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Fern Briefing December 1997

www.greennet.org.uk/fern

EUROPEAN COMMUNITY AID

The European Union and its member states are collectively the world's largest donors of development aid. Together they provide almost half of all development aid. The European Community i (EC) is the second largest multilateral donor, after the International Development Association of the World Bank ii. The EC development programme provided 9 billion ECU in 1995.

The EC development programme has two components. The legal basis for the first component is the Lomé Convention, a programme of development cooperation with the 72 countries in Africa, the Caribbean and the Pacific (ACP). Disbursement of funds to these countries is made through the European Development Fund (EDF), the financial protocol linked to the Lomé Convention. The EDF totals 14.6 bn ECU over a 5 year period (1995-2000). Funds are paid by the member states directly into the EDF, without going through the EC budget. Therefore the European Parliament has no control over the EDF spending.

The second component is 'budgetary aid' and consists of a variety of budget lines including the Asia and Latin America (ALA) budgetlines, the Mediterranean Programme, the programmes for Eastern Europe (PHARE), and the former USSR (TACIS). Budgetary aid also includes a number of sectoral programmes such as tropical forests, food aid and NGO support programmes. The legal basis for budgetary aid is the Maastricht Treaty iii. The total amount of budgetary aid was approximately 6 billion ECU in 1996.

Where does EC aid go?

The single biggest source of EC development aid is the EDF. 90% of EDF funds go to Africa; 7% to the Carribean and 3% to the Pacific. 14.3% of budgetary aid is spent in tropical countries. The rest is divided between the Central and Eastern European Countries, the Mediterranean, CIS (former USSR) and former Yugoslavia.

Which Directorates Generals are in charge of EC aid?

Decision making in the EC on development issues is a complex process with responsibilities split between four different Directorates Generals (DGs). Each one has responsibilities for different geographical areas. The following four DGs are responsible for development cooperation: DG1; DG1A; DG 1B and DG VIII.
DG 1 is responsible for China, Taiwan, South Korea, as well as the US, Australia, Japan.
DG1A is responsible for the Central and Eastern European Countries as well as those of the ex-Soviet Union, Mongolia, Turkey, Cyprus, Malta and European countries outside the EU.
DG 1B is responsible for the Middle-East, the Far-East, Latin America and Asia (except those countries which fall under the responsibilities of DG1).
DG VIII is called the Directorate for Development Cooperation but deals effectively only with the 72 ACP countries and implementation of the Lomé Convention.

Each of these DGs has a corresponding Commissioner: Leon Brittan for DG 1; Hans van den Broek for DG1A; Manuel Marin for DG1B and Joao de Deus Pinheiro for DG VIII. In addition there is a fifth Commissioner involved for the European Community Humanitarian Aid Office (ECHO), Emma Bonino. External relations are coordinated by a meeting of these Commissioners under the supervision of the President of the European Commission, Jacques Santer.

Decisions on project funding

All decisions on projects exceeding 1 million ECU for ALA countries and exceeding 2 million ECU for ACP countries need the approval of one of the management committees: the ALA and EDF Committee respectively. The ALA and EDF committee are all administered from a unit in DG VIII. Both committees are attended by representatives of the member states in their capacity as donors, as well as by desk officers and relevant technical officers. They meet once a month.

In these committees the member states can query the Commission about aspects of projects. If the projects are agreed they go forward without further debate. If not, the Commission may refer them to the Council with a proposal relating to the measures to be taken. The Council acts by a qualified majority iv. These management committees report regularly to the Council and the Member States.

Environmental performance of EC aid programmes

It is no exaggeration to state that the EC is far behind other multilateral donors both in openness and transparency and in the development of environmental and social policies. See table 2.. Where policies exist, they are often not implemented properly. A recent study commissioned by the EC v highlights that over several thousand implemented projects the last ten years, only 35 Environmental Impact Assessments (EIAs) have been conducted. Several EC funded studies vi have indicated that the poor environmental performance of EC aid can be explained by
  • lack of staff
  • lack of knowledge on environmental and social issues
  • the pressure to spend
  • unwillingness of some officials to take environmental and social aspects into account.

Problems with EC aid

There are other problems with EC aid apart from weak environmental performance and lack of transparency. Many of these are due to institutional problems. The Maastricht Treaty committed the Union to improving coordination between its various aid programmes. However not much progress has been made since 1993. Several recent studies have shown a clear lack of coordination among EC aid programmes and between member state aid programmes vii. Sustainable development is an overriding goal within the Lomé agreement. However in practice the European Commission acknowledges that it still
"lacks a clear strategy and a sense of purpose to make environmental management operationally viable".

viii

According to Eurostep ix the problems facing the European Commission include:

lack of staff
There are always many vacancies within the European Commission , sometimes up to one third of the total management staff. Many core tasks are being carried out by consultants. For DG1, 1A and 1B 40% of total staff are external contractual staff.

lack of staff and expertise in the fields of social affairs and the environment
The limited number of staff and the lack of expertise in these fields together have a significant negative impact on the quality of the development programme. The ratio of funds managed to number of staff is upto 7 times higher than in the World Bank

incoherent organisational structure
There are four DGs dealing with parts of the development policy. These DGs are regionally oriented and there is insufficient dialogue between them.

divergent objectives of different policy interests
The regional orientation of the DGs means that they also have to deal with other aspects of EU foreign policy (politics, security, trade) in their region. This is a potential source of conflicts of interest

lack of pressure from member states to exert influence on the EC development policy. Member states can improve aid policy through the Council. As long as they fail to do so they are responsible for the continuation of the implementation of problems mentioned.

lack of cooperation amongst member states and between member states and European commission.
It appears that there is a need for a better cooperation on foreign policy before there can be better coordination of European aid.

