BRUSSELS — The European Commission on Wednesday proposed an additional €16.5 billion ($18.2 billion) for the European Union’s foreign spending as part of its COVID-19 recovery package, sparking relief among NGOs that had feared further cuts.
The proposal, which must still be approved by EU states, would allocate €86 billion to the bloc’s main development instrument for 2021-2027, up 8.6% from the commission’s first outline in 2018. The increase is even greater when compared with the latest numbers proposed at a meeting of heads of state in February, where the instrument was down to €75.5 billion.
Brussels is changing its priorities to address COVID-19, but not the amount it gives to each country. Reactions from nonprofits and U.N. agencies are mixed, although many are urging more ambitious, fresh funding.
The additional resources would be mostly drawn from a €750 billion recovery fund, also announced Wednesday, to be raised by borrowing on financial markets. Most of the money from that fund will go to grants and loans designed to support EU priorities at home, such as the green and digital transitions. But €5 billion of it will be earmarked for humanitarian aid and €10.5 billion will go to development cooperation. The remaining €1 billion in the €16.5 billion foreign spending increase will go toward budget guarantees under the current European Fund for Sustainable Development.
Wednesday’s commission document pointed to the fledgling system of the commission using the EU budget to partially cover investors’ losses in development-friendly projects. It says this work — particularly in the Western Balkans, countries neighboring the EU, and Africa — would aid efforts to fight and recover from the impact of the coronavirus pandemic. It was not immediately clear how much of the €10.5 billion from the recovery fund would be used for guarantees, with more detail expected in the coming days.
“The fact that it is linked to the budget guarantees targeting the private sector raises concerns … but for now we remain positive.”— Jeroen Kwakkenbos, senior aid policy and development finance adviser, Oxfam EU
The plan for increased spending was welcomed by aid supporters.
Asked to rate the European NGO confederation CONCORD’s satisfaction with the proposal, Zuzana Sládková, the group’s policy and advocacy coordinator on financing and funding for sustainable development, told Devex that “we’re almost even 11 out of 10.”
Jeroen Kwakkenbos, senior aid policy and development finance adviser at Oxfam’s EU office, said by email that the EU is making a stand for development at a moment when “the knee jerk reaction would be to cut these budget lines.”
For Kwakkenbos, the issue now is ensuring that the extra money goes to more resources for public health, education, and investment in human development.
“The fact that it is linked to the budget guarantees targeting the private sector raises concerns that it could end up as a back door subsidy to European companies, but for now we remain positive and hope that Europe can lead the way,” Kwakkenbos added.
Tomas Tobé, the center-right Swedish chair of the European Parliament’s development committee, told Devex he welcomed “the additional guarantee funding aimed at boosting investment in vaccinations, treatments and diagnostics and [countering] the social and economic consequences of the pandemic.”
Stefano Manservisi, former director-general of the European Commission’s development department and now a distinguished nonresident fellow at the Center for Global Development, told Devex that the funding boost was not a given in the current climate.
“Clearly, the risk was to send a message — ‘Well, we take care of ourselves first, and then we see about the others,’” he said, adding that the proposal to increase development spending from the EU’s recovery fund is “politically and symbolically very important.”
Leaders of EU countries will discuss the proposal on June 18, with the commission calling for a deal by July.