STRATEGY 2010

What Direction for European Development Policy?

Directorate-General of Global Affairs, Development and Partnerships French Proposals Directorate-General of Global Affairs, Development and Partnerships

What Direction for European Development Policy?

French Proposals

Évaluation réalisée par : Pluricité Nicolas Subileau Alix de Saint-Albin Michel Hoffert

Synthèse du rapport (français et russe)

Rapport remis en décembre 2009

MinistRY OF FOREIGN AND EUROPEAN AFFAIRS contentS Acknowledgements This document would not have been possible without the active participation and input from various Directorates of the Ministry for Foreign and European Affairs (MAEE), the Ministry of the Economy, Industry and Employment (MINEIE), the French Development Agency (AFD), the Ministry of Immigration, National Identity, Integration and Co-development (MIIIDS), the Ministry of the Interior, Overseas France and Territorial Communities (MIOMCT), the Ministry of Agriculture, Food and Fisheries (MAAP), the Ministry of Ecology, Energy, Sustainable Development and the Sea (MEEDEM), the Ministry of Defence and the Secretariat General for European Affairs (SGAE). The document was also enriched by consultations with civil society. The layout of this document was prepared by European Development Policy Pole of the Directorate General of Global Affairs, Development and Partnerships (DGM), which organised the consultation meetings. The following people also participated in different ways in the discussions, drafting and review of this document:

For the MAEE: Éric Adam, Laurent Amar, Delphine Babin-Pelliard, Jacques Biau, Laure Bourdarot, Matthieu Boussichas, Mathilde Bouyé, Jocelyne Caballero, Pauline Chabbert, Delphine Clerc-Touré, Franz Coïdan, Jean Constantinesco, Paul Coustère, Emmanuelle d’Achon, Laurent Delahousse, Catherine Disparti, Benoît Faivre-Dupaigre, Falilou Fall, Emmanuelle Gallet, Christophe Gigaudaut, Myriam Gourrin, Camille Grousselas, Yves Gueymard, Laetitia Haton, Pierre Jaudoin, Philippe Lacoste, Matthias Lange, Élise Launay-Rencki, Jean-Luc Lavaud, Jennifer Le Duff, Dominique Le Masne, Romain Louvet, Alberto Martelli, Marc Mertillo, Laurence Pais, Isabelle Perot, François Ponge, Pierre Pougnaud, Béatrice Ravanel, Irchad Razaaly, Jérôme Rivière, Guillaume Robert, Matthieu Robin, Roland Sourd, Nicholas Suran, Giovanna Tattolo, Serge Tomasi, Alain Van Hamme, Florence Veber, Caroline Vinot, Lionel Vignacq.

For the AFD and other ministries: Jean-Marc Bellot, Quentin Bérinchy, Nicolas Beriot, Nicolas Caudal, Grégoire Chauvière Le Drian, Anne Crozat, Jean-René Cuzon, Colonel Éric Fournier, Françoise Georgin, Émilie Gravier, Thomas Groh, Damien Hendrick, Cécile Liev-Müller, Virginie Lucas, Nicole Martin, André Pouilles-Duplaix, Mylène Testut, Mailys Tisseau, Françoise Tysseire, Alexander Von Kapp-Herr, Claude Warin.

For Coordination Sud: Gipsy Beley, Aurélie Gal-Régniez, Philippe Jahshan, Cécile Mabilotte, Robert Toubon.

All rights of adaptation, translation and reproduction by any processes, including the photocopy and the microfilm, reserved for any countries.

Cover Photo: Rehabilitation of National Highway No.3 in Haiti, co-financed by AFD and the European Commission © European Union Production: Elisabeth Esdoluc Printed by: Centre Impression © Ministère des Affaires étrangères et européennes, 2010 contentS

Acronyms...... 4

Introduction...... 6

Presentation...... 12

Objective 1 For a european development policy at the heart of the European Union’s external action ...... 14 Objective 2 For a more integrated, effective and visible European policy ...... 18 Objective 3 For a European policy better adapted to the increasing diversity of developing countries ...... 22 Objective 4 For a European response adapted to the challenges of a new world...... 26 Objective 5 For comprehensive policies and more coherent European action to promote development...... 35 Objective 6 For more modern and responsive European financing solutions...... 41

What Direction for European Development Policy? 3 Ministry of Foreign and European Affairs - DGM Acronyms

ACP African, Caribbean and Pacific States AFD Agence française de développement AfDB African Development Bank AIF Agricultural Investment Fund BRIC Brazil, Russia, India, China CAP Common Agricultural Policy CFSP Common Foreign and Security Policy CGIAR Consultative Group on International Agricultural Research CSP Country Strategy Paper DAC Development Assistance Committee DCI Financing Instrument for Development Cooperation DDR Disarmament, Demobilisation and Reintegration DSB Dispute Settlement Body EBRD European Bank for Reconstruction and Development EDF European Development Fund EDFI European Development Finance Institutions EEAS European External Action Service EIB European Investment Bank ENP European Neighbourhood Policy ENPI European Neighbourhood and Partnership Instrument EPA Economic Partnership Agreement ESDP European Security and Defence Policy EU European Union EUNIDA European Network of Implementing Development Agencies FAO Food and Agriculture Organization of the United Nations GDP Gross Domestic Product GFAR Global Forum on Agricultural Research GNI Gross National Income GSP Generalised System of Preferences ICI Industrialised Countries Instrument IFAD International Fund for Agricultural Development IfS Instrument for Stability IMF International Monetary Fund KFW Kreditanstalt für Wiederaufbau (German banking group)

What Direction for European Development Policy? 4 Ministry of Foreign and European Affairs - DGM LDC Least Developed Countries MDG Millennium Development Goals MIC Middle-Income Country NIP National Indicative Programme ODA Official Development Assistance OECD Organisation for Economic Co-operation and Development PCD Policy Coherence for Development PRSP Poverty Reduction Strategy Paper SDT Special and Differential Treatment SSR Security System Reform TEU Treaty on European Union TFEU Treaty on the Functioning of the European Union UN United Nations UNCTAD United Nations Conference on Trade and Development UNESCO United Nations Educational, Scientific and Cultural Organization WTO World Trade Organisation

What Direction for European Development Policy? 5 Ministry of Foreign and European Affairs - DGM Introduction

The need to reform The need to restructure European development our cooperation policies ➔ Over the past two decades, globalisation policy has led to extraordinary scientific, technical and economic advancements, which have in turn ➔ Since it was first launched in the wake of generated remarkable progress in the fight World War II, international development against underdevelopment. New dynamics have cooperation has undergone many changes enabled hundreds of millions of people across and witnessed myriad alternating paradigms, in the planet to rise out of poverty, whether in India very different geopolitical settings. Following a or China, Latin America or certain African nations. post-Cold War spate of aid fatigue, the paradigm of the Millennium Development Goals (MDGs) Yet, at the same time, inequalities between today serves as the road map for the entire nations, regions and even within many societies international community. The fact that these have surfaced or been heightened. Neither goals lay prime emphasis on human capital has the end of the bipolar world nor the new made them a powerful driving force for action. interdependencies have managed to eradicate the factors of crisis; new tensions regularly arise After ten years of efforts geared to achieving that the international community is unable to the MDGs, reports show that progress has prevent or resolve. At a more systemic level, been very uneven across regions and across in the absence of a regulating mechanism, sectors. At the same time, in less than twenty global growth itself is under threat and years, the world has experienced a quantum development is unable to safeguard the planet’s shift that gives good reason for setting major balances in the medium-run. This is this paradigm on a new footing and, more obvious with regard to natural resources and generally, rethinking our cooperation policies. the climate, but the economic and financial By drawing up its Framework Document for crisis has also recently demonstrated the development cooperation, France seeks shortcomings of 20th-century economic and to take account of a new world marked by financial governance. global interdependence, and to contribute to the reflection on how to foster global policies France believes that for growth to be more that can offer a response to the world’s main equitable and respectful of human rights and issues and challenges. the planet’s major balances, it is necessary to implement global structural policies. These France has largely contributed to affirming policies must be able to give direction to European development policy at each new stage modern-day globalisation, leverage it to the of its evolution. Today, it wishes to participate, advantage of developing countries, better together with its partners, in the crucial step of manage the upheavals it generates, and ensure adapting this policy to the present, at a time that it does not lead humankind into an impasse. when the implementation of the Treaty of Lisbon offers numerous opportunities and Europe’s Our international cooperation and development Member States are preparing to negotiate the policies, although not global policies as such, next Financial Perspectives. are valuable instruments that can be used to

What Direction for European Development Policy? 6 Ministry of Foreign and European Affairs - DGM re-adjust certain dynamics. They are one of GNI. Given its modest scale, ODA now needs the few levers available to wealthy nations to to be better coordinated with the other try to minimise or avert the tragedies that are development funding sources, in a logic of brewing in the South. These cooperation policies, subsidiarity, by either joining forces with or however, were designed in a radically different supplementing them. economic and political context. To fulfil this role, therefore, they must be radically overhauled. Four conditions seem crucial for this transition. 2) Differentiate our policies and instruments to meet complementary objectives 1) Adapt to the vast complexity ➔ Few public policies are confronted with of today’s world so many parameters, uncertainties and ➔ Today, cooperation policy is implemented in ambitions. This complexity should drive us an environment of deep and fast-paced to clarify the objectives of a development change. The economic trajectories of “developing” cooperation policy that can only be designed as countries are becoming increasingly diversified, a framework to ensure the coherence and which means that the challenges and needs of effectiveness of a multitude of actions and emerging countries and least developed instruments. countries are different. Global leadership is no The first objective involves the prevention and longer exclusively in the hands of the OECD management of crises, which threaten the countries, and the increasingly important role of development of the countries affected as well the G20 indicates the need to frame collective as the security of France, particularly as crisis rules and more balanced relations with the major situations constitute fertile ground for large- emerging countries and beyond. Worldwide, the scale trafficking and terrorism. This objective growing interdependence of societies means complements France’s thinking on the prevention that consensus must necessarily be reached and management of major human, climatic on global balances that are often complex, as or even technological disasters. is demonstrated by the difficulties facing The second objective involves supporting negotiations on trade or climate. equitable and sustainable economic growth, The cooperation community is becoming since growth remains a key driver of social more diversified with the arrival of new donor progress. It should thus be supported and countries (emerging countries, oil-producing steered towards more socially just and countries), the multiplication of multilateral environmentally responsible models. These instruments (vertical funds), the increase in nascent models must help to ensure that growth private aid (foundations, NGOs), the growing in developing countries does not give rise numbers of cooperation initiatives involving to “ecological and social dumping,” and help local authorities and so on. DAC member to foster the convergence of economic, social States no longer have a monopoly on aid and and environmental standards in order to now need to define new working methods that safeguard the planet’s future, contribute to involve all of these newcomers. At the same improved living conditions for populations in time, as societies in developing countries are developing and emerging countries, and preserve becoming more diverse, States are no longer the industrial fabric of countries that already the sole players in the development arena; local have good social and environmental standards. government, businesses and associations, for The third objective is, of course, the fight against example, are also now stepping in. poverty and inequality, which must be given a Worldwide, Official Development Assistance pivotal place in European policy. Certainly, this (ODA) has been substantially scaled up remains a overarching goal for the one-fifth of over the course of the last decade, but the world population still living in extreme poverty, diversification of financial flows has been faster and one that must prevent those who have still. Trade, investments and migrant remittances recently risen out of poverty from falling back into all represent financial flows in excess of ODA. the poverty trap. The Millennium Development With a historical high of USD 120 billion in 2009, Goals have helped mobilise the international ODA still only accounts for 0.2% of worldwide community in favour of universal access to a

What Direction for European Development Policy? 7 Ministry of Foreign and European Affairs - DGM set of basic social services including food, 4) Promote collective governance education, health care, drinking water, a decent commensurate with the new habitat and access to employment. Substantial development challenges headway has been made, mainly driven by domestic economic growth but also with the ➔ In today’s globalised world, nations have support of targeted aid. Now, what needs to be to cope with exogenous shocks, whether found are the means and resources to ensure natural, economic or climate change-related. even broader-based access to these services. The combination of energy, food, climatic and economic disasters is jeopardising the progress Lastly, global public goods—particularly when made so far toward achieving the MDGs. endangered by climate change, biodiversity The increased vulnerability of some countries loss or the spread of contagious diseases— and the persistence of extreme poverty are represent collective challenges that are also of growing concern for the international intensifying and yet inadequately managed community, as much for humanitarian as both by markets (as their benefits are not security reasons. “appropriable”) and States (because their benefits cannot be confined within national These challenges highlight the extent to borders). These global public goods call for which States have become interdependent innovative governance and financing solutions at the international scale, and underline the on the part of the international community. need for global solutions. This requires a new form of collective governance, based on more effective regulation of global markets, which 3) Mobilise all available resources gives better representation to the world’s ➔ Funding remains one of the prime levers major geopolitical groups. for influencing development. The current budgetary environment requires making the best use of public funds. These funds must therefore be mobilised in synergy with and Why a European development subsidiary to other sources of financing, more policy? specifically tax revenues in the concerned countries as well as local and international ➔ Because France believes in the relevance private investment. and added value of European action in development, it has chosen to set its In the European context, coherent public policies development assistance policy within a should enable win-win solutions to be developed European framework, and has constantly (that reduce eventual contradictions) between sought to support this Union-wide competence. development policies and the other sectoral One fourth of France’s official development policies, including trade and immigration. assistance is delivered through European Support for democratic governance and the channels, and nearly half of its programmable promotion of rights and standards are priorities grants are implemented by the European for France, whether in partner countries, in a spirit Commission. However, the scale of this financial of mutual respect, or at the international level, commitment is today raising certain questions, where France will contribute to an international as voiced by the French Parliament. In this legal order that respects and promotes human context, the question of the European Union’s rights. added value as the vector of France’s European objectives and its vision of cooperation for Producing ideas and leading debate on the development has been examined. purposes and modalities of development at the national—especially in the media—and It must first be recalled that the European Union’s international level are also levers that France actions in favour of development have a specific intends to use, as demonstrated by the Landau role in the international aid landscape. European Commission report on innovative development assistance is not comparable to the action of funding and the Stiglitz, Sen and Fitoussi either a single Member State or a multilateral report on new ways of measuring development actor but is rather the result of a unique project progress. of political integration.

