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Monday, April 18, 2011

EU external aid: who is it for?

In a new report released yesterday, we examine the EU’s €12bn external aid budget and question who is it actually for? As the waves of protests in Africa and the Middle East prompt some much needed reflection on the West's foreign policies, we think it’s about time that EU aid is also put back under the spotlight.

The UK currently sends around £1.4bn to the Commission to be spent on external aid each year, which is no small sum. The Sunday Times featured our report, including many of the wasteful projects that we highlight.

Click here to read Open Europe's report to get the full picture. But to summarise, we find that EU aid is poorly targeted at tackling poverty, despite this being a core objective enshrined in the the Lisbon Treaty. In fact, only 46% of EU aid reached lower income countries in 2009, compared with 74% of UK aid and 58% of EU member state governments’ aid. Instead of poverty, it appears that geographical proximity and ties with former colonies continue to determine the destination of much of the EU's aid budget.

For example, the wealthy, tropical islands of New Caledonia receive on average €16 per person each year from EU aid, despite basically just as rich as your average EU country.

Vital aid funds are also being lost in a sea of administration costs. EU aid, managed by the Commission, currently has admin costs of 5.4%, higher than the UK’s Department for International Development’s (DFID) 4% and the UK target to reduce these to 2%. Some EU aid streams, such as the programme for African, Caribbean and Pacific countries, have administration costs as high as 8.6% - above the ceiling the UK imposes when giving grants to NGOs.

€1.4bn or roughly 10% of EU aid is needlessly passed on to other multilateral donors every year, such as the UN and World Bank. This money is simply being recycled between donors – up to three times in some cases – before it reaches a recipient country.

Transparency is also often lacking when it comes to recording how EU aid is spent on particular projects selected for grants - some recipients are simply marked "confidential".

Having said all this, credit to the UK government for taking the lead in pushing for better transparency of EU aid and greater effectiveness. In response to our report, International Development Secretary Andrew Mitchell said:
"This report underlines the very reason why we are pressing for reforms of the way the EU spends aid…The EU's aid needs to be far more transparent, results-focussed and targeted at the poorest people, and we are now working with Brussels to help achieve this."
We argue in our report that the best way to achieve this is to make all national contributions to the EU's aid spending voluntary - the European Development Fund, which is the only voluntary-funded stream of the EU aid budget, performs far better in terms of targeting the poorest countries. There is no need for Brussels' centralisation of aid funds - it simply leads to inefficiency and unaccountability.

Time for a radical rethink.


Rollo said...

As in all aspects of EU governance- or mis-governance, the aid budget is little to do with the publicised cause, and much to do with the glorification and wealth of people working for the EU.
We should stop every penny of EU aid, and concentrate on health and poverty and birth control.

Oskari Juurikkala said...

Development aid is a huge web of corruption. It should, for the most part, be stopped altogether.

Vernon Moat said...

I am glad you have this so well documented. I feel that you have the whole EU situation well exposed.

Bertil said...

Yes, it is time that EU external aid is seriously put under the spotlight. Collusion, abuses of dominant power, opacity, non motivated arbitrary decisions, misallocation of resources, ignorance and incompetence are unfortunately of currency. A big waste, harmful to the tax payers!

Anonymous said...

I'm glad the UK considers pouring large amounts of money into Nigeria in exchange for oil a better and more altruistic investment of time and resources, as opposed to simple fraud or corruption.