Devex Interview: Andris Piebalgs on the future of EU development aid

At a time of global economic and financial worries and political turmoil in the Middle East and beyond, the European Union has crafted a new framework for development cooperation. The plan, unveiled Oct. 13 by European Commissioner for Development Andris Piebalgs, focuses on the promotion of human rights and democratic values, improved governance and financial management, and mobilizing domestic revenues and reducing the dependency on aid in the developing world. The new policy also calls for heightened emphasis on activities that support inclusive and sustainable growth, reduce aid to middle-income countries, and increase investments in private sector development. Devex spoke with Piebalgs about the future of EU aid and what it means for implementing partners and the relief and development community at large. How will the ongoing financial crisis in Europe affect EU development cooperation? I think there are actually a lot of questions in your single question. First, the commitment of 0.7 percent of gross national income for development is alive; it was confirmed in June this year by heads of state and governments. So, we are increasing development aid. From 2009 to 2010, we have increased it in volume. In relative terms, we are still below what we would like to achieve. But in these crisis times, we are doing decently well. There are frontrunners like the U.K. But even Portugal has increased substantially development aid financing. There are definitely some countries that are not performing as well, like Greece or Italy. And the big reserve we have is new member countries that joined. … So, it is still very much alive. But the crisis strongly affects development aid. First, there’s much more of a focus on results to be achieved. There is a very clear demand now. … And, second, well, the argumentation for development aid should now be much more nuanced and much stronger compared with previous times, because very much it is being looked at as an investment also for Europe. If Africa has good growth, it’s growth also for Europe. If people get the jobs in Africa, there’ll be less illegal immigration. … So, the focus has changed, and people feel like it’s not just charity. [Regarding] the EU financial framework proposal, the European Commission actually has increased its proposal for external spending. The proposal is designed so that the commission’s share of EU total aid remains similar — around 20 percent of EU aid. Development funding has the biggest increase out of it, particular countries in the north of Africa — there, definitely, is a substantial increase in spending — but also for all other regions in the world. As far as I’ve discussed with member countries, this part of the proposal doesn’t raise too many question marks, but they will come. The challenge is the overall volume of EU spending. There, a couple of member countries would like to limit our spending and it could affect agriculture or regional fund spending. But external spending is only 7 percent, so from this overall pressure, I don’t expect, to be honest, substantial cuts in our portion of external spending. But the big fight will be exactly where the money should go — to neighborhood or to candidate countries, or further. And for me, it’s very important to demonstrate … results of our development policy in the Pacific, or in the eastern part of Africa, because they’ll be competing with the funds for north Africa — an obvious priority — or Ukraine or Moldova, which is close to the EU, and definitely a lot of member states will argue, “That’s exactly where the spending should go.” And for further countries, “Well, we’re not so rich anymore.” So, for me the fight is still ahead. There have been calls for member states to be forced to make good on their commitment to set aside 0.7 percent of GNI for development cooperation. What’s your take on this? I have some sympathies for these calls. But at the same time, it’s budget spending. It’s up to each and every country. We can’t put a penalizing mechanism. It’s still very much up to the conscience of each country, and political leadership, to respond to global challenges. And the EU can’t say the exact amount you should spend on a particular purpose. I believe that member states will give according to their pledges. Some will definitely be at 0.7 percent [of GNI] — some are already there, like Sweden, Netherlands, Luxembourg and Denmark. But most of the countries will definitely be at 0.7 [percent]. Some will not be, but I hope that the peer pressure will have them also increase their spending. So, I’m still optimistic that amid all the budget consolidation, we are surviving reasonably well. Speaking of that, the European Commission says that strengthening EU resources will “contribute to the wider budgetary consolidation efforts undertaken by member states.” How? It’s obvious that each member country of 27 alone, even the biggest, are rather small in today’s rather complicated and multipolar and multilateral world. So, for the EU to be effective, if you apply the same approach and stream the money in the same direction, then you could definitely expect some bigger results. Today, we spend 20 percent — less even! — through EU [meaning European Commission] funding. So, the national pride, the national flag, is very important to member countries. And to find these two directions in some type of harmony, we would much more use joint programming of national and EU aid, where we are working together to anticipate where the money should go, and knowing what others are doing. We have some experiences but it has so far been limited — Haiti and South Sudan. But, the intention is from October on, to embark on more, broader [joint programming exercises]. There have been a lot of misunderstandings [with some people] believing that the EU would like to take national envelopes away. I think we have dealt with this. And now member countries understand that our intention is not to provide aid only through the EU. Even if I would say it would be the most efficient way, sovereignty is definitely very important and I don’t expect that the EU share will increase. Actually, when we made our proposal [for the financial framework for 2014-‘20], we worked from the perception of 0.7 percent to be achieved and the EU share not increasing. … What regions or issues might be the focus of more joint programming, and how would that affect procurement? First of all, we definitely would like to use country systems as much as possible. I think work still needs to be done that the country systems are good enough. For the EU, basically, we have procurement legislation, so we’re not so different in the EU approaches. … So, I think for a lot of developing countries, the EU is less of a problem; but they are also partners with the United States, World Bank — plenty of partners. But I think the EU is rather homogenous in that respect. I think it’s still an open question [where we may do more joint programming]. I would definitely prefer that we do it in more complicated places like Somalia, Sudan — also the North of Sudan — and Sahel. But [another approach could be to do it in places where results are easier to achieve] like Rwanda. … I think the