 
  EC World Bank
Transparency (projects in pipeline);
  • DG1B: indicative programmes for countries are not available.
  • DG1B: Country Strategy Papers only available if governments do not object
  • DG VIII: National and regional indicative programmes available.
  • DG IB and VIII: No project identification sheets publicly available.
  • Monthly operational summary of all projects in pipeline
  • Quarterly expanded summary with more detail on environmentally sensitive projects
  • Summary of staff appraisal report before board approval available
Transparency (ongoing projects) Difficult to obtain documents even if they are publicly available. Documentation available in regional offices
EIA's
  • Different EIA procedures by DG1B and VIII. Very few EIAs have been carried out.
  • Stakeholder consultation is a weak point in many EIAs
  • EIAs are not easily available
  • Detailed EIA procedures exist of which stakeholder consultation is an important aspect
  • EIAs and summary reports are publicly available
Evaluation
  • No independent evaluation unit exists.
  • Evaluations are seldom publicly available. An independent
  • Operations Evaluation Department exists
  • Evaluations are publicly available
Grievances
  • No inspection panel nor any other mechanism to address grievances exists x
  • An inspections panel to address grievances does exist
Existing Policies
  • Policy on indigenous peoples under development
  • Guidelines exist for forestry
  • Policies on forests, indigenous peoples, resettlement, wild lands, and on dealing with NGOs all exist.

Table 2: A comparison between World Bank and EC aid procedures.

NGO recommendations

NGO xi recommendations put forward to improve the environmental and social performance of the EC development programme include:
  • Creating a complaints mechanism to offer intended beneficiaries of the EC development programme a means of having a fair and reasonably independent hearing should problems arise.

  • Increasing openness and transparency Information on the status of projects should be published in a monthly operational summary (similar to those produced by the World Bank).

  • All project documentation should be made routinely available to stakeholders and beneficiaries. Particularly project identification sheets should be distributed for consultation to interested stakeholders in due time before project decisions are made.

  • Every project idea requires a 'strategic' preliminary' environmental assessment in which the extent of further analysis is determined

  • Proper environmental and social impact assessments (EIAs and SIAs) should be conducted and distributed for consultation as early in the project cycle as possible. Stakeholder consultation should be a crucial part of each EIA.

  • A system for regular monitoring, evaluation and reporting of the environmental performance of development programmes and projects needs to be established.

Notes:

  i) The EU is often referred to as the European Community which under the Maastricht Treaty replaced the term European Economic Community. Technically if member states are discussing matters within the Treaty of Rome (e.g.trade) they should be referred to as the EC. If discussing matters relating to a Common Foreign and Security Policy or Justice and Home Affairs (the two new pillars which together with the European Community form the European Union) or other matters dealt with in the Maastricht Treaty they should be referred to as EU. In this briefing sheet we therefore speak of a European Community development programme.
 
ii) ODI. Inventory of EC aid. December 1996
 
iii) Title 17 of the Maastricht Treaty deals with XX
 
iv) A qualified majority vote means essentially 62 votes out of 87 using a weighted voting system in which Germany, France, Italy and the UK each have 10 votes. The smaller countries have from 2 to 8 votes.
 
v) ERM. Evaluation of the Environmental Performance of EC aid programmes in developing countries. December 1997
 
vi) See endnote 2 and 5 as well as a recent study by ECO. Evaluation of the forestry component of EU programmes in developing countries. Draft report
 
vii) Rainforest Foundation UK. European Commission development funding: environmental and social impacts in tropical forest areas. Draft March 1998 and Cirad-Forêt, Forest aid: The Cameroon Rush. October 1997
 
viii) European Commission. Green Paper on EU-ACP relations. 1997
 
ix) Eurostep. The reality of aid 1996, Earthscan (1996)
 
x) Patricia Feeney (Queen Elisabeth House). Why the EU needs a complaints mechanism for its development cooperation programme. March 1998. Available from Fern.
 
xi) The recommendations listed come from different NGO documents, including Eurostep (10), Queen Elisabeth House (7) WWF (European Sustainable Development Initiative) , Rainforest Foundation UK (8) and Fern (minutes of several meetings with the Commission).

What is Fern?

Fern is an NGO created by the World Rainforest Movement. Fern advocates changes in EU activities in order to achieve:
  • Conservation and sustainable management of forests,
  • Respect for the rights of forest peoples,
  • Greater transparency in EU aid to tropical forest countries.
Fern briefing notes aim to inform NGOs, MEPs and European Commission officials about key forest related issues.

Fern Contacts

Saskia Ozinga,
Fern/WRM
1C Fosseway Business Park
Stratford Road Moreton-in-Marsh
UK - GL 56 9NQ
Tel: 44 1608 652 895
Fax: 44 1608 652 878
Saskia@gn.apc.org Chantal Marijnissen & Susan,
Fern
20 Av des Celtes 1040
Brussels
Belgium
Tel: 32 2 742 24 36
Fax: 32 2 736 80 54
Fern@arcadis.be