What Direction for European Development Policy? 8 Ministry of Foreign and European Affairs - DGM This policy is justified first and foremost by European development policy is a competence Europe’s shared political ambition: to become shared between the Commission and the a global political actor on the international Member States, which means that Member scene. Because development cooperation States continue to operate bilaterally in policy is a competence shared between the parallel to the joint action taken by the Union and its Member States, this common European Commission. We are frequently policy needs to catalyse all of our actions if it reminded that Europe, understood as its is to be influential in global affairs. Member States and the European Union combined, is the world’s leading donor and accounts for almost 60% of official 1) European development policy development assistance. But this aid is must further the European in no way forms a coherent whole. The Union’s ambition to become challenge today, therefore, is to co-ordinate a global actor the bilateral actions of the 27 Member States with the action of the Union in order to ➔ To bring influence to bear on global respond to developmental challenges and affairs, Europeans must build on establish our collective presence on the common, effective and visible pro-development international scene. action. By delivering a message of more This is the purpose of the European Consensus inclusive globalisation, European development on Development adopted in 2005, which forms policy can be an effective tool for cooperation the basis of this “27 + 1” European policy and and solidarity, as well as for projecting values of its implementing instrument, the Code of and influence in a world characterised by Conduct on Complementarity and the Division normative competition. Cooperation has of Labour. always been grounded in a shared history and heritage. Today’s globalised setting must EU policy aims to accomplish more than prompt the Union to rethink its cooperation by simply complementing the action of Member assessing its partners’ growth potential and States. The added value of aid implemented the risks created by disparate levels of by the Commission lies in its capacity to development. Our common action must mobilise Europeans around common goals. therefore be rooted in a candid analysis of Using open and concerted programming our near future and the risks and the potential procedures, this aid must allow bilateral of our environment. Given the magnitude action to be catalysed and organised, with of the challenges, no bilateral actor can some degree of subsidiarity, so that it can today take on single-handedly regulating contribute to the emergence of a consolidated globalisation. The intensity of our European European policy. The Commission’s role as political project, built upon shared values, coordinator is based on its competences requires that we act together to meet these in aid delivery. The EU must therefore challenges and thereby serve the shared maintain its position as a key donor interests of our partners from the South and alongside the Member States, while the European communities. broadly respecting the present balance between the volume of its own financial contributions and those of Member States. 2) The European Union’s It does not replace the role of the Member development policy as a catalyst States, but is there to mobilise them, for Member States’ action supplementing their actions through adapted application of the subsidiarity principle. ➔ To be collectively influential in world The European Union does not aim to cover affairs, a European Union development all areas of cooperation, especially those policy implemented by the Commission is a related to the specific priorities of Member crucial instrument. This policy must draw States (support for the Francophonie, for its strength from its added value and instance). effectiveness. It must also act as a catalyst for bilateral action by Member States.

What Direction for European Development Policy? 9 Ministry of Foreign and European Affairs - DGM What European development France’s analysis of current challenges and of the implementation of new instruments has policy? led it to call for in-depth reform of European ➔ In the face of new challenges and with a development policy at the negotiations of the view to the implementation of the Treaty new Financial Perspectives. of Lisbon, to the next Financial Perspectives negotiations and to the next major programming cycle, France strongly believes there is a 1) European instruments were need for greater coherence, more strategic shaped by history but must now targets, heightened efficiency and increased adapt to the world’s complexity consideration for our respective assets. ➔ European development policy was Since the Yaoundé Conventions, the European built on a divide between the African, Union has relied on a model of North-South Caribbean and Pacific (ACP) Group of States relations based on the guiding principles of and the rest of the world. Two separate partnership, ownership, participation and development policies became more or less predictability of aid. established, each with its own financial In the early 1990s, the European Union instruments, actors and methods. This reading significantly re-framed its external action by of the world is the product of history and addressing the entire developing world, by was justified by the intergovernmental nature covering a large number of sectors and by of the European Development Fund. Today, enhancing its relations with developing countries however, this divide has become redundant, through a strong political component. The aid and the new institutions created by the Treaty management reform launched in 2000 also of Lisbon have very appropriately put a brought considerable progress. Simplifying term to this institutional fragmentation. instruments, creating an agency in charge The negotiation of the next Financial of aid implementation and deconcentrating Perspectives must serve as an opportunity management authority to Delegations all brought to modernise the associated instruments. It about improvements in the lead times, quality is still appropriate to maintain geographically and relevance of EU programming. based funding within the budget, but the The Commission has important assets in the European Union should not apply the same international aid landscape: methods and instruments to each region, as it currently tends to do. ■ the volume of its grant-based financing, which sets it apart from development banks; 2) The European Union must take ■ in its relations with third countries, the better account of Member States’ combined use of instruments for political dialogue, trade policy and development actions and further develop cooperation; innovative financial instruments ➔ Even after the adoption of the European ■ its competences in areas such as agricul- ture, fisheries and trade, which reinforce Consensus on Development, the Code of its action in favour of policy coherence for Conduct on the division of labour and the development; European agenda on aid effectiveness, European Union policy and Member State ■ its experience in areas such as budget bilateral policies continue to be designed and support, support for democratic governance implemented in isolation, despite strong political and regional integration, where its added will to reverse this. value can be brought into play. The European Commission needs to give Despite this quantitative and qualitative leap, greater consideration to its role as a catalyst observers everywhere regret that the European for Member State action and more thoroughly Union does not yet play a political role examine the respective added value of its commensurate with its financial contributions. services and those of its Member States.

What Direction for European Development Policy? 10 Ministry of Foreign and European Affairs - DGM 3) European instrument Moreover, the European Union must establish a programming must adapt to the new form of partnership with overseas countries new development challenges and territories (OCT), currently regulated by a decision of association based on Section 4 of the ➔ European aid was shaped by the search for TFEU. The new framework must take account added value in certain sectors. This effort of the fact that OCTs are a part of the European led to a certain standardisation of the aid family, and offer instruments and procedures that implemented by the European Commission. The are better suited to their reality and identity. same three concentration sectors are therefore found in a large number of partner countries: infrastructure, governance and budget support. 4) The European Union must Conversely, the Commission is not sufficiently heighten its visibility active in areas where it can provide genuine ➔ The European Union is too absent from added value, based on the experience gained in international debates on development, and the building of a united Europe. This is particularly its methods of intervention do not give it a poli­ true for regional integration and aid for trade, tical weight commensurable to its financial both areas in which support at EU level appears contributions. The entry into force of the Treaty to be the most relevant. European aid must of Lisbon has raised the issue of the European open up to the new challenges of development, Union’s representation within the organisations consider the lever effect its actions can have in charge of global governance (United Nations, on regulating globalisation, take better account World Bank, IMF). At a time when a reversal of growth objectives and mainstream global in the balance of power between industrialised public goods into its programmes. and emerging countries can be observed, it is At the same time, the European Union needs crucial that the European Union be in a position to diversify its instruments to match its partner to promote a development model in line with country situations. The so-called “developing” its values and legitimate interests. world has vastly changed over the last decade, and no longer presents a homogenous profile. Even though the political unity of these nations In the face of new challenges and with a has survived formally through the G77, disparities view to the implementation of the Treaty in development levels have increased to the of Lisbon, to the negotiation of the next extent that the developing country category Financial Perspectives and to the next is now being questioned. While most Latin major programming cycle, France believes American and Asian countries have successfully that greater coherence, more strategic implemented an effective growth model based targets, heightened efficiency and increased on export strategies for manufactured products, consideration for our respective assets are progress in sub-Saharan Africa has been lagging. possible. Through the present strategy, This diversification of our partners’ situations France wishes to submit six objectives and challenges calls for a differentiation of our to its European partners that reflect its strategies. Different instruments and methods vision of European aid architecture and its of dialogue are needed for LDCs, countries in chief expectations in terms of European a situation of fragility, middle-income countries, development policy for the next ten years. emerging countries and countries that export natural resources.

What Direction for European Development Policy? 11 Ministry of Foreign and European Affairs - DGM PrEsentation

■ Member States and the Commission must Six objectives move towards greater complementarity for European action and a better division of labour. that is more effective, more integrated Objective 3: for a European and better tailored policy better adapted to the new challenges to the increasing diversity of developing countries

■ Promote the strategic differentiation of Objective 1: for a European geographic partnerships.

development policy at the ■ Adapt aid delivery methods to the objectives heart of the European Union’s of geographic partnerships. external action

■ What opportunities are offered by the Treaty of Lisbon? Objective 4: for a European response adapted to the ■ How can the new institutional approach strengthen European development policy? challenges of a new world

■ How can foreign policy and development ■ Accelerate the achievement of the MDGs policy be better linked? via an integrated approach and diversified funding. ■ How can culture be better incorporated into the European Union’s external relations ■ Promote food security. and development policies? ■ Reinforce the development aspect of the European Union’s “climate diplomacy”.

■ Pursue the crosscutting objective of demo- Objective 2: for a more cratic governance. integrated, effective and visible ■ Reinforce the link between security and European policy development, notably in situations of fragility. ■ The European Union should achieve a new political consensus on development. ■ Increase support for regional integration.

What Direction for European Development Policy? 12 Ministry of Foreign and European Affairs - DGM Objective 5: for comprehensive policies and more coherent European action to promote development

■ Trade and development.

■ Migration and development.

■ Agriculture and development.

■ Intellectual property and development.

Objective 6: for more modern and responsive European financing solutions

■ Asserting a contractual and incentive-based European policy.

■ Better managed budget support for the benefit of aid recipients’ public policies.

■ Greater support to the productive sec- tor through a new commitment from the EIB and new loans and grants blending mechanisms.

■ European aid: a stronger capacity for rapid response to crises.

■ A more strategic allocation of the European development budget.

What Direction for European Development Policy? 13 Ministry of Foreign and European Affairs - DGM ObjectiVE 1

an intergovernmental approach, and the external For a European action of the Community (trade policy and development policy development policy). One of the goals of the Treaty of Lisbon is to put a stop to this at the heart of the fragmentation by combining the competences European Union’s of these two pillars under a single heading and by combining the mandates of the European external action Commissioner for External Relations with those of the High Representative of the Union for ➔ The Treaty of Lisbon, which entered into Foreign Affairs and Security Policy (HRUFASP). force on 1 December 2009, aims to make The High Representative is mandated by the the European Union a more influential player on Council for CFSP-related questions. He/she the international stage. Development policy presides over the Foreign Affairs Council, needs to be at the heart of this ambition. Certainly, including its development segment. As Vice- the treaty appears to offer ample opportunity President of the Commission, “he shall to enhance the effectiveness and coherence be responsible within the Commission for of our external action. responsibilities incumbent on it in external The co-existence of a common foreign and relations and for coordinating other aspects of the security policy managed by the Council and Union’s external action” (Art. 18 TEU). In fulfilling a development policy implemented by the his mandate, the High Representative will be Commission produced a fragmentation of the assisted by a European External Action Service European Union’s voice and action. The new (EEAS) (Art. 27 TEU) comprising officials from High Representative of the Union for Foreign relevant departments of the General Secretariat Affairs and Security Policy, who is also a of the Council and of the Commission as well Vice-President of the European Commission, as staff seconded from national diplomatic and the new institutional structure should now services of the Member States. The Union’s lead to reinforced coherence between all the new legal personality also transforms “European policies, both internal and external, that impact Commission” Delegations into “EU Delegations,” on developing countries. with diplomatic authority and responsible for representing the Union in third countries and within international organisations (Art. 221 TFEU). What opportunities are offered by the Treaty of Lisbon? 2) The Treaty of Lisbon 1) The Treaty of Lisbon fosters substantially strengthens new unity in the European European development policy Union’s external action ➔ For the first time, the Treaty establishes the ➔ In line with the EU’s three-pillar structure, paramount objective of reducing and the external relations of the European ultimately eradicating poverty and places this Union have developed since the Treaty of objective at the heart of the EU’s external Maastricht according to two logics: the Common action (Art. 3 TEU). TFEU Article 208 states Foreign and Security Policy (CFSP), based on that “Union policy in the field of development

What Direction for European Development Policy? 14 Ministry of Foreign and European Affairs - DGM cooperation shall be conducted within the EEAS must be assigned, under the authority framework of the principles and objectives of of the Commissioner for Development and the European Union’s external action. The the HRUFASP, a lead role in the initial phases Union’s development cooperation policy and of the programming cycle (country aid that of the Member States complement and allocation, country strategy documents, reinforce each other. Union development indicative multi-annual programming), with the cooperation policy shall have as its primary Commission services remaining responsible objective the reduction and, in the long term, for the later programming phases (annual the eradication of poverty. The Union shall take programming, implementation). account of the objectives of development Beyond any nexus between the European cooperation in the policies that it implements Union’s foreign policy, development policy which are likely to affect developing countries.” and economic, trade and financial policy, the The eradication of poverty is thus understood strategic framework should ensure “policy as a final objective that must be achieved coherence for development”. Achieving this through an array of complementary levers, ambition implies reinforcing, under the authority particularly economic growth. of the HRUFASP, coordination mechanisms Furthermore, it is specified that the EU and between the various general directorates and its Member States shall “coordinate their the relevant Commissioners. policies on development cooperation and shall consult each other on their aid programmes, including in international organisations and 2) Within this new architecture, the during international conferences.” The Treaty Commissioner for Development states that the Commission may take any useful must continue to promote strong initiative to promote this coordination. development policy in favour of Lastly, through its reinforced competences, the coordinated European action Treaty enables full involvement of the European ➔ Within the strategic framework described Parliament in formulating and implementing above, the Commission should be European development policy. The continuation responsible for identifying the sectors of of an institutionalised dialogue with civil society European aid (in close consultation with the must also accompany the creation of the EEAS and in light of its political analysis) and EEAS. for determining how the aid is allocated. Within the Commission, EuropeAid1 should continue to ensure operational unity for the How can the new institutional implementation of funds. architecture strengthen In accordance with the Treaty and the Consensus, European development policy? the Commissioner for Development will be responsible for taking any initiative required 1) The new institutional architecture to enhance coordination between Member should reinforce the strategic States’ bilateral policies and the bilateral policy aspect of programming and policy of the European Union. coherence for development ➔ The High Representative, who is also a Vice-President of the Commission, will 3) European Union Delegations in play a key role in placing development issues third countries should ensure aid at the heart of the EU’s external action and implementation in beneficiary in coordinating the action of the various countries and steer an in-depth Commissioners concerned. political dialogue to promote France calls for recognition of the EEAS’ key development role in the strategic programming of all aid-related ➔ The European Union’s new Delegations will financial instruments, including the EDF. The be in charge of in-country implementation