experience in Afghanistan is definitely one issue that we should address because by 2014, troops will be out, and then we need to be able to work in a completely new environment. … Are you talking with the United States, the World Bank and other partners about it, and are plans for more collaboration already under way? With the U.S., we have road maps in a couple of areas and countries. We have food security, health, climate change and MDGs. We have taken some pilot countries, like food security in Bangladesh, so we’re trying to adjust our systems vis a vis USAID. With the World Bank: It is doing more broader projects. And at the same time, we have no disagreements with the World Bank. But I think the World Bank’s size and experience is very much for mammoth projects or bigger schemes where none of the national schemes, or even the EU scheme, will not be strong enough. But we are cooperating on the ground with the World Bank and we have no difficulty. Still, for me, it’s important to get the EU around us. … I shouldn’t be overambitious. You can talk with China or India and Brazil — triangular cooperation; there are a lot of ideas. But at this stage, for me, the focus is very clear: It’s the EU. Value for money is a buzz word these days. What does it mean to you, and how is the EU pursuing it? The EU, as any other donor — all of us [pursue] value for money. For us, perhaps, it puts more challenges than for any other because the EU’s specificity was to work very much to strengthen the country systems. So, that means we have preferred to work through country systems. And I would also like to mention that 25 percent of aid that the EU provides is provided through the country’s budget. It’s a substantial amount of money. For this reason we are very much trying to, through visibility and accountability, see what we have achieved. We come now with new proposals to reform budget support [which was adopted Oct. 13]. We will be much more results-oriented and also much more transparency-oriented. … We are trying to express our work better in figures, compared to previous times where we looked and said, “Well, we are doing a good job.” Not everything could be measured [then]. Now, definitely we try to measure everything. You talk about accountability, and the EU has stressed mutual accountability among donors and recipients. Can you describe how this drive for more accountability may affect implementing partners, for instance when it comes to reporting requirements? No, there’s definitely not more paperwork. Our system is complex enough and slow enough already, so it’s quite opposite. … What instead we are trying is to pay much more attention to the designing, the pre-design period. [I presented my vision for the future of European development policy Oct. 13 with the agenda for change.] >> In New EU Aid Agenda, Emphasis on Governance, Growth We would like more focus on a couple of areas where anticipation of real change is needed. One is food security — all areas such as nutrition, access to food, et cetera. So that is one area, trying to see the niche because we see the growing population and depletion of soil. It’s a real headache, and you can’t come only when it’s too late with humanitarian aid. The Somalian drought situation [for instance] is a double challenge. And we have demonstrated, actually, what you could do if you anticipate it: Mali and Niger have been under threat, and early action with humanitarian aid and also some development funding prevented the worst from happening. But I think the skills need to be evolved and developed, particularly in fragility made by climate change. The second area is the sustainable provision of energy. We help very much in the road sector, for example. But if I see the road sector decoupled from the issue of food security, I think it’s a bit — well, money is too valuable today in austerity times, energy is definitely the absolute necessity for any social service but also for growth and manufacturing. So, the supply of energy, especially of sustainable energy, is definitely the big drive. We will stay in human development, health and education. But we’re trying somehow to squeeze down the sectors. And that immediately increases time and efficiency. .. We will be [focused on fewer] sectors and as a result, we will be more focused as a whole agency. It does not mean that we will completely forget the roads — there will be some countries where it’s an absolute necessity. But if you do it, that’s because the food supply will be improved. So, we’re trying to integrate there and to make things simplified, to cut the time of delivery. How exactly may that simplified procurement process look like, and what new financing mechanisms will we see the EU explore? I don’t like too much change in the procurement rules. They are well known to our partners, they got used to it. And they give me confidence that the money is not misspent. That’s not where I’m looking. I’m looking, for example, at project preparation: We have a project identification phase, then you prepare aid, then you discuss, then comes the action. That all takes a lot of time. So, these types of elements in the process that you can shorten or avoid, that is what we are looking at. Not changes in procurement rules. … On new financing mechanisms: We are looking very much at loan-grant blending. The EU has definitely the luxury that we provide the grants and never the loans. We have some elements through the European Investment Bank, Kreditanstalt für Wiederaufbau and Agence Française de Développement. But, there were all these limitations, and it has been decoupled. But we are now strengthening the mechanisms for loan-grant blending. And it is not an easy process because we are from different viewpoints. For me, it’s development results that matter; for banks, it’s return of money that matters. But they are much better in evaluating a project, especially if it’s an infrastructure project, compared with me. And then there’s the question, who’s in the driving seat? So, that I think still needs to be cracked. We’re working on it. I appreciate the European Investment Bank is fully supportive of the process, and we will come to the appropriate results. When will we hear more on this? By the end of this year, for sure, because we are working on this platform, and we have invested quite a lot — it’s not as if we’ve started from scratch. But I’ve described where the problem is: How do you [combine] a business-led approach with a charity-based approach? Because it in a way excludes each other. But you need to integrate both as it is key to creating jobs and promoting sustainable and inclusive growth. Read more: - Netherlands Pleased with New EU Development Cooperation Policy - Aid Groups Raise Some Concerns Over New EU Aid Agenda - The State of EU Humanitarian Relief: A Conversation with ECHO Chief Kristalina Georgieva - How to Engage the EU on Development Business: A Primer - EU’s New Development Aid Architecture: A Conversation with Fokion Fotiadis, Part 1 - Concord’s Justin Kilcullen on EEAS, Value-for-Money and National Security - A Conversation with EuropeAid Director-General Koos Richelle: Part 1 - Andris Piebalgs Outlines Priorities for EU Development Cooperation Read more international development business news.