December 1997 Insights Issue #24

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Understanding changes in European aid

The Since Lomé I was signed 23 years ago, European aid-giving has undergone a radical transformation. Yet the projection of EU aid has not caught up with the reality of its complexity and sophistication. Unique though it is, Lomé reflects neither the breadth of EU aid policy nor the changing geographical and sectoral balance of its spending.

Through the mid-1970s and beyond, aid as well as trade preferences were concentrated on the ACP countries. Given the trade and aid crumbs available to the rest of the developing world, no wonder the Convention's freshness and generosity occupied the high ground. But now Lomé is under notice to change; at the very least it will face major revisions in the period 1998-2000.

An inventory recently published by the Overseas Development Institute (see "Lomé is not the only fruit") shows that EC aid-giving has been turned on its head in more than a geographical sense. Instead of the familiar African countries, former Yugoslavia (mainly Bosnia) becomes the leading aid recipient not on account of development assistance spending but through the use of aid for conflict resolution. (Aid to most of the CEEC/CIS does not qualify as official development assistance.) Most of the PHARE and TACIS programme money is spent on European consultants rather than on productive infrastructure which will remain in the recipient country and fill balance-of-payments or savings gaps. This raises new questions of evaluation and accountability.

Yet it is the ACP that are being pressed to accept new conditions and to become more accountable for their aid both to donors and to local populations. This despite the Lomé programme being more conventional than the aid to CEEC/CIS.

Not all is gloom, however. The study shows that the EU has become a mature donor with global reach. EC programmes alone are now the second-largest source of multilateral aid after the World Bank's IDA. EU official development assistance (ODA) programmes as a whole now (1996) total $31.3bn, of which $4.8bn is administered by the Commission, so EU aid as a proportion of GNP is now 0.37 percent, only 0.25 percent for Development Assistance Committee members. Nearly three-quarters of the total improvement in OECD aid is attributable to the growth of the EC and Member State aid; the disproportionate rise of the EC programme itself now makes it equivalent to the DAC's fifth largest donor, ahead of the Netherlands and UK.

The ODI inventory is currently being used as a guide by the International Development Select Committee of the House of Commons and by the Development Cooperation Directorate of the OECD for its forthcoming (1998) Peer Review of EC aid, it is also used in-house in the European Commission as a way of explaining the big picture of their own complex aid programme.

ODI believes this is only a first step. After detailed analysis, informed judgements and recommendations on policy reform are needed. As ACP countries begin negotiations to secure a successor arrangement to the Lomé Convention, it helps to regard aid policy through the bigger picture. Perhaps the most pertinent remark at the UK national consultation on the Commission's Green Paper on the future of Lomé in London last June came from the floor: if we can have detailed national and regional consultations on Lomé, is it not time we did the same for all the EC's other aid programmes, and had a Consultation on the Whole?

Understanding European Community Aid: Aid Policies, Management and Distribution Explained is edited by Aidan Cox and Antonique Koning with Adrian Hewitt et al., published by ODI with the EC, 1997 (cost £12:50). Also available from the same source in a French language version.

Adrian Hewitt,
Overseas Development Institute,
Portland House,
Stag Place,
London SW1E 5DP,
UK

E: a.hewitt@odi.org.uk
URL: http://www.oneworld.org/odi