1. European Commission Cooperation Agency.

What Direction for European Development Policy? 15 Ministry of Foreign and European Affairs - DGM of all external competences. By allowing these currently in force to conduct both the CFSP Delegations to steer the political dialogue as and development policy: well as monitor the cooperation relationship, ■ European development policy must continue the Treaty of Lisbon has set in place a new to be governed by the fundamental principles dynamic. At the same time, this new organisation that guarantee its long-term objectives supposes that Delegations are given the (solidarity, eradication of poverty) and by necessary means and staff with the requisite the procedures developed to this end, in expertise to carry out these newly extended particular under the Cotonou Agreement prerogatives. (partnership, joint institutions, joint multi- The political dialogue as defined by Article 8 annual programming, resource allocation of the Cotonou Agreement between the EU based on needs and performance, etc.); and the ACP countries deals with all concerns of common interest. The Agreement states ■ the restrictive measures adopted by the that “the Parties shall regularly engage in a Council under the CFSP must, whene- comprehensive political dialogue […] The ver possible, only target and be applied to dialogue shall be conducted in a flexible manner. persons who have violated international Dialogue shall be formal or informal according law. These restrictions must also take their to the need […] in the appropriate format, and potential humanitarian consequences on at the appropriate level” in order to contribute local populations into account; to peace, security and stability and to promote ■ the suspension of cooperation, which can a stable and democratic political environment. be decided by the Council by virtue of Article In addition to the dialogue with political 96 of the Cotonou Agreement, is a measure authorities, the political dialogue can involve of last resort. When countries are subject a wide array of actors: opposition parties, non- to this procedure (Zimbabwe, Guinea, State players and civil society in general. Madagascar, Niger), the EU must continue In some countries, the implementation of to support the crisis recovery process and political dialogue has met with some difficulty. assist local populations. The operational unity embodied by the Union’s new Delegations should be used to reinforce this political dialogue by better integrating all How can culture be better questions relating to development. incorporated into the Union’s external relations and How can foreign policy development policies? and development policy ➔ Culture must be reaffirmed as a cross- be better linked? cutting component at the heart of development policies. Promoting cultural ➔ Although the Treaty of Lisbon clarifies the and linguistic diversity is an important factor definition of European development for fostering democratic values, conflict policy, concern has sometimes been expressed prevention and social cohesion. It is also that this policy runs the risk of becoming an an essential motor of human and social “appendix” to the CFSP. development, and one that is too frequently overlooked in development policies. It is important to recall that neither the Commission nor the Member States have It is vital that cultural diversity, in its broadest ever expressed the desire to instrumentalise sense, be integrated upstream into the development, and that the authors of the shaping of development policies so as to Treaty of Lisbon have in no way formalised adapt them to a society’s needs and defining the institutional subordination of development characteristics, except if this puts policy policy to the CFSP. ownership or success at risk. While advocating more strategic and coherent France defends the development of a new programming under the impetus of the external cultural strategy for the European EEAS, France places special importance on Union. Within the Commission, the cultural maintaining the balanced approach and principles dimension suffers from having been spread

What Direction for European Development Policy? 16 Ministry of Foreign and European Affairs - DGM among several general directorates, and The Treaty of Lisbon must enable European better coordination is now needed under the development policy to be steered more leadership of the EEAS. Culture must be strategically while preserving the role considered as a catalyst for human as well as of the Commissioner for Development economic development, whether it involves and the fundamental principles for aid the cultural and audiovisual industries or effectiveness: predictability and contract- the enhancement of national heritage. This based commitments. The fact that the new strategy must also reaffirm the specific European Union’s Delegations now steer all nature of cultural goods and services and external competences will help to reinforce ensure they are excluded from all trade synergies. negotiations with third countries. France, which is particularly involved on a bilateral basis in sub-Saharan Africa, will be very attentive to ensuring that the political dialogue initiated by the EU also covers development issues, with heightened emphasis on incentive and differentiation.

What Direction for European Development Policy? 17 Ministry of Foreign and European Affairs - DGM ObjectiVE 2

2) The Consensus should be For a more integrated, updated in order to face new effective and visible global challenges and could be European policy cascaded into more detailed strategies ➔ The challenge for the 27 European Union ➔ The content of the European Consensus Member States must be to mobilise their needs to be clarified and expanded. Being aid contributions—collectively equivalent to some very general in scope, it does not truly define 60% of global ODA —in a more consolidated focus areas for EU aid and fails to incorporate but non-centralised manner. Even though the some global challenges (climate; migration; European Consensus on Development adopted social cohesion, including access to employment; in 2005 laid down the principle of stronger linkage respect for fundamental rights). between bilateral policies and Union policy, The new Consensus could provide shared European action still appears too fragmented. sectoral and regional strategies to respond The new ambition for external relations set forth to challenges that may be beyond the reach in the Treaty of Lisbon implies updating the of bilateral policies and require consolidated European Consensus for Development in order action (access to energy, adaptation to climate to promote common, effective and visible action change, infrastructure, access to a universal on the international scene. social protection floor, and so on). To ensure their effectiveness, these strategies would require regular monitoring and assessment. The European Union should achieve a new political consensus on development 3) More effective monitoring of the implementation of the Consensus 1) To influence the international and the associated sectoral agenda, an renewed European strategies is needed consensus is crucial ➔ The procedures defined as part of the ➔ Over the past five years, progress has open coordination method could be been made in building a more integrated adapted to the European development policy European development policy. Two fundamental to ensure better monitoring of the Consensus texts were adopted: the European Consensus and the resulting initiatives. This method (2005) and the Code of Conduct on should be grounded in a precise mapping Complementarity and the Division of Labour of interventions and a distribution of tasks (2007). As the first text to address bilateral between the Community and Member States, policies and EU policy for development according to their respective added value. cooperation, the Consensus is a major step The Foreign Affairs Council should be forward in the affirmation of a European strategy. responsible for the adoption and monitoring of However, this founding text lays down only commitments, with support from the general principles of little practical use and Commission. as well as involvement of the fails to incorporate an effective monitoring European Parliament in line with the appropriate mechanism. procedures.

What Direction for European Development Policy? 18 Ministry of Foreign and European Affairs - DGM 4) The European Union’s action in vertical funds, private foundations, NGOs and the multilateral arena should be middle-income countries through South-South more unified, as demonstrated cooperation initiatives. It is thus vital that the during the Accra and Doha European Union form a united front in its allocation of aid in order to gain in effectiveness conferences and visibility. The Member States and the ➔ In the major international debates on European Union possess a variety of skills that development, the EU manages increasingly represent a considerable asset for European often to speak with a single voice. Two questions action. have nonetheless been raised as to how The division of labour process—a key component best exploit the full potentiality of the Treaty of of aid effectiveness—is crucial to in-the- Lisbon: the question of European coordination field complementarity between the different within the multilateral organisations in charge European players and to the implementation of development (UN, development banks, the of common strategies. Faced with the widely OECD’s DAC), and that of the appropriateness differing country situations, the division of the EU providing consolidated financial of labour needs to be implemented more contributions to these organisations. More pragmatically on a case-by-case basis, with consolidated action in terms of research on clear political leadership from Headquarters. development should be promoted upstream. Advancing a common European approach in developing countries will guarantee the 5) The European Union should coherence, effectiveness and visibility of be able to promote research our action. Today, even though the Code of that can serve as a reference Conduct on Complementarity and the Division in the international community of Labour and the operational framework on aid effectiveness constitute a political ➔ The European Union should be a reference platform, the potential for complementarity enabling all of Europe to capitalise on our and financial coordination is still not fully research and expertise in order to strengthen harnessed. our influence. The post of chief economist and a more robust research department should be created within the European Commission so as 2) The division of labour must to improve the strategic guidance of development leverage the comparative policies and bolster this influence. advantages of European A club of Chief European Economists in charge agencies of coordinating the intellectual production of the Member States and the Commission could be ➔ In the European Consensus on set up to achieve more consolidated and visible Development, Member States chose to action in development research. focus the EU’s actions on six sectors. However, the financial programming under the 10th EDF evidenced overall that EU aid is still Member States and too dispersed. It is crucial that Member States more clearly define the sectors in which the the Commission must Commission has real comparative advantages, move towards greater as well as the available instruments and complementarity and expertise. Strong specialisations exist in the a better division of labour areas of budget support, governance and infrastructure. Some areas that offer compara­ 1) Development effectiveness tive advantages, such as support for regional requires a strong linkage integration, simply need to be put to greater between Member States’ and use. But the Commission is involved in many European institutions’ action other sectors. Increased specialisation and a more precise inventory of its “areas of ➔ The aid landscape is becoming increasingly expertise” will allow a better division of tasks to complex and fragmented. Beneficiary match the needs identified by partners in their countries now interact with emerging countries, national poverty reduction strategies.

What Direction for European Development Policy? 19 Ministry of Foreign and European Affairs - DGM More generally, this reflection on comparative 4) Like the Consensus, the Code of advantages should be mainstreamed into a Conduct should be extended to joint programming process, and by all European include the complementarity of donors, in order to guarantee the relevance aid delivery methods of their efforts on division of labour. ➔ Complementarity between aid delivery The current process for the sectoral division methods should also be taken into account of labour, mainly implemented through the when applying the principles defined by Fast-Track Initiative, should be systematised the Code of Conduct. A donor’s legitimacy so as to reach common operational sectoral within a given country clearly increases if the strategies and systematic joint programming ways in which it delivers its aid complement in developing countries. those of its partners. The added value of actors On this count, the networking of European such as AFD, KfW and the EIB resides in the agencies is a cooperation modality that should broad spectrum of their financial instruments, be reinforced. This would help to improve coordi­ and the question should be raised as to whether nation between donors, build complementarity all of their financial activities (excluding grants) based on comparative advantages and create should be integrated within the scope of the true leverage effects. The three initiatives that Code of Conduct. exist today are: EDFI (European Development This more inclusive approach would make it Finance Institutions), EUNIDA (European possible to systematically examine whether Network of Implementing Development Agencies) it is beneficial to continue funding certain and the Practioners’ Network for European operations through grants, especially in the Development. Respectively, they make it area of infrastructure, to ensure optimal use of possible to pool resources, channel expertise European funds. and exchange good practices. France advocates a more ambitious use of The European Union, as the world’s leading loans and grants blending, which encourages donor present in almost all developing investment in regions where economic growth countries, has the critical size needed to help can be stimulated through countercyclical loan the drive for lesser inequality in aid allocation. policies. The geographical division of labour should help to prioritise the issue concerning countries Better linkage between the loans and grants that are commonly deprived of aid. allocated by the various European donors would lead to an aid delivery method that is not only coordinated, but also adapted to 3) An open, transparent the situations of partner countries in line with programming process must their level of development. In addition, this enable full leverage of Member approach would be particularly appropriate States’ and European agencies’ for funding the fight against climate change comparative advantages and for Europe’s capacity to help developing countries define low-carbon growth strategies. ➔ On-the-ground consultative meetings and common programming procedures must be used to examine European donors’ comparative advantages with respect to To enhance the effectiveness of European intervention contexts and offer partners more aid and heighten the visibility of its action on coherent and effective financing solutions, the international scene, greater coordination particularly through co-financing and delegated between European donors should be cooperation and transfer agreements, the encouraged. This objective of coordinated relevance of which should be systematically but non-centralised action must be pursued assessed. as much at headquarters as in the field. There is an apparent need for a new Given the diversity of European donors’ skills, consensus that bolsters synergies among there seem to be good grounds for calling European donors appears necessary and upon multilateral donors only as a last resort which is based on better identification of for the implementation of Community and even their respective added values. To make this emergency aid.

What Direction for European Development Policy? 20 Ministry of Foreign and European Affairs - DGM approach comprehensive, it appears essential to modify the timetable of its programming to extend the scope of complementarity to documents in order to harmonise with that the various aid delivery methods. France of the European Commission. This process believes that greater complementarity is should be implemented in concert with the required between the loans and grants other Member States in order to reinforce, provided by the different European donors. in the long term, the European Union’s Furthermore, this complementarity would universal competence, while fully leveraging likely mean that actions can be adequately each actor’s comparative advantages at the differentiated according to our partners’ geographic level. needs and the sectors concerned. The division of labour goes hand in hand France has firmly rooted its bilateral policy with the delegated cooperation and transfer in a European approach. Like most of its agreements, whereby a Member State or the European partners, it has committed to European Commission implements a project focus its aid geographically and secto­ designed or financed by (an)other European rally (conclusions of the Interministerial donor(s). France fully participates in this Committee for International Cooperation process, which enables it to put its expertise and Development - CICID, 5 June). To to best use within a harmonised common improve the division of labour, it intends framework.

