EU budget battle kicks off amid single instrument concerns

BRUSSELS — The European Commission unveiled its proposal for the European Union’s next seven-year budget Wednesday, lifting the amount it wants to spend on work outside its borders, but drawing fire from civil society over a plan to unite its development instruments.

The EU’s development work is currently undertaken through multiple funding streams, but in its proposal, the bloc’s executive argued that a single instrument — the “Neighbourhood, Development and International Cooperation Instrument (including external aspects of migration)” — is now necessary “to provide more coherence between instruments, to exploit economies of scale and synergies between programs, and to simplify processes.”

However, NGOs raised concerns about the level and direction of spending under the plans, with Oxfam saying the proposal signals the EU “abandoning its ambition to be the global leader in international development,” and that it is “more concerned with pushing its own agenda than delivering on its commitments to the Sustainable Development Goals.”

The new instrument would subsume existing funding streams, such as the European Instrument for Democracy and Human Rights. In their place, a geographic pillar would “ring-fence” funds for certain regions, in particular countries in Europe’s neighborhood and Africa, while a thematic pillar would go to “addressing issues of global nature and/or political flagship initiatives.”

The Commission also proposed bringing the 30 billion euro ($35.93 billion) European Development Fund under the EU budget, a move long called for by the European Parliament on the grounds that it would provide greater scrutiny over how funds are allocated. The EDF currently sits outside the EU’s official budget, with member states contributing to it on a voluntary basis, meaning parliamentarians have limited oversight of its work.

The move to budgetize the fund “will be welcomed by colleagues across the house,” Linda McAvan, the center-left head of the parliament’s development committee, told Devex. “The fear going into these negotiations was that the budgetization of the EDF would be used to cover for some of the losses caused by Brexit, but that fear hasn't been realized.”

The new instrument would also include a rapid response pillar — “for crisis management, conflict prevention and resilience building” — and a flexibility cushion of which the primary objective “would be to address migratory pressures, but also stability and security needs, unforeseen events, and new international initiatives and priorities.”

The Commission also flagged a “new investment architecture” for the instrument, designed to build on the External Investment Plan model of combining grants with guarantees and other tools, to crowd in “additional resources from other donors and from the private sector.”

However, the plan was heavily criticized by civil society groups and others. Jonathan Beger, EU advocacy director for World Vision, told Devex of his concern that a lack of clarity within the overarching instrument would see funding for issues such as the SDGs and gender equality lose out to short-term objectives, including halting migration — a key but controversial feature of EU development policy in recent years.

Karine Sohet of ACT Alliance EU, and a member of the civil society confederation CONCORD, said “the fact that migration is set as a priority [within the new instrument] confirms our concern of development policy being progressively reoriented toward EU self-interests.”

Dutch centrist member of European parliament Marietje Schaake, the rapporteur of a parliamentary report on the existing external instruments, agreed, telling Devex: “Focusing only on migration management while losing sight of other objectives and long-term goals is misguided ... Unfortunately, it remains unclear how, under a single external instrument, funds will be governed and guided.”

The commission’s budget proposal includes a separate line for “Migration and Border Management” worth almost 35 billion euros, outside the aid budget.

The funding breakdown

Under the new Multiannual Financial Framework which will govern the EU’s budget for the period 2021-2027, the Commission wants to spend 123 billion euros — about 10 percent of the total budget — on “Neighborhood and the World;” in other words, the EU’s work outside its own borders. That figure is 26 percent higher than for the previous period of 2014-2020. Some 89.5 billion euros of it would go to the new development instrument, with 11 billion going to humanitarian aid and 14.5 billion to pre-accession assistance for countries looking to join the EU.

Emily Wigens, interim Brussels director at antipoverty group the ONE Campaign, told Devex that the Commission’s numbers are not enough to see the EU achieve spending 0.7 percent of members states’ combined gross national income on official development assistance by 2030, the target set by the United Nations. If the EU budget continues to channel 20 percent of member states’ aid, then Wigens said the new MFF would require at least 40 billion euros more aid than the current long-term budget. That would translate as a 40 percent increase on EU external spending, “well above the 26 percent proposed today.”

Meanwhile, PLATFORMA, the European coalition of local and regional governments, expressed alarm that the proposed instrument appears to omit local authorities and their role in city-to-city and region-to-region development cooperation. The proposed MFF includes a thematic line in support of civil society organizations, in contrast to the current MFF which refers to “civil society organizations and local authorities.” The group argued that this goes against the EU’s development framework, the Consensus on Development adopted last June, which recognized the key role local and regional governments play in meeting the SDGs.

Responding to the criticisms, EU development commissioner Neven Mimica told Devex the idea of a streamlined instrument “remains true to the very values and principles on which our development cooperation is built.” He added that the Commission “will continue to ensure that our assistance reaches those who most need it, that every euro spent has the highest possible development impact, and that it contributes to eradicating poverty and ensuring sustainable social and economic development, while protecting and promoting human rights, gender equality, and other universal values.”

McAvan welcomed the ring-fencing of money for certain regions, but said “we will be looking out for further safeguards to make sure that the SDGs and poverty reduction stay at the heart of development work and also reassurances that the amount of development funding (as defined by the OECD-DAC) isn’t reduced.”

In addition to the regional and thematic pillars, the Commission also wants to dedicate 25 percent of the budget to climate action, up from 20 percent under the current MFF. Climate Action Network Europe welcomed the move, while noting it fell well short of French President Emmanuel Macron’s call for 40 percent of the next budget to go toward climate action and the transition to a green economy.

The commission additionally backed the call from the EU’s foreign affairs chief, Federica Mogherini, for a European Peace Facility. The proposal envisages a 10.5 billion euro off-budget fund — which will fall outside the bounds of the MFF — designed “to close the current gap in the EU’s ability to conduct Common Security and Defence Policy missions and to provide military and defence assistance to relevant third countries, international and regional organizations.”

Negotiations ongoing

Despite the loss of about 13 billion euros per year from the departing United Kingdom, the Commission proposed a total of 1.279 trillion euros in spending between 2021 and 2027 — a little over 1.1 percent of the bloc’s gross national income, up from 1 percent for the previous period. More information about the external spending plans will be known on June 14, when the Commission releases proposals for each pillar.

The final budget still has to be negotiated with member states and the European Parliament, with Commission President Jean-Claude Juncker saying he wants to see the process concluded before European Parliament elections next May.

Andrew Sherriff from the European Centre for Development Policy Management warned that while the proposed increase in external spending is significant, there are typically large cuts between the Commission’s proposals for external spending and the final agreement.

Some EU countries are already baulking at the Commission’s plan to cover the loss of financing from the U.K.’s departure. "This is an unreasonable proposal. We cannot accept this," Swedish Finance Minister Magdalena Andersson told national media.