The Commission responds to our aid report (Part 1)

The strong reaction to our report on EU external aid, particularly in the Netherlands, has prompted the European Commission to issue a 14 page rebuttal. Without rehashing the Commission's entire response, which you can read here, we think it's important to highlight some of the contradictions within it and also where it seems to have completely missed the point.

We call this part 1 because the Commission has also issued a response to our report which specifically addresses EU aid to North Africa and the Middle East. We'll take a closer look at that later on (in part 2).

So here goes...

The EU's aid budget is designed to do several different things at once: it is used for programmes that most people would understand as "development" funding, aimed at poor countries in sub-Saharan Africa and Central Asia; it is used for programmes in the EU's neighbourhood including countries in Eastern Europe, the Middle East and North Africa; it is used for 'pre-accession' funding to help supposedly future members of the EU make the grade; and some of it is also passed on to other multilateral aid donors such as the World Bank and the United Nations.

The central conclusion of our report is that national contributions to EU aid spending should be made voluntary. This would not only increase accountability to national governments, and by extension European taxpayers, but also necessitate a thorough debate about whether the EU should really be attempting so many different things with its aid spending (many of which we argue national governments could do on their own - member states are perfectly capable of donating money to the UN and World Bank without the EU's help).

It's behind this complexity that the fundamental problems of the EU's aid budget lie, which the Commission's responses to our criticism demonstrate. The mixed objectives lead to some pretty blatant contradictions and prevent a sensible discussion about the specific problems with the component parts.

Firstly, in our report we note that, in 2009, only 46% of the Commission's 'Official Development Assistance' (ODA) was spent in lower income countries, illustrating a lack of poverty focus. The reason for this is because, although some of the EU's aid programmes are geared explicitly at poorer countries, a large amount of EU aid is spent on neighbouring countries.

The Commission says our figure of 46% is "misleading", since no lower income country "is eligible for the neighbourhood funding, ENPI [Eastern Europe, Middle East, and North Africa] or IPA [Turkey and the Balkans], which represents a sizable portion of EU aid."

This is precisely our point. Much of the Commission's aid budget is spent in neighbouring countries, which are relatively wealthy in global terms. But, crucially, this is still counted by the Commission as 'development aid', or ODA, in its official figures (we have explained the logic of the figures and the concept of ODA in greater detail here).

The 46% figure is, therefore, not misleading but merely illustrates the mixed priorities of the EU's aid budget. The real question is whether the Commission's aid is pursuing the right aims and how much money should be allocated to each of them. But the Commission's refusal to acknowledge the logic of its own position makes a debate on the real issues incredibly difficult.

The Commission points out that one of its aid programmes, the European Development Fund (EDF), sees 85% of its funding spent in lower income countries. In fact, this is a point we make ourselves in the report. The EDF also happens to be the only part of the EU's aid budget that is based on voluntary contributions from national governments rather than from mandatory contributions to the central EU budget. According to the UK's Department for International Development (DfID), the UK is able to "drive much better performance" with the EDF, precisely because the UK's contribution to it is voluntary. Sadly, the Commission chooses not to address this point.

Secondly, the Commission also takes exception to our statement that "geographical proximity and ties with former colonies continue to determine the destination of much of the Commission's foreign aid". The Commission claims this is "simply false", which is quite frankly a bizarre accusation since the Commission's response also contains the following defence of neighbourhood spending:

"The EU has a real interest in fighting poverty on the EU's borders, for example in Northern Africa and Central and Eastern Europe, where poverty breeds insecurity and illegal migration. Only by helping these countries create stable democracies with economic chances for its citizens will we address the root causes of these problems, which are of interest to us all."

"The case of Turkey must therefore be understood under this light and in particular of its efforts to transform its economy as it continues the process towards accession to the EU: Turkey is indeed the biggest recipient of EU funds due to its status of candidate countries to the EU."

The Commission's impassioned defence of EU aid funding to countries on Europe's borders patently shows that "geographical proximity" plays a strong determining factor in EU aid. Our point here is that when it comes to "fighting poverty", targeting the world's poorest countries seems a better place to start. Funding for neighbouring countries might have a role to play but, again, it is a question of degree and what the EU is trying to achieve (we look at this in closer detail here).

However, most importantly and revealingly, despite going to the lengths of a 14 page response, the Commission has completely failed to engage with our main recommendation: that national contributions to EU aid spending should be made voluntary.

There is a legitimate discussion to be had about whether the Commission is simply funding countries that the member states would be helping anyway – what officials in Brussels describe as the ‘division of labour’. But, on the back of our report, the UK’s Development Minister Andrew Mitchell has called on the EU’s aid to be far more “targeted at the poorest people”, while the Netherlands’ Europe Minister Ben Knapen has suggested, “We need to help our neighbours, that is in our interest. But such assistance must be reconsidered, especially when it comes to the significant assistance to candidate countries such as Turkey.”

If, as the Commission says, member states would spend the same amount of money on their neighbours anyway, why not relinquish control and make national contributions to EU aid spending voluntary? We would soon find out who is right.

Why is the Commission so reluctant to move to a voluntary-funded model? The answer, one suspects, is that it would result in far less money heading to Brussels and because it goes to the root of the EU's current modus operandi, of accumulating power at the expense of member states. People might even start to question whether other areas of the EU budget might be better funded nationally rather than via Brussels: the Common Agricultural Policy, or regional spending within the Union, perhaps?

It is, above all, the Commission's silence on this crucial point that speaks volumes.