What Direction for European Development Policy? 21 Ministry of Foreign and European Affairs - DGM ObjectiVE 3

country. The fact that the EU’s partners and their For a European policy growth paths are vulnerable to external and better adapted to natural shocks should be more effectively integrated into European aid programming. the increasing diversity Given their swift pace of development, emerging of developing countries countries should benefit from programmes that focus on their efforts to preserve global public goods. ➔ The diversity of developing countries’ economic circumstances, including countries in fragile situations, least developed 2) Better target European financial countries (LDC), middle-income countries (MIC) instruments based on geographic and emerging countries, questions the relevance zones of the concept of “developing country” as practiced by the WTO or as defined by the ➔ The upcoming budget (2014–2020) will OECD’s Development Assistance Committee. be an opportunity to redefine the priorities The EU could take better account of this of EU action across the world. The Commis­ heterogeneity by more fully differentiating its sion could propose that priority partners be partnerships with developing countries. This identi­fied to increase the effectiveness of poverty would boost the effectiveness of its action by eradication. European support for regional targeting the poorest countries and populations. integration could also be strengthened by This approach should go hand in hand with identifying priority organisations on the basis strategic thinking on how to link up the of sector and geographic zone. These choices partnerships agreed at national, regional and would be backed by specific European continental levels. strategies. It seems essential that overriding focus be given to Africa for the allocation of grants targeting Promote the strategic the MDGs. It is on this continent that progress differentiation of geographic towards the MDGs is lagging most. Certainly, partnerships Africa’s demographic, political, environmental, health and food security challenges are of 1) Define more differentiated particular concern, with a fall in average growth policies that take levels rates from 5.6% in 2008 to 1.5% in 2009 sparked of development into account by the global economic crisis. France has therefore decided to allocate 50% of the funds ➔ EU partnerships should more effectively earmarked for the MDGs (excluding actions in mirror the increasingly disparate situations post-crisis countries and grants not allocated and challenges affecting developing countries, on a country basis) to fourteen poor priority both in the strategic objectives they pursue countries in sub-Saharan Africa. and in their methods of intervention. European action would gain in effectiveness by adapting The incentive-based differentiation approach to the political, economic, social, health-related implemented through the European Neigh­ and environmental challenges specific to each bourhood Policy (ENP) could also serve as

What Direction for European Development Policy? 22 Ministry of Foreign and European Affairs - DGM example for building partnership strategies Provided that the achievements and fundamental with other middle-income and emerging principles that qualify this relationship are countries. Qualitatively graduating partner­ not lost, we should jointly reflect with our ships to match partners’ levels of commitment partners on the most effective framework for would lead to progress in the social and environ­ deepening our relationship. This debate is also mental agendas. linked to the budgetisation (incorporation) of the EDF into the EU budget, as requested by the European Commission and the European 3) Develop partnerships with other Parliament, which would be particularly useful donors for funding pan-African projects. ➔ Triangular partnerships (North-South-South) To facilitate their regional economic integration, on development aid issues are vital the ultra-peripheral regions (UPR) and overseas for building greater coordination with other countries and territories (OCT) should also donors and helping to forge a global partner­ be taken into better account in European ship for development (MDG 8). programmes, especially regional indicative programmes, and the Pacific and Caribbean Transatlantic dialogue on development strategies. The European Union needs to coope­ration offers an opportunity to deepen start thinking about a cooperation framework collaboration in key areas such as the MDGs, that is adapted to the international reality of aid effectiveness, food security or climate- UPRs and OCTs in order to facilitate trade related aid. This dialogue needs to be fleshed with neighbouring countries, particularly ACP out so that it becomes a genuine tool to enhance countries. the convergence of our interests in major international conferences. Discussions on Africa With regard to migration, the European Pact should also be taken further with China and the on Immigration and Asylum aims to foster the other major emerging donor countries (BRIC), synergies between migration and development. as well as the Gulf countries, and made as The EU’s “Global Approach” encourages a operational as possible, particularly through holistic approach to migration and promotes dialogue on the aid effectiveness agenda. inclusive development actions that focus on enabling migrants to contribute to development in their countries of origin. By this token, the 4) Increase the coherence of the Mobility Partnerships and the “migration and European partnership network development” strands of the Partnership and Cooperation Agreements should be developed, ➔ The overlapping of EU partnerships with bilateral support from Member States. weakens the effectiveness and readability of European action. It is paramount that thought be given to the coherence of both the network of agreements signed with third Adapt aid delivery methods countries and the dialogues with regional to the objectives of geographic organisations, and should be facilitated by partnerships the incorporation of all geographical desks within the EEAS. ➔ A more strategic and differentiated partnership policy also implies more In this context, the future of the framework of targeted use of European financial instruments. our relations with the ACP countries is an issue These adaptation efforts would help to that deserves a thorough review. Although this avoid the pitfall of standardising sectoral relationship is a longstanding model of flexible, approaches and aid delivery methods. effective and innovative cooperation, it now has to be recognised that these States’ development trajectories and interests are increasingly 1) Grant the most concessional divergent and that, in their political relations aid to sub-Saharan Africa and with Europe, our partners often give preference to the poorest countries to the sub-regional or pan-African level at the expense of the joint institutions established ➔ Adapting European financial instruments to by the Cotonou Agreement. geographic and sectoral factors would help

What Direction for European Development Policy? 23 Ministry of Foreign and European Affairs - DGM to streamline allocation of the most concessional EIB to the Southern neighbourhood, and one- aid, particularly grants to the poorest countries. third to the East. Lastly, more consideration This challenge is especially important in view needs to be given to the economic situations of current EU budgetary restrictions. Greater of the different countries in order to determine use of loans and mechanisms that blend the advisability of budget support. loans and grants would help to create new levers to increase financing, while grants could be used mainly to combat poverty and support 3) Diversify cooperation themes unprofitable sectors. and tools for middle-income The EIB could also expand its operations in countries and emerging Asian sub-Saharan Africa, which presently amount and Latin American countries to under EUR 1 billion per year, by issuing ➔ Cooperation in the partnerships with highly concessional loans to complement MICs and emerging countries is now grants and by fostering new collaborations with addressing highly diversified fields. Economic African banks and bilateral European agencies. and trade cooperation, the promotion of sectoral dialogue, support for higher education, scientific and technical collaboration and the 2) Support a European management of global challenges, particularly Neighbourhood Policy (ENP) environmental and energy issues, are all gaining that shows the potential incentive in importance. effects of partnerships The Financing Instrument for Development ➔ Partnerships signed with neighbouring Cooperation (DCI) in particular should adapt countries must remain ambitious so as to to this diversity and foresee a new, much- further the creation of an area of political stability, needed classification system. Reform of the security and economic prosperity in the vicinity Industrialised Countries Instrument (ICI) to of the EU. This objective implies engaging ensure eligibility for emerging countries appears in a deeper dialogue on democratic values equally necessary for funding programmes and environmental and energy issues, these that do not fall strictly within the scope of being fields in which leveraging the acquis development assistance. This adjustment communautaire and EU expertise is highly would also mean stepping up the use of loans, desirable. private funds and trade advantages, notably for goods manufactured in compliance with The EU must also ensure that the different certain environmental or social standards. strategies implemented in the neighbourhood Nevertheless, grants should not be excluded, are more effectively hinged. Complementarity especially if geared to incentivising reform in and interaction between the Eastern ENP, the sectors of key importance for the EU, such as Eastern Partnership and the Black Sea Synergy mitigating the effects of climate change. need to be bolstered. The major projects envisaged for the Union for the Mediterranean Given that the EEAS’ role is to guarantee the will help inject new impetus into the Southern coherence and the strategic aspect of European ENP; their extension to certain interested external policies, it should promote this more countries in Sub-Saharan Africa will likely help inclusive, differentiated and coherent approach to promote pan-African integration in line with to EU partnerships. the Africa-EU Strategic Partnership. The diversification of aid delivery methods appears to be fully justified for the ENP. The European development assistance would ambition of these partnerships calls for greater gain in effectiveness by more fully adapting use of lending and loans and grants blending, to its partners’ needs. The diversification of as well as private and innovative financing developing countries’ situations requires solutions. As for Community instruments, the more differentiated strategic approaches and safeguard of economic and demographic a more ample blend of financial instruments. balances implies continuing to allocate two-thirds This adaptation responds to the objectives of funds from the European Neighbourhood of ownership and alignment mapped out by and Partnership Instrument (ENPI) and the the Paris Declaration on Aid Effectiveness.

What Direction for European Development Policy? 24 Ministry of Foreign and European Affairs - DGM The setting up of the EEAS, which integrates is an opportunity for greater differentiation all of the Commission’s geographical desks between the approaches used, thanks to and strengthens EU Delegations’ political more detailed analysis of situations, for a expertise, should provide the EU with a more coherent linkage between European more comprehensive and strategic vision strategies and for more targeted efforts of all of its partnerships. This major change based on our partners’ needs.

What Direction for European Development Policy? 25 Ministry of Foreign and European Affairs - DGM ObjectiVE 4

Since the turn of the millennium, debates on For a European pro-poor growth have sought to promote this response adapted form of development, leading the ministers in charge of cooperation on the OECD’s Develop­ to the challenges ment Assistance Committee to adopt a policy of a new world statement on employment and social protection in 2009. ➔ While reports on the achievement of the MDGs emphasise the unevenness of the progress made, developing countries now Accelerate the achievement have to tackle challenges of a new kind or of of the MDGs via an integrated fresh severity, such as turbulence in interna­ approach and diversified tional economic and financial systems, climate funding change, demographic growth, food security, coverage of energy consumption, the preser­ ➔ The European Union is committed to vation of natural resources and, lastly, migration. channelling its development assistance These challenges call for the adoption of more toward achieving the MDGs, making these goals deeply integrated strategies that mobilise all a core part of its Consensus on Development. European instruments. Such strategies must European efforts have been substantial and also be differentiated to better match country remain preponderant within the OECD, parti­ specificities. Today’s challenges call for greater cularly in financial terms. Despite this, progress support of national development and growth towards the MDGs is still very heterogeneous strategies and for global governance in areas and particularly slow in sub-Saharan Africa. where globalisation significantly impacts Research conducted by the United Nations development. concurs with the European Commission report coordinated by F. Bourguignon2 in highlighting The crisis has served as a reminder of the the need for a more integrated, sustainable and limitations of economic theories that are founded differentiated approach to the MDGs, as well as on free markets and which reduce anti-poverty diversified funding and fields of action. policies to providing assistance for those who are excluded from these markets. It is Europe’s role to foster integrated develop­ 1) Support a more integrated, ment that supports social inclusion of poor sustainable and differentiated and excluded groups and is based on a approach to the MDGs high level of social protection combined with ➔ The achievement of each MDG is closely full employment, which is the core target of interlinked with the attainment of the other MDG 1. This inclusive development needs to goals. Reducing poverty, empowering women, open the way for a form of economic growth education, access to safe drinking water and that has a pace and pattern conducive to health are common goals. This means that all well-balanced, endogenous and sustainable of the EU’s policies need to be implemented economic development. in concert.

2. Millennium Development Goals at Midpoint: Where Do We Stand and Where Do We Need to Go?, 2008.

What Direction for European Development Policy? 26 Ministry of Foreign and European Affairs - DGM Sustainable progress toward the MDGs At the same time, the European Union must presupposes a development strategy adapted encourage greater mobilisation of local to each country, accompanied by support for resources and public-private partnerships. In governance and endogenous economic growth. many developing countries, the attainment The development of local productive sectors, of the MDGs will require significant public which create employment and wealth, is a spending well beyond 2015. This spending powerful lever in the fight against poverty. As must be guided by more effective and early as in 2008, France undertook to double equitable budget policies. Long-run reduction the AFD’s support to the African private sector, of poverty through sustainable growth and representing a commitment of EUR 2.5 billion investment in human development implies that over five years. States have the necessary budgetary leeway to implement appropriate public policies, limit Local indicators, beyond the MDGs’ overall their dependence on official development targets, could also be defined jointly with the assistance and thereby reinforce their owner­ relevant countries. The mobilisation of regional ship and legitimacy. The European Union organisations, particularly via the “MDG partner­ has an important role to play in this respect ship” in the Africa-EU Strategic Partnership, by providing coordinated support for capacity would also reinforce the developing countries’ building in tax administrations, by backing the ownership of these objectives. work of the African tax forum, by supporting Increased attention should be paid to the regional economic communities in efforts role and condition of women in achieving the for tax harmonisation, by continuing the fight MDGs. Gender equality in access to education, against tax evasion and non-cooperative tax healthcare services, employment, land and jurisdictions and by ensuring that the resources financial services, as well as to all levels of implemented to this end take into account the governance bodies, is a prerequisite to the specificity of developing countries. political and economic enrichment of society. Promote food security 2) Diversify funding and find ➔ The recent food crisis and the emergence new levers of new challenges such as demographic ➔ The EU must uphold its collective ODA growth and changing dietary habits in emer­ commitments while seeking new levers to ging countries, large-scale international land increase the impact of its aid and enhance the acquisitions, climate change and price volatility diversification of financial flows, as provided must prompt the EU to rethink its action for food for by the Monterrey Consensus. The use of security, with special focus on: loans and grants blending and innovative ■ the recognition of the four food security financing mechanisms offer promising potential. pillars (availability, access, quality/nutrition, The European Union has expressed support for stability/crisis prevention) and the need to innovative financing, for example, in the form rebalance these components (with particu- of taxes on financial transactions, air travel or lar focus on the low agricultural productivity revenues from auctioning carbon emissions of sub-Saharan Africa); allowances. It must maintain and intensify ■ the pertinence of action at global level, the this commitment over the coming years in recognition of regional dynamics and the order to trigger a real change of scale. Finding importance of field-level implementation new sources of funding is essential, but it is through coordinated approaches to enhance equally important to promote the emergence food security; of a solidarity system based on globalised economic activities. France will take steps to ■ the need to ensure the coherence, coordi- maintain European mobilisation in this area and nation and complementarity of European ensure that development funding receives full policies (trade, environmental, humanita- consideration in future allocation of funds from rian, agricultural, development, energy, etc.) innovative financing sources developed by the impacting food security. European Union and its partners.

