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Email this citationCIAO DATE: 07/03
Improving the Governance of European Foreign Aid: Development Co-Operation as an Element of Foreign Policy
Carlos Santiso
Working Document No. 189
October 2002
Abstract
Should European Union (EU) member states 're-nationalise' foreign aid? Considering the dismal record of the aid managed by the European Commission, this is a legitimate question that European leaders nevertheless seem unwilling to address seriously. Like in America, there is heightened debate across Europe on the purpose of the aid it provides to developing countries. The current debates on poverty reduction, debt relief and, more broadly, the effectiveness of development assistance have brought renewed light on foreign aid.
The reform of external relations is a critical dimension of the newly launched Convention on the Future of Europe. In 2000, €8.3 billion (about $US8 billion) were allocated to finance external relations activities, of which almost €5 billion to foreign aid. In the draft 2002 budget of the EC (excluding European Development Fund resources), €12.5 billion are committed to external actions, including €5 billion pre-accession aid. Yet, the contentious discussions tend to focus exclusively on the core dimensions of foreign policy, namely on enlargement, security and defence policy. They only tangentially address the no less crucial reform of foreign aid policy. As Europe embarks on yet another attempt to define its purpose in the world, the uncertain future of European foreign aid has received scant attention. Renewed criticism, both within and outside the EU, renders the reform of European Community (EC) aid all the more urgent.
However, EC foreign aid is in disarray, lacking political thrust, strategic purpose and institutional support. Recurrent reform initiatives have left the bureaucracy responsible for its management on the defensive and increasingly frustrated. EU aid officials are the first victims of the dysfunctional governance of European foreign aid. Institutional structures have run amok and have created perverse incentives, which inhibit the innovation and boldness that is often required to promote sustainable development and democratic governance in poor countries. Instead, structural flaws have created a risk-averse bureaucracy driven by the tortuous procedures of financial accountability. The EU thus seems unable of articulating a European identify in development co-operation capable of challenging the latest fads of the prevalent 'Washington consensus.'
Current debates on the reform of European foreign aid remain an insider affair, exclusively dealt with by Euro-technocrats. They are obscured by the impossibility of most outside observers to comprehend how EU foreign aid actually works. Developing countries have long given up on attempting to comprehend it. They have, at times, expressed frustration with the EC's inchoate bureaucratic procedures and the added burden these create, as they are struggling to strengthen their own systems of governance. Complying with EC interminable procedural and financial requirements often over-stretches their limited administrative capacities.
Ironically, improving governance has become both a condition and objective of European foreign aid. Yet, the governance of European foreign aid is hardly an example to be followed. EC aid policies applicable to any given sector or geographical region are made of a thicket of regulations, resolutions, declarations, and communications, which often lack an overarching purpose and strategic objectives. This abstruse complexity has also enabled the Commission to elude public scrutiny, except from European non-government organisations, most of which either depend or seek EC financing.
It has become almost impossible to navigate the complex labyrinth of the Commission bureaucracy and in particular its foreign aid apparatus whose Kafkaesque structures and procedures are beyond comprehension. The exasperation with the failure of the Commission to reform its ways was bluntly expressed by Britain's development minister, Clare Short, in June 2000: 'the Commission is the worst development agency in the world. The poor quality and reputation of its aid brings Europe into disrepute.' Similarly, alluding to the dismal record of EC foreign aid to Albania, Chris Patten, the European Commissioner for External Affairs, has recognised that 'The EU's capacity for making political promises is more impressive than our past record on delivering financial assistance.' Why, then, have EU countries repeatedly failed to harness the aid managed by the Commission?
This study argues that the root cause of the current state of affairs is linked to the very process of European integration and the birth defects of European foreign aid policy. Europe has never clearly decided whether it wants development aid to be an instrument of its diplomacy or an autonomous policy with its own objectives and rationale. Time has probably come to make such a decision. The reform of the aid it provides is a critical dimension of its foreign policy, a dimension often overlooked by the debates on foreign, security and defence policies. It should be a critical component of any meaningful debate on the reform of EU external relations and added on the agenda of the constitutional convention launched in 2002. The main question arising from recent reforms is who will set development co-operation policy and how will it be translated into operational aid strategies. A corollary question is which organisational structure is most appropriate to achieve the EU's development goals.
