Q&A: DFID's Chris Carter on Brexit, development, and the 'European preference'

BRUSSELS — With the United Kingdom heading toward an exit from the European Union in January, the U.K. aid sector is grappling with its future outside of the bloc. A key concern is that, as a non-EU country, U.K. NGOs will lose their eligibility for at least some EU aid contracts, because “the EU still ties its aid — something the U.K. hasn’t done since the mid-90s,” according to Chris Carter, deputy head of the Europe department at the U.K. Department for International Development, who is helping to lead DFID’s work on Brexit. “We are seeing a move in Europe of what's called 'European preference' ... It just seems a real step backwards.” --— Chris Carter, deputy head of the Europe department, DFID His point received short shrift in Brussels, however, with a senior official from the EU's foreign service telling reporters that such concerns were "a little bit rich" coming from a country that, as an EU member state, had helped to set the rules. Devex spoke to Carter on the sidelines of the AidEx conference last month to discuss the issue, and whether DFID hopes to continue contributing to EU development work after Brexit. His comments could not be reported until now due to purdah rules, which restrict public communication from officials ahead of an election. This conversation has been edited for length and clarity. What are your concerns about the availability of EU aid contracts to those outside the European Union after Brexit? ECHO [the EU’s humanitarian arm] has a regulation that dates from the ‘90s, which has not been updated, that says that they can only fund organizations in EU member states. They have no plans to change those rules. So unless there is some kind of agreement between the U.K. and ECHO — but that’s not something that is being discussed — it means that those organizations [based in the U.K.] will no longer be eligible to deliver ECHO’s programs. Why we find it surprising is that we thought this issue had been sorted out a long time ago. What we [DFID] care about is the best implementing partner. It doesn’t matter if they are British or, if you are USAID, if they are American. What we care about is that they are the specialists, they are the best organizations, because we care about results. In development assistance, we are seeing a move in Europe of what’s called “European preference”: Going back to a time where what is most important is that people know that it is the EU delivering that project, the branding, the visibility of the donor. For me, having worked in development for a very long time, I don’t think that is particularly positive. And it just seems a real step backwards. Where are you seeing the EU reverting back to that old vision of aid? In development funding — rather than humanitarian assistance — the current European Fund for Sustainable Development says the guarantee from the EU budget “shall be implemented whenever possible under the lead of a European eligible counterpart...” In the new EFSD+, nothing is set down yet, so the language is in flux. But the language on European preference looks like it will be strengthened, under pressure from some member states — and this is a trend across the EU, which is what worries me. The European “flavor” of the institution may be taken into account earlier in an assessment. Though there could be a provision for regional expertise, which may mean banks like the African Development Bank are not affected. For humanitarian aid, ECHO had an exception allowing it to work through organizations in Switzerland, which is not in the EU. It recently ended that agreement, insisting that it had nothing to do with Brexit. How did you view that move? Well, ECHO said it had nothing to do with Brexit. But it was interesting that they were working with humanitarian organizations, despite a regulation that said they couldn’t, where they had been telling us that they can’t change the rules. Why can’t they change the rules? My understanding is if you open up that regulation there are lots of things that would then come onto the table to be discussed. So there are pros and cons. They can’t just open up and say “we’ll change this one bit.” They open up the whole regulation. You touch on all sorts of issues about humanitarian funding, where it is funding, how it is funded, how quickly it is funded, how much freedom ECHO has to fund in an emergency, that all becomes part of that new regulation. “We are at a pretty important moment, where the EU is making decisions about which way it is going to go.” --— Haven’t U.K. NGOs taken steps to try and hedge their bets on Brexit, increasing their presence in the EU? Some can, some are able to. Some have EU affiliates. There are ways around this. And ECHO will probably be OK with that. But it is not good for the U.K. sector. It is also not good to add on additional costs to humanitarian funding for a rule. For smaller organizations it is expensive. And it is not quite as easy as opening up a postbox, you have to have a two-year financial track record [within the EU in order to be eligible] — that’s very hard to get. So again, it is shutting out smaller organizations. So are you saying the EU should get over its bureaucratic concern about changing the regulation, despite its concerns about the other consequences? That’s a difficult question. We are not saying anything. They had an agreement with the Swiss, for example, that seemed to work with the regulation. But we do think that it needs to be properly looked at. Their decision to not open the regulation was just made and nobody seemed to comment on that. It just happened, without commentary, which seems surprising for us. There is a debate to be had about it. It seems to me that a regulation from [1996] belongs to a different age. And this issue I think is important enough. That rule that an implementing partner who happens to be based in Turkey or North Africa cannot lead a consortium seems really outdated to me. On the development side, what does the European Commission’s plan to bring the €30.5 billion ($34 billion) European Development Fund into the 2021-2027 EU budget mean for the U.K. and DFID? Some have suggested that it will make it harder for the U.K. to contribute as a third party, and therefore less likely that U.K. entities will remain eligible for EDF funds. There are Brexit issues, which is this, but even this is a wider issue about tied aid. On NDICI [the proposed Neighbourhood, Development and International Cooperation Instrument for EU external spending in 2021-2027, which would bring the EU’s many funding instruments for development together], what we want for the EU is the best development instrument. So we support the EDF and [the European Neighborhood Instrument] going into one instrument. That’s cohesion, a more strategic approach that gets around all these different systems and rules, it’s better for implementing partners. So that’s the best case. We will then have to work out how the U.K. works with that. That is secondary for us. We do want to work closely with the EU. We hope there will be flexibility in the instrument to be able to work with external partners. It’s not just us: it’s Gates, it’s others, it’s the U.N. It goes back to the EU preferences, it’s about the EU being a good development donor and partner, rather than closing in and being all about visibility and branding and so on. So we are at a pretty important moment, where the EU is making decisions about which way it is going to go. Whereas the rest of the world is kind of going into more openness and collaboration — more or less the rest of the world — the EU seems to be going somewhere else. If EDF and [the European Neighborhood Instrument] are all one together in NDICI, it is not obvious or easy how the U.K. will work with that. Again, the EU are not talking about that. They are not open to opening it up and making it easier for us at the moment. But we will see where it goes. The main point from the U.K. and DFID is that we don’t want to make a worse instrument, just so we can work with it more easily. That’s not DFID. And we still think that it is in the EU’s gift to make an instrument that can be flexible enough to work with. It’s highly sensitive. It’s got caught up in the whole Article 50 issues around Brexit. I would hope that development aid can slightly move away from that high politics, because it is development aid. And we will see what that means next year. It’s a bit too early to say … [Development] was not one of the priority issues [of the Brexit negotiations. The EU’s Article 50 Task Force] kept a very tight rein on anything to do with Brexit, and this is seen as an exit issue — how the U.K. would work with the future development instrument — so there have been no [substantive] discussions.