What Direction for European Development Policy? 27 Ministry of Foreign and European Affairs - DGM 1) Promote a revamped governance for example) and the competent international system for food security organisations (such as IFAD). ➔ The European Union must continue to For these financial instruments, the European drive implementation of the Global Union should define a mechanism to manage Partnership for Agriculture, Food Security and price volatility, particularly concerning the Nutrition by defending an integrated approach remuneration of agricultural producers. based on three pillars: governance, knowledge Innovative financing mechanisms offering and finance. While there is certainly a need medium- and long-term returns to private to scale up donor funding, food security is a investors should also be encouraged. The global issue that in addition calls for highly African Agriculture Fund (AAF) operates with effective international governance hinged on equity financing and facilitates the mobili­sation the Committee on World Food Security, on of substantial volumes of private capital. An involvement from all stakeholders and on interesting case in point is IFAD’s contribution independent expertise. In this context, it is from European resources to the technical crucial to enhance the effectiveness of assistance facility linked to the AAF, the latter multilateral institutions, in particular the FAO, being co-financed by France and other donors. the Consultative Group on International Agri­ cultural Research (CGIAR) and the Standing Committee on Nutrition. Reinforce the development aspect of the European Union’s 2) Define a common framework “climate diplomacy” for action ➔ Regardless of a country’s or region’s level ➔ European and Member State food security of development, response strategies to policies need to integrate a common climate change have become an integral part framework, within the Global Partnership. This of the international agenda. Climate protection framework should define common objectives is now considered a global public good in need (agricultural development, support for food of an urgent, coordinated response from the production and smallholder farming, access to international community. food, nutrition policy, policy for crisis prevention and management and fostering increased and soundly based integration into international 1) Integrate the climate issue into trade). It should also address new global challenges (price volatility, climate change, land European development policy issues) and follow certain guiding principles ➔ The climate change issue needs to be (support for regional integration, an integrated better integrated into all EU policies. This is approach to meet new challenges, support for particularly true for European development national policies and strategies, prioritising policy and trade policy. the needs of the most vulnerable populations, Following the Copenhagen Conference in aid effectiveness, coordination of actors and December 2009, there is a vital need to more financing, division of labour and mutual closely align the development agenda with responsibility). climate policies. These policies must be designed to open up new opportunities allowing 3) Improve financing deve­loping countries to reduce poverty while pursuing low-carbon development strategies ➔ European financial instruments (AA, DCI- and adapting to the impacts of climate change. SA, EDF, ENPI) must be deployed with maximum coordination and effectiveness and The climate issue should translate into reinforced in coherence with Member State instruments. political dialogue between the European Union They need to be aligned with national sectoral and developing countries and become a key programmes involving all donors. In addition, part of the strategic partnerships and bilateral they need to be coordinated with international or multilateral cooperation agreements to be financial instruments (the World Bank’s GAFSP, negotiated in the coming years.

What Direction for European Development Policy? 28 Ministry of Foreign and European Affairs - DGM As for renewable energies and the fight against Pursue the cross-cutting climate change, the EU can follow the example set by the strategies pursued in the UPRs objective of democratic and OCTs and ensure greater sharing of best governance practices with developing countries. ➔ Within the European Consensus on Deve­ lopment, the European Union broadly defined the concept of democratic gover­ 2) Meet financing needs nance, taking into consideration all of its ➔ To maintain its credibility in the wake dimen­sions (political, economic, social, cultural of the Copenhagen conference, it is urgent and environmental). for the European Union to act on its fast-start In the new institutional framework, closer finance pledge to provide an annual EUR 2.4 ties between foreign policy and development billion over the 2010-2012 period. policy should help to strengthen governance in At the same time, it is essential that the developing countries. next Financial Perspectives (2013-2020) fully integrate the climate issue and its implications for developing countries. Overall, priority should 1) A positive, contractual approach be given to establishing an effective financial architecture using existing funds. ➔ Since the 1990s, the European Union has enhanced its cooperation policy by greatly It is also important to promote coordinated reinforcing its political component. In this respect, action by European financial institutions, its relations with the ACP member states are the such as the EIB, AFD, KfW and other Member most mature. State institutions and operators, for projects targeting climate change mitigation or In the event that the “essential elements” adaptation. Full advantage should be taken of pertaining to human rights, democratic principles all mechanisms that blend or combine different and the rule of law, as defined in Article 9 of types of available resources (Member State the Cotonou EU-ACP Partnership Agreement, grants and loans). are violated, Article 96 of the Agreement provides for a reinforced consultation procedure In the long term and given the scale of the (“consultations”) with the partner country and needs (an estimated EUR 100 billion per enables the Council of Ministers to adopt year by 2020), it is already clear that official “appropriate measures”, notably the suspension development assistance will fall short of the of cooperation assistance under the EDF. The mark and that complementary sources of funding European Union, aware of the inherent limitations (including private funds) will have to be found for of any political conditionality, has taken a investments, particularly in clean technologies. pragmatic approach in which the implementation France, which provides the Permanent of cooperation is suspended only in cases of Secretariat of the Leading Group on Innovative serious violation of the rule of law (accession Financing for Development, intends to actively to or maintenance of power by unconstitutional contribute to European and international means). research into new sources of funding—notably The suspension of cooperation must, as far as innovative financing mechanisms—in the area possible, spare civil populations. The adoption of climate change. France proposes that a of appropriate measures already enables the portion of the proceeds from carbon auctions European Union to refocus its cooperation be earmarked for the fight against the causes onto direct support to populations, via civil and impacts of climate change in developing society organisations, for example, and to countries. thus avoid impacting them too severely. The European Union should play a lead role Greater flexibility and responsiveness must in this initiative, which involves mobilising new be sought in implementing the procedure financing mechanisms for development while laid down in Article 96, especially when all promoting a more inclusive, equitable and conditions required to resume cooperation sustainable path for globalisation. have been met.

What Direction for European Development Policy? 29 Ministry of Foreign and European Affairs - DGM In general, the EU prefers to take a positive Commission and the EEAS to strengthen the approach by engaging in political dialogue role of local actors in European programmes with the partner country, as described in and, in particular, to promote the development Article 8 of the Cotonou Agreement, and by of platforms for multi-partner consultation. financing programmes in support of democratic To this end, it recalls the ambition of the governance. This is the second focal sector in European Charter on development cooperation ACP country programming. Under the 10th in support of local governance. Faced with the EDF, the EU also introduced a new contractual proliferation of cooperation players at local mechanism: the “Governance Initiative”. An level, the Charter defines more coherent types in-depth analysis of each country’s governance of action to complement other international (“governance profile”) is carried out with input initiatives, sets out principles and procedures from Member States and the partner country. for more effective cooperation at the local On the basis of this profile, the partner country level and identifies priority fields of action to can choose to undertake a governance action enhance aid effectiveness. plan for reform in order to receive additional With respect to existing Community programmes funding on top of their initial allocation. The (in particular, DCI-Non-State Actors and implementation of their commitments is jointly DCI-Investing in People), the European monitored by EU Delegations and Member Union must continue to actively support civil States through political dialogue and mid-term society organisations. The Palermo II process, reviews of programming. The governance designed to operationalise the Accra Declara­ incentive tranche is allocated at the start of the tion commitments, is an encouraging step in programming process and is not dependent this direction. More specifically, this support on results. It is an incentive tool designed to should strengthen the capacity of civil society encourage partner governments to initiate organisations to dialogue with their national a reform process in which civil society fully governments and help to develop more inclusive participates. public policies. Promoting social dialogue and building the capacities of social partners are 2) A broad approach to governance thus important objectives and dovetail with with civil society involvement various International Labour Office programmes. The European Union’s efforts to involve these ➔ The European Union has mapped out a organisations in discussions on aid programming broad approach to governance in deve­ are also vital and must be continued and lopment cooperation, “based on the universal amplified. principles and objectives and the common aspirations that must inform the main functions Regarding the terms of this aid, France is of government, all areas of state intervention in favour of the European Union proposing and the interaction of public institutions and financing mechanisms that support the citizens.” implementation of small-scale projects tailored to the expectations of civil society in the poorest France fully supports the implementation of this countries. The minimum threshold for EDF approach by the Commission and recognises projects benefiting non-State actors is usually its added value in this area. France favours too high when compared against the needs of a multidimensional approach that supports, these communities. for example, tax administration reform and judicial training, as well as the integration of the governance concept into each sectoral Reinforce the link between programme, including the deconcentration and decentralisation components. security and development, notably in situations of fragility France firmly believes in the importance of working closely with parliaments but also in ➔ The Treaty of Lisbon and the setting up of involving non-State actors from both the non- the European External Action Service governmental and private sectors in defining (EEAS) should afford the European Union an European development policy and program­ opportunity to give greater coherence to its ming its financial instruments. France invites the action by reinforcing the links between security

What Direction for European Development Policy? 30 Ministry of Foreign and European Affairs - DGM and development. The European Security item on the agenda of the future European Strategy (2003) and the European Consensus External Action Service. on Development (2005) have already explicitly Ensuring aid effectiveness in States in situations recognised that sustainable development is not of fragility (estimated at more than thirty) is a feasible without peace and security and that major issue for the international community. sustainable peace cannot be attained without It calls for the creative use of all European development and poverty eradication. The instruments, namely, the geographic and tangible threats identified by the European thematic programmes of the European Deve­ Security Strategy include regional conflicts, the lopment Fund and of the Financing Instrument failure of States, and organised crime. for Development Cooperation; the Instrument To meet these challenges, the EU has several for Stability; the African Peace Facility; and efficient tools at its disposal: for example, humanitarian assistance. It is crucial to combine the African Peace Facility, the Instrument for these tools effectively in order to ensure the Stability (IfS), governance programmes funded continuum between emergency aid, rehabili­ by the European Development Fund (EDF), tation and development. the Financing Instrument for Development France’s view is that budget support can play Cooperation (DCI) and European Security and a role in maintaining the stability of fragile Defence Policy (ESDP) operations. countries, whether they are in an acute crisis or post-conflict situations. It enables basic public services to remain operational in countries 1) Promote conflict prevention where the State lacks the means to finance and peace-building in European them, pending mobilisation of its fiscal resources, Union external relations which must remain the primary objective. ➔ As early as in 2001, the European Union’s Budget support must be accompanied by Gothenburg Programme had identified initiatives to provide governance advice, so the prevention of violent conflicts as a key that control procedures can be set up to objective for the EU’s external relations. Since guarantee good financial management and then, the European Union has gradually built fight corruption and tax evasion. up its conflict prevention and crisis response Although this comes with undeniable risks, capabilities. adopting a flexible and non-standardised France advocates that this priority should remain approach makes it possible to adapt to the a prominent feature of the European Union’s specifics of each situation. The Commission’s external relations, especially in fragile States work to formalise a common approach by the that require specific attention and a differentia­ EU, World Bank, IMF (International Monetary ted approach. Fund) and AfDB (African Development Bank) founded on strengthened dialogue and effective field coordination is of utmost importance. 2) Increase the coherence In fragile States, the European Union and and effectiveness of the European the United Nations have a key role to play Union’s action in fragile or failed in preventing conflicts, managing crises and States proposing an appropriate response strategy. The fact that the European Union (like several ➔ In November 2007, the Council adopted Member States) has a permanent seat at conclusions on the strong nexus between the Peacebuilding Commission is illustrative of security and development, on the one hand, this shared responsibility. and on the EU’s response to situations of fragility, on the other hand. In 2009, the principles France favours a reinforced partnership underpinning the merger of the two action plans between the European Union and the United were agreed upon. France fully supports the Nations to deal with situations of fragility. If formulation of a European Union action plan on necessary, the European Union needs to be in the security and development nexus in fragile a position to contribute to the United Nations States. It considers that this should be a priority Peacebuilding Fund.

What Direction for European Development Policy? 31 Ministry of Foreign and European Affairs - DGM 3) Develop the European Union’s substantial, predictable source of funds for peace-building skills African peacekeeping and security operations and thus encourages Africa to assume ➔ From 2001 to 2008, the EU channelled responsibility for security on the continent. some EUR 5.3 billion (excluding the Balkan region) into conflict prevention and peace- France considers that the European Union building by mobilising the financial instruments must continue to support the African Peace of European development policy. Since both and Security Architecture. To do so, proactive Brussels and the EU Delegations have limited efforts are needed to enhance African expertise in this domain, the programmes are capacities (of the AU particularly) in the most often implemented by regional or administration and financial management of international organisations. allocated funds. This is true, for example, of the Security System Reform (SSR) programmes, including justice 5) The case of Sahel-Saharan Africa and police programmes, and Disarmament, Demobilisation and Reintegration (DDR) ➔ The Sahel-Saharan region is currently programmes for former combatants. facing a number of social, economic and security challenges that threaten the stability of France is in favour of the European Union the region and are of concern for Europe given developing its own analysis and intervention its geographic proximity. capabilities for SSR and DDR. Modules on conflict prevention, SSR and DDR should be an The region’s security and stability is also a integral part of EEAS staff training. In addition, key issue for Europeans, as the weakened the European Union should ensure the short- sovereignty of Western Sahel countries term availability of relevant expertise that can undermines the fight against illicit trafficking be rapidly mobilised in case of crisis, drawing and the management of migration flows. on Member State resources. “Defence Advisor” Furthermore, European interests are increa­ and “Internal Security Advisor” positions filled singly targeted by terrorist threats in this region. by representatives from Member States could It therefore appears necessary that programmes be created within EU Delegations in developing to restore State authority take into account countries where these issues are a priority area the living conditions and expectations of the of cooperation. EU Delegations should acquire population concerned and, consequently, the new skills not only in the area of hard security, development outlooks for these regions. but also in complementary areas such as civil security. France considers that this situation calls for coherent, sustained action geared at helping Security is not, however, an end in itself and the region’s States to strengthen their capacity the action taken in this area must necessarily to control their territories and neutralise threats. be a part of a more comprehensive approach Such action must also support the development to reinforce democratic governance and foster of regions excluded from social and economic development. growth. To achieve this strategic objective, resources need to be better coordinated within national and regional projects, on the basis of 4) Strengthen the African peace existing cooperation instruments such as the and security architecture EDF and the Instrument for Stability. ➔ The African Peace Facility was created at the request of the African Union (AU) to flesh out the African peace and security Increase support of regional architecture. The Facility channels funds to integration peace support operations conducted by African regional or sub-regional organisations in ➔ France fully supports all efforts that can be Africa, as well as to capacity building initiatives deployed in favour of regional integration. within the African Union’s newly created security Such projects are key determinants for peace, structure. This innovative instrument is highly stability and development, as they endeavour to appreciated by African partners. It is the only overcome, through common agreement, the

What Direction for European Development Policy? 32 Ministry of Foreign and European Affairs - DGM political, physical, economic and social hurdles dialogue, capacity-building support, project that separate countries from their neighbours. aid and assistance in trade negotiations. EU They also aim to foster collaborative manage­ Delegations should also develop their role as ment of shared resources and promote common donor coordinators and implement the division of interests in the international arena. labour at the regional level. Greater interaction between the EU Delegation in charge of a region Promoting regional integration is a central and all Member State Delegations within the component of the European Consensus on region should also be sought. Development and is an area in which the European Union can bring a comparative advantage. For many years, the EU has actively supported a model of regional integration 2) More gradual support around the world. A particular case in point is ➔ European support for regional integration the ACP region, where Economic Partnership could be scaled to match the needs of Agreement (EPA) negotiations must continue each organisation, focusing on accompanying to focus on this priority objective, regardless their growth in a gradual, realistic manner. of the difficulties involved. European support An in-depth analysis of institutions would avoid for regional integration could gain in effective­ support being given to objectives that are overly ness if a more political, gradual and coherent ambitious compared to an organisation’s approach is adopted. resources and allow a more effective use of aid for capacity building. The Commission has already emphasised the need to simplify 1) A more political strategy institutional architecture and integration programmes, and the European Court of Auditors ➔ The presence of numerous regional has issued recommendations to this effect. organisations with overlapping mandates Stepping up technical assistance should bolster and scope, particularly in sub-Saharan Africa, these efforts. and the continuing weakness of institutional capabilities and common policies make it necessary for the European Union to re-align its 3) A more coherent approach strategy. ➔ In extended and more harmonised markets, The EU’s regional partnerships could enjoy the free movement of goods, services, better coordination if greater account were capital and persons should facilitate economies taken of Member States’ support, the reality of scale and stimulate investment, thereby of their sectoral expertise and the political role fuelling economic growth and South-South trade. played by the different organisations. A strategic For this to happen, the policies developed choice of stakeholders, to avoid kindling by regional organisations, particularly for inter-organisational rivalry, would improve harmonising legal frameworks, need to be the impact of European institution-building complemented, supported and strengthened programmes and would encourage collabo­ra­ by national-level policies to build up production tion between Regional Economic Communities, capacity, improve economic competitiveness sub-regional organisations and the African and promote sustainable social and Union Commission. environmental development. The success of To assess regional integration, there is a need regional integration processes also depends on for indicators other than those based solely a deeper involvement of the private sector and on intra-regional trade figures. To this end, the civil society. EU could support the pan-African programme In programming its aid, the European Union launched by the African Union Commission must also consider regional integration as to develop a common framework for monitoring a cross-cutting objective. Under the 10th the regional integration process. EDF, national programming documents and The new EEAS should also enable the EU to regional programming documents were drafted develop a more integrated approach for its separately due to other concurrent trade regional integration support through closer negotiations, which is a weakness that needs to linkage between political and institutional be addressed in the next programming period.

What Direction for European Development Policy? 33 Ministry of Foreign and European Affairs - DGM Lastly, the EU must defend a trade policy to regional integration, promoting growth that gives priority to the achievements and through economies of scale and contributing potential of regional integration. Although EPA to poverty reduction. negotiations have strengthened interregional dialogue, some of the bilateral interim In this setting, it is also necessary to ensure agreements do not appear to be compatible economic complementarity between Europe’s with the commitments made to customs ultra-peripheral regions (UPR) and the countries unions. The signing of full regional EPAs, which surrounding them, particularly ACP countries, is a necessary step after the interim EPAs with due consideration for their individual negotiated in 2007, should also give priority sensitivities.

What Direction for European Development Policy? 34 Ministry of Foreign and European Affairs - DGM ObjectiVE 5

as trade, migration or agriculture. Yet, this For comprehensive refocusing of priorities should not overshadow policies and more the importance of other themes such as the coherence between intellectual property coherent European and development, which this document has action to promote accordingly chosen to address. development Trade and development ➔ European policy coherence for develop­ ment (PCD) appears as a pivotal stake in ➔ As the main market for developing the European response to the global challenges. countries and the world’s leading donor, Article 208 of the Treaty of Lisbon requires all the EU seeks to combine trade tools and policies to address the objective of poverty development instruments to support growth in reduction. developing countries and combat poverty. Its action in this area could be made more effective Accordingly, in 2005, the EU decided to apply by taking advantage of opportunities offered PCD to twelve policy areas that could accelerate by the Treaty of Lisbon and better responding the achievement the MDGs. Every two years to new aid challenges, for example, by since then, the Commission has issued a differentiating development levels, supporting progress report on PCD in these twelve areas. more diversified local production and promoting The latest Commission report on this theme, social and environmental norms. released in 2009, suggests strengthening PCD in five priority areas: trade and finance, climate 1) Improve institutional cooperation change, global food security, migration and security. In the Council, France backed the ➔ The Treaty of Lisbon can help to establish a renewed focus on these priorities, while underlining more coherent link between trade policy the special importance it attaches to the themes and development policy. To do so, there needs to concerning the trade-development nexus, the be closer cooperation between the different migration issue and the future of the Common Commission departments and the EEAS, as Agricultural Policy (CAP). The importance of the well as the EU’s three institutions. The climate change strand in development policies European Parliament now plays a bigger role in has been discussed earlier3. As for the linkage European trade policy as its formal approval is between taxation and development, the strategic required before agreements are signed by the study launched by France4 will provide useful Council. National parliaments should also insights into this topic. be more deeply involved. With respect to its external partners, the EU should also pursue The European Union is in a position to foster its dialogue with the WTO and the UNCTAD a positive approach geared to strengthening (United Nations Conference on Trade and and leveraging synergies between develop­ Development) concerning the link between ment policy and other policy areas, such trade and development.

3. Reinforce the development aspect of the European Union’s “climate diplomacy”, Objective 4, p. 28. 4. Taxation and development, a strategic study launched in September 2009, currently being finalized.

What Direction for European Development Policy? 35 Ministry of Foreign and European Affairs - DGM 2) Better address the needs worrying in a context of economic and food of the poorest countries in trade crises and tougher competition from emerging agreements countries, which suggests that European strategy should be geared first and foremost towards ➔ Although “Everything But Arms” is an supporting local production and markets. important initiative, European trade policy does not always give priority support to the Compensatory instruments and assistance poorest countries. The upcoming revision of the mechanisms to adapt traditional industries are Generalised System of Preferences (GSP) intended to cushion developing countries from should, on this count, better target the economic exogenous shocks caused by globalisation and development objective by reserving trade trade liberalisation. Yet, these tools are labouring preferences to the benefit of those countries to support the development and diversification most in need. Trade agreements can also help to of local production. To prevent the marginalisa­ foster development and reduce poverty in tion of developing countries in the world developing countries. Economic Partnership economy, it is necessary to help them adapt to Agreements with ACP countries, in particular, liberalisation processes. The EU could adopt can serve this purpose insofar as the level of a more flexible and differentiated approach to market opening required from developing the market access conditions of the free trade countries allows them to protect their sensitive agreements negotiated with least developed sectors and long-run support measures are set countries, much in the same way as France is up. As the world’s largest donor and trading encouraging with the EPAs. power, the EU is especially well placed to There is also a need to redirect European aid advocate for better differentiation between the for trade toward priority support of local and developing countries in the WTO. Within the regional markets, as is recommended in the Doha Development Round, the economic French aid-for-trade strategy. The current gap performances of emerging countries are now between supply and demand with respect far in excess of those reported when it was to aid for trade implies that European aid launched, whereas the situation in LDCs and needs to be better aligned with the priorities of other poor countries has barely evolved. This developing countries, following the approach makes a strong case for better differentiation of of a division of labour among donors and developing countries, notably as distinct from enhanced complementarity between regional emerging countries. The EU should thus and national levels. The development of an encourage discussion on this subject in the aid-for-trade frame of reference, akin to that WTO, support further research on differentiation in Western Africa, would facilitate the task of criteria and promote special consideration for ensuring coherence. European support for the needs of the poorest countries in negotiations, private sector development must also be notably by recommending better utilisation of strengthened, particularly by drawing on Special and Differential Treatment (SDT). exper­­tise from Member States to upgrade Lastly, the effective implementation of businesses. European aid-for-trade commitments should also improve the integration of developing 4) Promote an ambitious countries into world trade. commodities policy ➔ Commodities are a global issue both in 3) Give priority support to local terms of economy and food supply. The production and markets commodity trade represents about 28% of ➔ The EU seeks to foster better integration of global trade and more than ninety countries are developing countries into the international dependent on commodities for over 50% of economic system by means of unilateral trade their exports. preferences and free trade agreements supported Given the current volatility of agricultural and by assistance programmes, especially ones to energy commodity prices and the fact that building up production and export capacities. commodities as raw materials are sources of Yet, the decline in the production capacities income for developing countries, the European of many developing countries is particularly Union must lay particular focus on commodity

What Direction for European Development Policy? 36 Ministry of Foreign and European Affairs - DGM markets and develop coherent policies in agreements; and support for civil society. this area. While commodities contribute to Adapting the first and stepping up the third would economic growth and the reduction of poverty give stronger impact to its action. in developing countries, as well as the planet’s At present, little incentive is offered by GSP+, food security, they also reflect economic and as beneficiaries must have effectively imple­ trade interests for the European Union and men­ted twenty-seven international conventions its private sector. in human and labour rights. In reality, the The problems specific to each of the major application of these conventions is assessed commodities must nonetheless be identified on the basis of often incomplete reports. and addressed. Agreement must be sought Moreover, the Commission services tend with producing countries to implement sustaina­ to give precedence to the regime’s trade bility, which is an approach that for the time being benefits rather than to its incentive role and arouses their wariness. For this, agronomic, keep to very flexible evaluations so that as economic and social solutions adapted to local many countries as possible can benefit from conditions could be proposed to bring about this preference. reform in some sectors through the use of The resulting situation is disquieting: not only European expertise in this area. is the objective of promoting good governance The present crisis reveals, above all, a lack of abandoned, but the rigour of the European European and global regulation that must be selection process could again be challenged addressed urgently. For this reason, it would before the WTO’s Dispute Settlement Body be desirable at EU level notably to reinforce (DSB). the work of the Council Group on commodities Improving this evaluation process is thus an (PROBA-Group) and to define an ambitious urgent matter and must be initiated with the commodities strategy for the European Union. revision of the GSP. More comprehensive For example, the European Union could European research on the basis of internationally encourage improved economic organisation recognised criteria would help to preserve of the value chains and promote instruments the incentive effect of the GSP+. Greater for the management of commodities market; responsiveness from the EU in dealing with further integrate commodities into European failure to comply with international obligations aid programmes and national and regional is also desirable in order to strengthen the aid-for-trade strategies; adopt measures to credibility and legitimacy of GSP+. fight raw material speculation by promoting the creation of a European regulatory body for The inclusion of social and environmental futures markets, along the lines of the CFTC clauses in trade agreements is an avenue to (Commodity Futures Trading Commission) in the be explored, since at this stage progress within United States; and, lastly, support international the multilateral framework remains limited, initiatives to combat commodity price volatility especially for the Doha Round negotiations and establish global governance for these on the relationship between trade and the products. environment (social issues are excluded here from the negotiating mandate). Greater attention should be devoted to this issue 5) Reconcile the developing with respect to implementing development countries’ economic interests assistance and agreements with the private with the promotion of social sector. The EU should also bolster its direct support to representative stakeholders and and environmental norms members of civil society who are actively ➔ The EU has three means of promoting working in developing countries to promote compliance with social and environmental decent work and environmental sustainability. clauses in developing countries: the special This approach would reinforce government incentive arrangement for sustainable develop­ ownership of these issues, as demonstrated by ment and good governance, known as the France’s experience in promoting West African Generalised System of Preferences Plus agricultural trade union structures. (GSP+); the inclusion of clauses in bilateral

What Direction for European Development Policy? 37 Ministry of Foreign and European Affairs - DGM 6) Strengthen the role of culture and the economy, all at both the national and in development cooperation European level. Although progress has been made toward harmonisation, legal regulation ➔ Our partners’ culture should be given still varies considerably across Member States greater consideration in development in terms of entry, mobility, long-term stay and cooperation policy. Integrating culture into migrant integration within the host community. development programmes, whatever the sphere In light of demographic prospects in Europe of intervention, is a factor for success as it and worldwide, this situation calls for increased ensures better alignment with our partners’ efforts, especially concerning legal migration, in needs, lifestyles and values. In turn, this leads order to promote policy coherence and give real local populations to take on fuller ownership of substance to the Global Approach. Furthermore, these programmes. as human trafficking is on the rise, stronger The EU has negotiated cultural cooperation cooperation is needed to effectively combat frameworks with some of our trade partners, illegal immigration networks in home and transit such as the Cultural Cooperation Protocol countries, where they are a source of economic, with the CARIFORUM countries to promote social and political destabilisation. the implementation of the 2005 UNESCO The European Pact on Immigration and Asylum Convention on the Protection and Promotion of as well as the EU-African conferences in Rabat the Diversity of Cultural Expressions. The French and Paris were milestones in of the area of concept paper, Pour une nouvelle stratégie “migration and development.” They demonstrate culturelle extérieure de l’Union européenne the common European desire for a global and (“For a new European Union external cultural coherent approach. strategy”), offers several recommendations for European cultural cooperation, particularly when this cooperation is linked to trade liberalisation. 1) The migration and development These proposals call for cultural cooperation frameworks to take into account the level of nexus could benefit from a more development of a partner country’s cultural dynamic approach industries, as well as its expectations and ➔ Since 2006, Europe and Africa have been interests in the different cultural sectors. The engaged in a dialogue on migration- paper also recommends that the EU adopt a related issues. The EU-African process on comprehensive and differentiated approach migration and development was launched in to cultural cooperation with its partners, and Rabat in July 2006. On 25 November, France, incorporate this cooperation into its develop­ which is firmly committed to this regular ment policy. dialogue, hosted the second EU-African Ministerial Conference on Migration and Development in order to give fresh impetus to For a global approach to practical and operational cooperation between migration and development the partners involved in the process. This conference led to the adoption of a triennial ➔ The Global Approach to Migration, adopted cooperation programme comprising around in 2005 by Heads of State and Government, one hundred practical recommendations. provides a clear framework for action by the Migration must become a key component of European Union and can be used to take the external relations of Member States and advantage of the development opportunities the Union. This means that, in the relations with offered by migration. each third country, the quality of the existing Its three focus areas—promoting mobility and dialogue should be taken into account. legal migration, preventing and combating illegal The goal is to better integrate migratory policy immigration and its networks, and optimising and development policy to help reduce inter- the link between migration and development— regional development disparities, in line with require well-balanced implementation to ensure the specific development policy objectives, in “policy coherence for development”. particular the Millennium Development Goals. Migration policy cross-cuts a variety of domains Migrant remittances, the involvement of diaspora including domestic affairs, justice, foreign affairs populations and circular migration are three

