document when they want to know what the EC spends on development policy.
Legitimacy: The EDF is currently the only expenditure that is not subject to authorisation by the European Parliament. Incorporating the EDF into the budget would put an end to this anomaly thereby strengthening the public legitimacy of the EU's external assistance. Bringing all EU external assistance together in the budget would give higher prominence to EU/ACP relations in the external relations policy debate.
An annual reality check: The situation on the ground changes. Incorporating the EDF into the budget would mean that the annual budget approval procedure would apply. This would provide the opportunity to conduct an annual reality check and on that basis respond faster to evolving needs and priorities for instance through a redistribution of resources. Steps in this direction were already taken with the introduction of the mid-term review (MTR) in the Cotonou agreement. Incorporating the EDF in the budget would boost effectiveness gains from the MTR even further. The multi-annual indicative planning in the so-called financial perspectives would guarantee the necessary long term planning security.
Modernise our relations with the ACPs and OCTs. Member states' contributions to the EDF are the result of negotiations. The result has been a burden sharing which has been a reflection of member states' interest and ties with the ACPs. In the past, the financing rules were a major obstacle to incorporating the EDF in the budget, because the financing keys negotiated by the Member States for the EDF differ from the 'general' budget keys. Budgetisation would align the burden sharing with all other EU-policy areas, placing cooperation with ACPs and OCTs at a truly EU-level.
The communication on the incorporation of the EDF into the budget is adopted at a crucial time. The working group in the European Convention has in its draft Constitutional Treaty recommended that the EDF be fully incorporated into the budget. Work on the financial framework after 2006 is advancing. Incorporating the EDF into the budget would mean that the new financial perspectives can include the totality of expenditure for EU/ACP co-operation. Finally, 10 new member states currently not participating in the financing of the EDF are expected to join the EU in 2004 with the donor obligations that this entails. The current EDF will run until 2007, then a new one would have to be negotiated. Against this background the present communication offers a basis on which to address these many agendas.
For more information on co-operation with ACP countries and OCTs see: