BRUSSELS — The European Commission’s humanitarian department holds grave concerns for the whereabouts of €5 billion ($5.7 billion), last seen in a footnote to the latest long-term spending proposal for the European Union.
The EU plan won praise from aid supporters for proposing a more ambitious external budget for the next seven years.
The money was first proposed by the commission in May to assist in the humanitarian response to the COVID-19 pandemic. But as heads of state from the 27 EU countries meet Friday and Saturday to try to agree on the coronavirus recovery package alongside their 2021-2027 budget, an EU official told reporters that, for legal reasons, the money cannot come from the COVID-19 package after all.
Instead, if they want it, leaders will have to find the extra €5 billion somewhere in their own 2021-2027 budget, the official said Thursday.
That is because, unlike the budget, the proposed €750 billion coronavirus response package — known as Next Generation EU, or NGEU — is to be financed by borrowing on financial markets with its legal basis under Article 122 of the Treaty on the Functioning of the European Union. And according to advice from the Council of the European Union’s legal service, “Article 122 TFEU does not allow for the provision of direct assistance to third countries, in respect of measures aimed at supporting their resilience, to the extent that those measures have no direct consequences on Member States economies.”
So when Charles Michel, the European Council president charged with leading both frugal member states and their opponents to a compromise on the budget, announced his new proposal last week, there was a catch. The document explained in a footnote that the additional €5 billion foreseen for humanitarian assistance by the commission had instead been transferred to the instrument used for development spending, “for legal reasons.”
“The EU is talking so much about cooperation. … But this basically means that a lot of important institutions will compete over a small pot of funding.”— Kasia Lemanska, Aidsfonds
Yet no one from the council could explain why a proposed €10.5 billion of development spending from NGEU does not fall foul of Article 122 while the €5 billion of humanitarian aid does. As one member state source told Devex, the reasoning for allowing development spending under NGEU could be: “If everything goes wrong in Africa, our economies will suffer. But this would, for me, also apply to humanitarian assistance.”
Meanwhile, a source from ECHO, the commission’s humanitarian department, claimed that the legal problem was “artificial.”
All of the initial €10.5 billion foreseen for development spending under NGEU is for budget guarantees that take some of the loss if investments from development banks — that are mostly European — in countries neighboring the bloc and sub-Saharan Africa go bad.
Under Michel’s latest proposal, the €5 billion has also been moved to development spending to make it permissible under the rules, making for a proposed total of €15.5 billion of development spending from NGEU, but no humanitarian spending.
The EU official told reporters that even if “it is not humanitarian aid,” at least the €5 billion has been preserved for external action under Michel’s latest proposal so that “we can at least relieve those more affected regions around the world, those who have been really deeply impacted by the COVID-19 — that’s the idea.”
For aid advocates, though, it is a bitter blow, especially as Michel’s latest proposal also includes further proposed cuts to development spending in the 2021-2027 budget, compared with the commission’s May budget proposal. The proposed cuts are made up for by the NGEU funds, but those are reserved for budget guarantees, which are unpopular with the development community.
“It does not make sense,” Kasia Lemanska, from the NGO Aidsfonds, told Devex this week about the proposed cuts to thematic programs. “This is what will fund multilaterals and global initiatives. On the one hand, with COVID-19, the EU is talking so much about cooperation, overcoming fragmentation in global health, etc. But this basically means that a lot of important institutions will compete over a small pot of funding.”
As for the €5 billion in humanitarian funding for COVID-19, ECHO is not relinquishing the money without a fight — first lobbying Tomas Tobé, chair of the European Parliament’s development committee, who in turn lobbied the German foreign minister to save the money for humanitarian spending.
The ECHO source said that Michel needed to find a way to commit the money to humanitarian spending one way or another. “Now is the time to walk the talk and live up to the responsibility of being a global leader,” the source said.
European Parliament members from across the political spectrum also registered their concern at a committee hearing Wednesday with Jutta Urpilainen, who is in charge of the commission’s development department.
“I feel you,” Urpilainen, whose department will get the extra funds if Michel’s latest proposal goes through unchanged, told members of Parliament. “I share your concerns, but of course there is quite little room for maneuver [in] what the commission is able to do at this point.” Urpilainen said the best course of action now is to try to convince heads of state that they also have a responsibility outside the EU.
The problem is that with so many other divisions between the 27 leaders, few predict the issue of humanitarian funding will generate much debate at this week’s summit. Some even suggested the best outcome for those worried about humanitarian aid would be if leaders fail to strike a deal this week, to allow more time for lobbying.
“At the end of the day, it is leaders who decide,” a second member state source told Devex, while cautioning that the budget for spending outside the EU “is not at the forefront of their minds though, as we all know.”