What Direction for European Development Policy? 38 Ministry of Foreign and European Affairs - DGM key components that the Union should put France encourages the EU countries and to full use to incorporate development into the European Commission to coordinate their migration policies and boost policy coherence efforts and cooperation with origin and transit for development. countries, with a view to improving migrant families’ access to financial services and to encouraging origin and transit countries to adopt 2) France encourages the EU to regulations that will facilitate the emergence of strengthen the legal regulations new actors on the migrant remittance market pertaining to legal migration, in connection with micro-financing institutions notably in rural areas. particularly circular migration ➔ Adopted by the European Council on 16 October 2008, the European Pact on Migration and Asylum encourages Member Agriculture and development States to offer third-country nationals legal The promotion of agriculture and food immigration opportunities in function of their ➔ security in developing countries must be a labour market capacities. Through Commitment key objective for the Union. As illustrated by the 5, the Pact promotes inclusive development food crisis, agriculture crystallises major human, actions that enable migrants residing in the economic and environmental challenges for European Union to take part in the development developing countries. It frequently represents of their home country, thereby furthering the one-third of developing countries’ GDP (Gross consultative and partnership-based approach. Domestic Product) and provides employment for The EU should make further headway with two-thirds of their active population. Agriculture agreements on the mutual recognition of quali­ is therefore one of the five priorities of French f­ications, making them a systematic component policy on development assistance. of the bilateral strand of the “Partnerships for Mobility” in which it participates. In addition, France encourages full implementation of the 1) Bolster synergies between “EU Policy Plan on Legal Migration”. European policies that impact agriculture in developing countries 3) France encourages the European As the world’s foremost agricultural power, Union to fully invest its efforts in ➔ the European Union is cognisant of the facilitating and lowering the cost prominent role it has to play in meeting the of migrant remittances toward global food challenge. In 2009, it pledged to home and transit countries, increase its policy coherence by placing the and to back development projects global food security objective at the heart of the undertaken or supported by Common Agricultural Policy (CAP) reform migrants process. ➔ More specifically, France would like the EU The series of reforms in the 1990s and 2000s Member States and the Commission, within have already marked up clear progress and the framework of the European Directive on built support for agricultural industries in Payment Services, to work jointly with transfer developing countries. The proportion of export operators to increase cost disclosure, develop refunds in the European agricultural budget the opportunities created by new technologies fell from 29.5% in 1993 (EUR 10.159 billion) and support financial products tailored to to 5% in 2006 (EUR 2.494 billion). This downward the needs of migrants and their families in reci­ trend has continued ever since, with refunds pient countries. This should be achieved by accounting for a mere 1.2% of CAP spending encouraging and supporting migrants’ initiatives in 2009. Their impact on developing countries for productive investment in their countries of must continue to be closely monitored. Thanks to origin through appropriate incentive mecha­ the decoupling of direct European aid, almost all nisms, in particular building on European CAP domestic support (programmes designed diaspora networks. to support guaranteed income, structural

What Direction for European Development Policy? 39 Ministry of Foreign and European Affairs - DGM adjustments or environmental protection) now Intellectual property qualifies as non trade-distorting (“green box”) according to the WTO rules. The EU should and development improve its communication on these radical ➔ Innovation and the development of creativity reforms, which have made it possible to counter are essential drivers of economic growth, the criticism frequently levelled against the CAP. especially in today’s global knowledge economy. It should also step up efforts to support the Intellectual property, which is an incentive growth of local industries in developing countries. mechanism for innovation, is an important tool A mid-term review of biofuel production objectives in this context. Developing countries must be in on the basis of their impact on food security is a position to use and adapt the intellectual also essential. property regime to meet their specific needs. It is important to underscore that the impact of While a balance needs to be determined the CAP varies depending on the country. Net between protecting European industries and exporters of agricultural products tend to suffer disseminating technology in developing from the increased competition and lower prices countries, the European Union must enhance resulting from European agricultural subsidies, its incentives for technology transfer, as well as opposed to importing countries, which tend to as its offering of technical cooperation. benefit from this situation. France encourages the European Commission Furthermore, thinking on the relationships to conduct a study into the added value of between food security policy and humanitarian agriculture, particularly with regard to geo­ aid could be taken further, especially as graphical indications. Today, little is done to the London Food Aid Convention is under protect traditional knowledge and local products renegotiation. The notion of food aid should in the South, or to promote these assets in be developed so as to reinforce the continuum developed country markets despite the fact that that stretches from emergency aid to long-term they offer promising development opportunities. food security. Beyond this framework, a Europe- wide reflection on the role of multinational France encourages its partners to consider agro-industrial firms appears necessary. technology dissemination as an essential development lever, particularly in the health sector. It proposes a specific approach for 2) Promote the coherence the least developed countries, which notably of policies for food security involve: in international bodies ■ identifying requirements and a study into ➔ The European Union should also work how technology dissemination can be with international bodies to frame coherent facilitated, in particular through patents and policies for worldwide food security. The Doha patent transfers; Development Round must respect the ■ adopting an integrated approach to mobi- legitimate desire of States to ensure their food lise European aid for the use of patents; security, which involves inter alia using the most appropriate measures to develop the ■ implementing of practical solutions such agricultural sector, particularly in the case of as royalty-free voluntary licensing, or obtai- very small-scale farmers. Regulation of the ning funding for the acquisition of rights. international financial system can also target measures to protect the commodities markets from potentially harmful speculation, and Developing the external aspects of certain monitor measures designed to limit the volatility “internal” policies calls for greater of agricultural prices. Lastly, the EU will need coor­dination with the EU’s general political to be attentive to the negotiation of new climate foreign policy objectives, in particular with agreements in the areas of adaptation, miti­ regard to development. gation, and sustainable agricultural production in developing countries.

What Direction for European Development Policy? 40 Ministry of Foreign and European Affairs - DGM ObjectiVE 6

tied to the provision of services and to the For more modern and management of public finances.” In the Cotonou responsive European Agreement signed with the ACP countries, the EU thus introduced an approach geared to financing solutions allocating aid on the basis of needs and results, while maintaining the essential principles of aid ➔ Starting in 2000, the European Union predictability and joint programming. began a major reform of aid management It appears necessary for European aid to be that has helped to streamline its instruments deployed within a structured development and considerably improve its programming agenda led by the beneficiary country. Whene­ process. However, maintaining the EDF outside ver possible, priority should be given to a pro­ the Union’s general budget puts a brake on its gramme approach understood as constituting effectiveness. European programmes must a framework for donor-beneficiary relations that continue to be implemented in line with the aid is underpinned by the principles of ownership effectiveness agenda laid down by the Paris and alignment and, at the same time, backed Declaration in 2005. by a process for coordinating and harmonising procedures. In order to adapt to the diversity of developing country situations and the weakness Asserting a contractual and of public policies in certain countries, France incentive-based European has chosen to intensify its use of the Sector- policy Wide Approach (SWAp) to aid, which is a sector- oriented programme approach. This solution 1) For a well-balanced partnership should above all be rolled out in countries where between ownership and incentive growth strategies and poverty reduction strategy papers (PRSP) are too general to give direction ➔ When it signed the Yaoundé Conventions to the development process. with the ACP countries, the EU became the first donor to establish a truly partnership- based relationship with developing countries, 2) The need for stronger political grounded in the equality of the parties and in investment supporting contractual commitments. Country strategy and an incentive-based approach aid programming must continue to be jointly defined with the partner country according to the ➔ Over the past few years, the EU has sought latter’s development strategy and priorities. to increase the effectiveness of its aid by To increase the impact of its aid, the EU has developing two incentive-based models: MDG developed a partnership approach focused on contracts and the “governance initiative” results, requiring that aid be disbursed according mentioned earlier. to the “progress made with regard to several With the “MDG contracts,” the Union is promo­ indicators, in particular the results achieved ting an innovative approach that more overtly toward reducing the aspects of poverty directly links aid to the improvement of human

What Direction for European Development Policy? 41 Ministry of Foreign and European Affairs - DGM development indicators. Under these contracts, to reduce aid transaction costs, particularly for a proportion of total funding is contingent on the beneficiary country, while furthering donor the progress toward achieving the Millennium coordination. Development Goals (MDGs). This mechanism Under firm impetus from the previous offers many potential advantages in terms of Commissioner in charge of development, Louis effectiveness and mutual commitment. However, Michel, the Commission set the objective of it is not suited to all circumstances and, if channelling nearly 50% of its programmable implemented, should be coupled with close aid under the 10th EDF in the form of general monitoring of MDG-related public expenditure, or sector budget support (in some countries, particularly in the social sectors. the latter accounts for up to 80% of this type By sharing responsibilities and commitments, of aid). Under the 9th EDF, only twenty-nine the new incentive-based approaches have ACP countries received budget support; their altered the nature of the donor-recipient number will increase to forty-four under the 10th relationship. The emphasis is now on defining EDF. public policies and assessing their implemen­ Setting in advance an overall target for budget tation: programme execution is entrusted de support from European funds—in this case a facto to the partner countries on the basis of 50% mark—is hardly coherent with a strategy results-oriented management. aimed at improving aid effectiveness. The Yet, these approaches will yield benefits only amounts and modalities of budget support can if the EU can successfully lead a strong and only be determined in light of each country’s coordinated political dialogue. The capacities economic and political situation and in conjunc­ of the EU’s new Delegations should be tion with the recipient State. Otherwise, there reinforced, not least by mobilising Member is a risk that aid be disbursed with little regard States’ expertise, in order to engage with partner for development priorities. If the overall financial countries in a more comprehensive dialogue on target, which reflects a disbursement obligation, public policies. is determined a priori, this could run counter to effectiveness and ownership objectives.

Better managed budget support 2) For more differentiated budget for the benefit of aid recipients’ support public policies ➔ Given the inherent political and fiduciary 1) Promote the use of budget risks, implementing budget support is a support without quantifying formidable challenge. It requires excellent ma­ general objectives nagement, concerted action and, above all, capacity building. Since 2007, the Commission ➔ The 2005 European Consensus on Deve­ has consequently endeavoured to adapt its lopment recognised that budget support budget support programmes to the nature and should be given prominence as an aid delivery needs of each beneficiary country. method. The choice of this instrument is in line with the orientations adopted by the international The Commission must continue to adapt its community in the Paris Declaration. Given the budget support modalities to country situations critical mass of European budget support and and needs. This is a pragmatic approach that the expertise developed by its services, the should be reflected not only in the criteria used Commission unquestionably has a comparative to select this instrument for a given country, but advantage for implementing this type of aid, also in the related procedures. For instance, which has moreover been commended by the should a country have no national development OECD’s Development Assistance Committee. policy and adequate poverty reduction strategy, underpinned by a realistic budget framework This purpose of this aid delivery channel is to with medium-term programming, the use of reinforce partner governments’ capacities to sector budget support to build credible and manage their resources, prepare budgets and budgetarily sustainable sector policies may prove deliver basic social services. It should also help more effective than general budget support.

What Direction for European Development Policy? 42 Ministry of Foreign and European Affairs - DGM In accordance with the Paris Declaration on and customs policies. Such harmonisation is Aid Effectiveness, there should be continued likely to stimulate investments that generate emphasis on budget support, but this is not additional resources for the State and create a feasible solution in all countries or in all jobs that foster the emergence of a tax-paying circumstances. The Commission must thus community use a more integrated approach drawing on the entire spectrum of available financing tools (aid tied to specific projects, support 3) Work to strengthen the dialogue for sectoral programmes, sector and general on policies budget support, humanitarian aid and crisis ➔ The introduction of specific political prevention assistance, support for civil society conditionalities into budget support (this and via civil society, approximation of standards, being only one of many development financing rules and legislation, etc.) to increase its aid instruments) could prove counter-productive, effectiveness. which makes it vital for policy dialogue to be At the same time, budget support must also conducted at the highest level. encourage the mobilisation of beneficiary Budget support must be conceived as a pro­ countries’ fiscal resources. It is likely to reinforce gramme to bolster the State, particularly in coun­ government capacity on three counts: tries in fragile situations. This means providing short-term assistance on top of the financial enve­ ■ effective implementation of public policies defined by the government and under lope to ensure the proper execution of budget government ownership are likely to support, as well as longer-term support for State encourage taxpayer compliance when capacity building. This “package” must be comple­ citizens see that planned projects are mented by high-level dialogue on the public completed; policies implemented by the beneficiary State.

