A deadlock between the European Union’s three main branches of power is threatening to block the 2015 budget, and NGOs fear that many aid expenditures — and future EU-funded development projects in some of the world’s poorest countries — are at risk.
In a letter sent last week to EU heads of state and government, Plan International’s offices urged EU leaders to “protect the European development cooperation budget from severe and unjustified cuts.”
Initially, the European Commission — the EU’s executive arm — had proposed a budget of 142 billion euros ($174.6 billion) for 2015. The European Council, which represents the 28 EU member states, brought this back to 140 billion euros, but the European Parliament raised it again to 146 billion euros, including extra funding for humanitarian aid. The three institutions are now engaged in urgent talks to find a solution.
“We are really concerned,” Alexandra Makaroff, the head of Plan’s office in Brussels, told Devex. “Smaller organizations who help at grass-roots level will see their funding cut off. Already, we hear that EU delegations in Africa have been delaying pre-financing and the signing of contracts for new projects.”
Development cooperation falls under the budget line “Global Europe,” which covers all of the EU’s external actions such as foreign relations, aid, support for democracy and human rights. This represents only 6 percent of the bloc’s multiannual budget for 2014-2020.
“We therefore do not believe that cutting the budget available under this heading will result in the overall savings which certain member states seek,” Plan’s letter to EU leaders states.
Nevertheless, if member states have their way, EU external actions may suffer a severe 19 percent budget cut. This flies in the face of the many international commitments by member states, which include the target of spending 0.7 percent of gross national income on development aid.
The budget crisis is already affecting the Commission administration departments that dispense the funding to partners.
In late 2013 and early, humanitarian office ECHO was already confronted with a 500 million euro shortfall. Now the same is happening to EuropeAid, the Commission’s Directorate-General for Development Cooperation, which is facing a 1.3 billion euro funding gap. By mid-2015, EuropeAid may run out of money.
The EU’s financial woes are compounded by the EU’s budgetary system, which foresees both commitments and actual expenditures per year, allowing payments to be carried over to the following year. In past years, the gap between commitments and expenditures has been growing wider, as it carries over unpaid bills to the next year, ballooning to a total of up to 28 billion euros.
Parliament demands that the problem with arrears and unfulfilled back payments over 2014 is sorted out first, before it agrees with any budget for 2015. The gap accumulated in 2014 amounts to 4.7 billion euros, a sum that could easily be covered by the fines raised by the Commission this year. Member states, however, want to funnel this money into their national coffers, and especially the United Kingdom and the Netherlands are taking a hard line on the budget debate.
On Nov. 29, Commission Vice President for Budget Kristalina Georgieva tabled a new proposal for 2015, which foresees 145.2 billion euros in commitments and 141.3 billion in payments. She stressed that the text was focused on supporting in particular those policies agreed by the Council and the Parliament that will contribute to growth and jobs in Europe, as well as budget lines which allow Europe to address crises abroad.
The new budget plan includes an additional 142 million for the “Global Europe” heading, considering “how huge the vulnerabilities in the world we live in are,” said Georgieva, who was responsible for humanitarian affairs in the previous Commission. Makaroff welcomes the extra funding, which will go to development, human rights and the EU’s neighboring countries in Eastern Europe and North Africa.
“But it’s still a stop-gap measure that will not help to remedy the funding crisis at DevCo,” the Plan official pointed out.
Other international NGOs such as Oxfam, Save the Children, Aprodev and CONCORD — the umbrella organization of Europe-based humanitarian NGOs — are also raising concerns over the funding dispute through their EU offices in Brussels.
“The Commission is already convinced, Parliament is in the same book, and we’re working closely with DevCo,” said Makaroff, adding that the ball is now in the court of the member states.
Global development reputation at risk
As negotiators from the EU’s three main institutions have less than two weeks time to hammer out an agreement on next year’s budget before the end of the year, time is running out.
Talks among the Commission, the Council and Parliament ended in deadlock Thursday, but will continue next week. If they reach an agreement by then, the Council can adopt the package on Dec. 15, the Parliament at its plenary session two days later, and leaders of member states at their summit in Brussels on Dec. 18. If not, the EU will enter the new year without a budget, which means that funds can then only be dispensed through monthly instalments of one-twelfth of the 2014 budget or of the relevant amount under the 2015 draft budget — whichever amount is lower.
NGOs fear that supporting aid projects will thus be practically impossible, as for instance programs not covered by any allocation in 2014 will not be able to start even if financing has been committed.
“The clock is ticking,” Georgieva told reporters in Brussels when she presented her new budget proposal on Nov. 28. “If we don’t get an agreement, we’ll be limping into 2015 with the so-called provisional twelfths. Yes, we will continue to function, but it would be to the detriment of programs in their implementation that we would have to budget for every month, creating unnecessary disruptions.”
More broadly, the perception and reputation of the EU as a global development player would be seriously damaged if it cannot agree on affording itself the means to live up to its ambitions.
“EU member states — collectively and individually — must demonstrate the global leadership they so often profess,” Plan’s letter concludes.
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