Audit finds design flaws in EU aid budget

The European Union’s foreign aid budget lacks transparency and measuring its impact is sometimes impossible, according to a new audit. The European Court of Auditors’ latest nonbinding report found a number of shortcomings in the €79.5 billion (around $85 billion) Global Europe instrument, which covers 70% of EU spending outside the bloc. Piotr Zych, the lead auditor, told Devex in an interview this week that the most striking problem his team identified was how the money is allocated. Despite funds for countries in the EU’s neighborhood and those in sub-Saharan Africa, Asia, and Latin America having been merged under the bloc’s 2021-2027 funding instrument, auditors found that the commission uses different criteria to set funding for the two groups. While allocations to countries further afield are based on a quantitative methodology, neighborhood countries undergo “non-comparable and insufficiently documented qualitative assessments,” the auditors reported. Short narrative assessments by the commission for neighborhood countries do not convert criteria such as needs and progress in implementing reforms into comparable quantitative figures. And because this is also mixed with internal EU political judgments, the auditors were unable to measure or replicate how funding for neighborhood countries, such as Kosovo, Algeria or Azerbaijan, were decided. In response, the European Commission told auditors that a quantitative approach for neighborhood countries would lack nuance and favor those with a high population. Asked what he made of that argument, Zych said that there was still nothing to stop an initial quantitative approach, which would then be used as a basis for political discussions. “In this case, as auditors, we would have the audit trail. We would see, ‘okay, this is the basis for discussion, there are some political assessments which led to an increase or decrease of this amount.’ This is definitely feasible,” he said. Allocations for nonneighborhood countries are more transparent, the auditors found. But they still pointed to possible improvements such as showing which exact indicators to use and why, noting for instance that the “World Bank uses seven different methods for measuring gross national income per capita.” The 53-page report, released Wednesday, drew on interviews with EU officials as well as national ministries and NGOs. Auditors analyzed 89 country plans with nine in-depth studies, including three field trips to Senegal, Armenia, and Cambodia. As with previous EU audits on climate change, Kenya, private sector engagement, and accounting, the latest document makes for at times uncomfortable reading for the commission. Consultations for the regional pots of funding were largely planned in Brussels, in parallel to national programming and without hearing enough from staff in the regions themselves. “The EU delegations were not sufficiently involved in the process and did not consult with donors to determine regional needs,” the auditors wrote. A lack of consultation was sometimes an issue for national programs too. Religious leaders and traditional authorities in Guinea were not consulted on EU development programming, auditors found, even though the EU delegation acknowledged they were “potential drivers of change” and the subsequent country plan recognizes their role in supporting the legal system as well as peace and security. In Armenia, civil society criticized a lack of discussion with the EU about how it would measure its impact, which could have in turn helped local civil society monitor government reforms. The auditors assessed a sample of around 700 indicators, designed to measure the impact of EU aid. They found that more than 20% either had no baseline or an unclear baseline against which to measure progress. In Senegal, for instance, one indicator aimed for 14% of diaspora remittances to be directed toward “productive and socio-economic investments,” but the EU delegation admitted this could not be measured objectively due to a lack of evidence. In its responses to the auditors, the commission wrote that it is in favor of simplifying the use of indicators as well as making these more consistent. It accepted almost all the auditors recommendations, while adding that it “cannot preempt” anything about the post-2027 budget and “political and policy priorities.”