■ both general and sector budget support strengthens the capacity of government administrations to better manage public Greater support to the finances, make more effective and trans- productive sector through parent decisions and implement more a new commitment from the efficient actions; EIB and new loans and grants ■ the policy dialogue established by the blending mechanisms through budget support process fosters greater transparency and fuller participation of the creation of a European civil society actors and, at the same time, platform to fund development improves the reliability of information. As ➔ The private sector is deemed to be one of a result, this may create an incentive for the engines of poverty reduction. Yet many productive investment to generate new projects designed to support productive sectors fiscal resources for the State. fail to find funding, especially in Africa, where Budget support is an effective instrument and it often seems easier to martial resources reveals it full potential when coupled with a for other forms of aid (technical assistance, sound policy for strengthening State capacities debt relief, food aid, etc.). The EIB is mandated in public finance management and the mobili­ to promote the private sector. To this end it sation of fiscal resources. France has recognised disposes of valuable tools that would gain in experience in this field and welcomes the effectiveness if the bank’s actions were defined European Commission’s desire to reinforce its in closer relation to Commission policy. Commis­ expertise in this domain. sion resources and EIB lending have so far Budget support can also play a significant been highly inadequate for want of coordination role in regional integration through its support between their respective programming processes. for the implementation of transnational sectoral The increasing diversity of developing countries’ policies (environment, natural resources, health situations, the amplitude of the new challenges and education) and the harmonisation of fiscal facing development assistance and the need

What Direction for European Development Policy? 43 Ministry of Foreign and European Affairs - DGM to regard grants as rare resources all call for a parties. The possibility of revising the rules and greater blending of loans and grants, together practices in both these directions should with a new platform to knit closer ties between thus be explored so as to enable the EIB to take the Commission, the EIB and bilateral agencies. more risks. Short-term recommendations This would then mean that grants could be included in the report by the “committee of wise focussed on the poorest countries and least persons”, chaired by M. Camdessus, as part of profitable sectors, and that lever effects could the mid-term review of the EIB external mandate be sought in other regions or sectors to increase should open up opportunities for additional European funding. A truly robust offering of lending in favour of developing countries, European financing is conceivable if it brings particularly in the areas of climate change, together, through the use of new instruments, economic infrastructure and the private sector. all of the actors involved—the Commission, the Another possible avenue worth exploring would EIB and Member State agencies. be to consolidate the Bank’s external activities within a new independently governed EIB subsidiary devoted to non-EU and non- 1) A stronger EIB commitment candidate country financing. This subsidiary in sub-Saharan Africa would then be able to take its own risks without ➔ Sub-Saharan Africa has overwhelming a Commission guarantee. needs in terms of infrastructure, investment Notably because this option would involve crea­ and support for its private sector. Given the ting a new structure, it seems to have triggered efforts to bring EIB activities more closely opposition from a large number of Member into line with EU external policy, it seems crucial States on the grounds that the subsidiary would to reform EIB’s mandate for sub-Saharan lose economies of scale on its overheads, as Africa, facilitated by a possible budgetisation of well as the EIB’s advantages of low-cost the EDF. A study into the Investment Facility borrowing and financial diversification. In the and inclusion of sub-Saharan Africa in the Camdessus report this option is meaningful EIB’s external mandate would help to expand only as a first step towards creating a European the bank’s margin of manoeuvre in this region, agency that would build new synergies and where it currently operates in alignment with involve bilateral development agencies. the Cotonou Agreement. The EUR 3.4 billion endowment for the ACP countries remains An alternative recommendation from the far below the budgets allocated to candidate commission chaired by Charles Milhaud would countries (8.7 billion) and neighbouring be to limit subsidiarisation to the EIB finan­ countries (12.7 billion), and is equivalent to cial instruments in the Mediterranean region, those earmarked for Asia and Latin America which are now framed by the Facility for Euro- (3.8 billion). Mediterranean Investment and Partnership (FEMIP). The creation of a Mediterranean bank would facilitate a more effective response to 2) A possible subsidiary to house the region’s specific and hefty needs for funding. all or part of the EIB’s external The proposed bank would be regional, much actions like the EBRD for Eastern Europe, with capital open to Southern countries (and governance- ➔ The EIB has a limited scope for interven­ compliant with co-development requirements). tion in developing countries, although the Its affiliation with the EIB group would give this needs identified could open up real opportu­ subsidiary access to low-cost borrowing. nities. For EU-guaranteed loans, the EIB is bound by strict mandates and by the guarantee fund mechanism, which has a very high 3) The need to develop tools provisioning rate (9%). Under the Cotonou blending European agency loans Investment Facility for ACP countries, leveraging and European grants through the opportunities are particularly narrow: some creation of a European platform resources are not borrowed but drawn from a fund directly fed by the EDF. For loans from the for development finance bank’s own resources, the Board of Directors ➔ In recent years the Commission has only approves lending to risk-free counter­ developed instruments for certain regions,

What Direction for European Development Policy? 44 Ministry of Foreign and European Affairs - DGM based on variable governance arrangements EBRD’s non-European shareholders, since such and associating Member States who are asked a move would alter the status of what is currently to contribute to a trust fund. These instruments a multilateral bank. are open to Member States’ bilateral financial The creation of these new structures, which institutions as well as the EIB, and encourage are moreover vastly different from one another, co-financing and coordination. The grant would undoubtedly result in a major shift in the component can be allocated to technical positioning of the European development policy. assistance to enhance the quality of project The consequences of such a reform must thus design and management, or to offsetting be carefully measured. environmental impact. The number of eligible projects is on the rise. A coherent and overarching strategy should European aid: a stronger be developed with respect to the geographic coverage and governance of these instruments capacity for rapid response in order to encourage the widespread use to crises of this approach. They should evolve into a ➔ The latest series of energy, food, economic platform that coordinates financial institutions and financial crises has severely affected with a view to further bolstering synergies. developing countries’ economies and may have Blending mechanisms are currently funded jeopardised the progress marked up by some of by the multi-country programmes under the them over the past few years. The European Community budget devoted to the concerned Union has responded by mobilising additional regions. More funds will need to be allocated to resources (in the case of the food facility), EDF them to ensure they reach full maturity. reserves (in the case of the vulnerability FLEX mechanism [V-FLEX]) and the EDF B-envelope As a complement, loans and grants blending reserved for ACP countries. could also be proposed as an option for implementing national programmes. The requi­ red level of funding would be determined jointly 1) The need for greater reserves with partner countries, depending on their to face crises circumstances and priorities, during the drafting of strategy papers. This proposal would mean ➔ Two sources of funding can be mobilised that very high volumes of consolidated financing by the EDF: the reserve determined at could be channelled to Southern partners, with the beginning of the programming cycle (EUR swift and substantial macroeconomic impact. 600 million under the 10th EDF), and the B-envelope allocated to each country and replenishable as needed. This envelope is 4) The scenario of a future European intended to cover unforeseen needs such as development agency emergency assistance that cannot be resourced ➔ In the Camdessus report, on top of from the EU budget, contributions to interna­ proposals to develop and improve loans tionally agreed debt relief initiatives, as well as and grants blending and to create a platform support to mitigate the adverse effects of to reinforce ties between the Commission, the fluctuations in export earnings. These resources EIB and bilateral agencies, an even more have proved insufficient to cope with both the ambitious reform is suggested: the setting up economic and financial crisis and the food crisis. of a large European development agency Although EDF reserves, determined for a (merging the EIB and EuropeAid), or even a six-year period, made it possible to fund the major European development bank (which would V-FLEX mechanism to compensate for loss of also take over Member States’ EBRD share­ tax revenue, this operation consumed a large holdings). In an increasingly competitive and fraction of the resources available for the fragmented landscape, the universality of mid-term review, which are a vital aspect of the instruments offers a comparative advantage incentive created when funds are allocated on that may hold an appeal for the EU as it offers the basis of needs and results. greater effectiveness and visibility. However, this idea first needs to be duly discussed with the

What Direction for European Development Policy? 45 Ministry of Foreign and European Affairs - DGM 2) Create insurance instruments tenable that the European Parliament not be to protect developing countries fully involved in EU-ACP relations, as it is with from exogenous shocks the other instruments and regions of the world. There are also many technical arguments in ➔ A subject to be explored is the creation favour of budgetisation. Most importantly, other of a mechanism that would safeguard the cooperation frameworks that do not coincide level of investment spending indispensable to with the ACP configuration have been establi­ the State in the event of an exogenous shock. shed and these require better linkage between The study initiated as part of the V-FLEX our instruments. This is particularly true for the mechanism reform is noteworthy in this regard. new pan-African component of the EU-Africa The idea would be to set up a fund that could be strategy. mobilised in the event of a shock. The fund would be replenished annually by the European Budgetising the EDF would increase trans­ Union and, on a voluntary basis, by the Member parency and visibility, while complying with States and “high-income” developing countries. the principles of budgetary unity and enabling It would be used to directly meet the exceptional all EU development funding to be presented needs of ACP countries or, more innovatively, under a single budget. to finance (initial capital, premiums) the Budgetisation would also make it possible to underwriting of insurance policies with private circumvent the lock-in caused by the five-yearly companies. negotiation cycle of successive EDF budgets. It would also help to avoid the lengthy procedures for ratification of financial protocols, and to A more strategic allocation harmonise the implementation procedures for of the European development European aid, thereby reducing management costs for the Commission and beneficiary States. budget This move, however, should not jeopardise ➔ The Union’s external action budget has the continuity of relations established within gradually increased over the years, although the framework of the EU-ACP, both in terms it still accounts for a relatively modest fraction of commitments and management methods. It of the Union’s total spending. In 2008, EU should provide an opportunity to disseminate external aid amounted to EUR 12.8 billion, EDF good practices to the other European equivalent to 9% of total EU spending (EDF external aid instruments. included). The Treaty of Lisbon aims to scale up the 2) Give priority to Africa and external action of the EU by creating a High the Least Developed Countries Representative Vice-President of the Commission and a European External Action Service (EEAS). ➔ The European Union has pledged to set In the next Financial Perspectives, the EU’s Africa at the top of its aid agenda. This external action budget should be adapted to the choice could not be better grounded. Sub- new priorities. Saharan Africa is the region where progress toward achieving the MDGs is lagging most. It is also the region that concentrates the greatest 1) Budgetisation of the European development-related challenges. Governance Development Fund problems, climate change, strong demogra­phic growth and globalisation all pose a threat ➔ The existence of an intergovernmental fund to the region’s political stability, food security separate from the Union’s general budget and sustainable growth. The fragility of certain and dedicated to ACP countries is explained countries coupled with the extreme poverty also by history and by the differing levels of Member raises critical humanitarian, migratory and States’ commitment towards these countries. security challenges for the international commu­ The prime argument for budgetisation stems nity and, a fortiori, for the EU. from the nature of Europe’s commitment to Africa, which is now grounded in geography and Africa’s population is expected to rise to our shared interests, over and beyond the 2 billion by 2050. Already today, 60% of the legacies of history. Secondly, it is no longer sub-Saharan population is under 25 years of

What Direction for European Development Policy? 46 Ministry of Foreign and European Affairs - DGM age. The EU has a duty to intensify its efforts to The need to support the productive sector help African governments offer a brighter future and build a comprehensive range of Euro­ to their populations, especially their youth. This pean financing solutions implies enabling objective means making Africa and the Least greater synergies between grant and loan Developed Countries the budgetary priority of programming by the EIB and by Member European development assistance, particularly States. The role of the EIB in achieving this for the most concessional aid, by exploiting, goal should be stepped up in developing where possible, the lever effects of loans and countries. grants blending. France favours the use of budget support by the Commission, particularly for countries in a situation of fragility. It encourages the At the Accra conference in 2008, the European Commission to fine-tune the associated Union showed that it is a driving force procedures in order to take better account in international debates on aid effectiveness. of the needs of each beneficiary country, Its programmes are fully framed by the rather than pre-define an overall financial 2005 Paris Declaration agenda. France is target that is not directly linked to the particularly committed to the contractual specificities of each ACP country. Lastly, it is and incentive-based nature of European vital that the Commission increase its efforts policy and invites the Commission to to diffuse information on this instrument’s further strengthen this approach grounded performance, which needs to be precisely in performance and dialogue. To do so, measured. This will reinforce its legitimacy it appears essential for European aid to in the eyes of recipient country populations systematically adopt programme-based as well as for our taxpayers. approaches that combine budget support, multi-donor funds and project aid.

What Direction for European Development Policy? 47 Ministry of Foreign and European Affairs - DGM

The entry into force of the Treaty of Lisbon and creation of the European External Action Service have given the European Union the means play a key role on the international stage. Meanwhile, new global challenges and the emergence of new players have brought about a sea-change for development in the countries of the South. In this setting, France is more convinced than ever that Europe needs to propose a new and powerful vision in international debates on development. The volume of its contribution to European development policy also has led France to set high expectations for the Union: it should become a landmark in terms of policy coherence, precisely targeted actions, the effectiveness of its interventions and take better account of the respective assets of European and bilateral aid. A few months before the start of negotiations on the next Financial Perspectives of the EU budget, the French strategy for the European development policy is proposing a comprehensive vision of European aid architecture for the next ten years. This document reiterates the importance of development assistance in the European Union’s external relations and advocates the modernisation of its financial instruments.

Directorate-General of Global Affairs, Development and Partnerships of the French Ministry of Foreign and European Affairs

The missions of the French Ministry of Foreign and European Affairs are: • summarize information on the changing global economy and put it into perspective, prepare decisions on the French government’s foreign policy; • draft France’s foreign policy; • coordinate France’s international relations; • protect French interests abroad and assist French nationals outside France. The creation of the Directorate-General of Global Affairs, Development and Partnerships (DGM) in April 2009, as part of the reform of the Ministry, enables diplomacy to anticipate, identify and respond to the challenges of globalisation more effectively. Confronted with global issues that have a direct impact on the lives of our citizens and multiple actors, the Ministry intends to emphasise the need to tackle global issues, in the firm belief that every major economic, cultural and societal issue calls for collective action with more outward focus, anticipation, interministerial coordination, responsiveness, interdisciplinarity and a resolutely European approach. Brochure printed on ecologically responsible paper

Directorate for Communication and the Spokesperson’s Office www.diplomatie.gouv.fr