Foreign aid neglected in historic EU budget deal

BRUSSELS — It was one giant leap for the European Union but only a small step for its spending abroad Tuesday, as national leaders reached a long-awaited deal to combine the bloc’s coronavirus response with its next seven-year budget.

After an epic summit, which began Friday and ended at around 5 a.m. Tuesday, leaders agreed to add a €750 billion ($860 billion) pandemic recovery fund to a €1.07 trillion budget for 2021-2027. That includes €98.4 billion for external spending, up only slightly from an estimated €97.1 billion in the 2014-2020 period.

The recovery fund will see states take on joint debt by borrowing together on financial markets through the European Commission — a move that French President Emmanuel Macron called “a historic change, a historic step for Europe,” in a press conference Tuesday.

Aid advocates were left disappointed, however, after €10.5 billion for development funding and €5 billion for humanitarian aid that were proposed by the commission as part of the pandemic recovery package in May disappeared amid a larger battle with frugal states. In the end, €70.8 billion was allocated to the budget’s main development tool, a reduction of 10.4% compared with the first proposal from the commission in May 2018.

Andrew Sherriff, head of the European external affairs program at the European Centre for Development Policy Management think tank, told Devex by email that a 10% reduction was always “in the zone of possible agreement,” given member states' tendency to trim commission proposals.

However, he said the outcome, aspects of which must now be approved by the European Parliament, Council of the EU and national parliaments, was disappointing in light of “the rhetoric of the Geopolitical commission, COVID-19's global impact, addressing climate change and much talk about an enhanced partnership with Africa.”

Stefano Manservisi, who was director-general at the commission’s development department at the time of the 2018 proposal, agreed.

“I don’t think it would be fair just now to condemn what has been done because there are a few billion less in a category,” Manservisi, who is now a distinguished nonresident fellow at the Center for Global Development, told Devex. “But if I have to assess what is coming out in terms of message, of commitment of solidarity of Europe with the rest of the world, which in effect is partially measurable on the basis of external expenditure, unfortunately the picture is not good.”

Simon Maxwell, former chair of the European Think Tanks Group, told Devex that EU countries will now face pressure to meet their overall aid commitments by other means, rather than through the Brussels institutions. “In this moment of supposed progress for the EU as a whole, its global arm emerges weakened,” he wrote in an email.

NGOs were also unimpressed. Emily Wigens, EU director at the ONE Campaign, said in a press release that the outcome was “a worrying sign for global solidarity in the face of the pandemic.” Marissa Ryan, head of Oxfam’s EU office, said in a press release that the recovery plan “lacks ambition” at a time when the pandemic is increasing extreme poverty, though she welcomed the inclusion of a digital levy, environmental taxes, and a possible financial transaction tax.

There were other silver linings. Sherriff pointed out that external spending took just 17% of the €60.3 billion reduction in the overall budget when compared with the commission’s first proposal in 2018, faring better than other areas such as security and defense or the single market, innovation, and digital.

A commission spokesperson told Devex by email Wednesday that it “regrets that its ambitious proposals for certain policies were cut back during the negotiation process. This will reduce the EU’s capacity to deal collectively with certain common challenges, in the area of health, of research, of migration, etc.”

Janez Lenarčič, the EU crisis management commissioner who unsuccessfully pushed for the extra €5 billion for humanitarian aid in the recovery package, tweeted that Tuesday’s deal is “an important step in the right direction.” The bloc’s Humanitarian Aid Instrument was allocated €9.76 billion, unchanged from the commission’s 2018 proposal.

The main development tool has been streamlined, and the European Development Fund was brought into the bloc’s main budget, increasing scrutiny on spending and, as Manservisi noted, marking a turning point in a decades-old debate.

A member state source also welcomed the slight raise in external spending for the next budgetary period, despite the departure of the U.K. from the EU.

“I would have wished for more,” the source said. “But these are difficult times.”