Budget support to developing countries (short presentation) 
President
The next item is the report by Charles Goerens, on behalf of the Committee on Development, on the future of EU budget support to developing countries.
Charles Goerens
Mr President, I will say straight away that there are no miracle solutions to the problems that go with insecurity and poverty. One only has to look back over the different types of relationship we had with developing countries over the 20th century.
We can put behind us for good the colonial era, which was marked by the appropriation of entire continents by the old European colonial powers.
The next, postcolonial stage, which was characterised by a somewhat paternalistic approach, produced results that although perhaps not insignificant, were nonetheless highly unsatisfactory compared with the southern countries' considerable needs, especially in the areas of health, education and basic economic development.
Over the last few decades, a policy of cooperation, based on a set of values including human rights, respect for minorities, upholding democratic principles and the rule of law has gradually become the norm.
This policy, which the European Union claims to its credit, focuses more on treating our partner countries as being in charge of their own development, hence the notions of partnership, political dialogue, and above all, ownership by the partner countries of their own development.
Indeed, the phrase 'budget support' is in keeping with the latter kind of relationship. 'Budget support' refers to the transfer of financial resources from a funding agency outside the partner country's treasury, under the proviso that the country abide by the agreed conditions governing payments. At first sight, budget support may seem to be a risky undertaking. However, this is not true when the necessary precautions are taken to ensure that the funds are used wisely. All disbursements - and I must stress this point - are made on the premise that the recipient country has the necessary capacity to manage the funds. This means that the country must first have in place a strategy to combat poverty that addresses the basic needs of the inhabitants in question. This is also known as endogenous development, and is the only real form of lasting development.
The Commission, moreover, is very aware of the conditions that the recipient countries must meet, and has ensured that a fail-safe system is in place to prevent funds from being diverted in developing countries. As for the countries themselves, there is every reason for them to build up their capacity to engage with local communities, and with their parliaments of course, first and foremost.
Another benefit that is worth mentioning is that better control of public finances by the beneficiaries of budget support can also have a healthy effect on their taxation systems' capacity to bring in additional revenue.
Nonetheless, budget support is not a cure-all, nor is it a funding instrument that all countries are able to make use of: far from it, in fact. One of the consequences of the strict conditions imposed is that they rule out a large number of developing countries.
Mr President, I would like to end my speech by adding that I urge everyone to adopt my proposed amendment to paragraph 1. If it is not adopted, I will have to vote against my own report, as the statements that second-guess the Commission's intentions are purely gratuitous and not at all justified.
As has been confirmed to me during our consultations, the Commission has taken all the necessary steps to ensure that the disbursements fulfil the precautionary conditions to which I just referred.
Lastly, I would like to say that paragraph 11 goes a little too far. It aims to promote budget support as basically the only form of development cooperation. This is going too far. It is not in keeping with the realistic outlook that the Commission has maintained throughout these discussions.
Zuzana Roithová
(CS) Mr President, this report contains substantial arguments in favour of increasing budgetary support forms of development aid, instead of the traditional project-based approach. It would also be a good idea for both the International Monetary Fund and the World Bank to cooperate with the Commission on the establishment of independent indicators to assess how effectively financial support funded by European taxpayers is being used. In view of the fact that some countries, such as Rwanda or Uganda, have demonstrated their ability to manage public finances better than others, it would be a good idea for the governments and parliaments in countries receiving development aid to share this positive experience, and to cooperate in the establishment of the assessment indicators. In conclusion, I would like to emphasise the high quality and broad scope of the two reports, both that of Mr Goerens and the following report of Mr Kaczmarek. I would also like to comment on this report later.
Ricardo Cortés Lastra
(ES) Mr President, budget support is currently one of the most important forms of aid. We are at a crucial moment, since the Commission is committed to increasing the funds destined for budget support over coming years.
I believe that budget support is compatible with other forms of aid, as long as there is long-term commitment and better coordination between donors, and simplification of procedures.
The Commission should adopt a dynamic approach towards the criteria on admissibility, and the results indicators should be established on the basis of poverty reduction objectives being met.
I believe that budget support should prioritise those programmes with the greatest impact on poverty reduction, and this is why we feel that the health and education ministries are of fundamental importance. In the same way, the gender perspective must also be incorporated into budget support.
Another of the areas of potential highlighted in the report is that budget support helps to strengthen public management systems, and the audit and control capacity of developing countries.
Lastly, Mr President, I believe that the national parliaments, and the local and non-state authorities in developing countries should be informed and be able to make suggestions throughout all the phases of budget support.
Anneli Jäätteenmäki
(FI) Mr President, I take a very sceptical view of direct budget support, because I believe that it can encourage the trade in weapons, for example. Something that I would like to draw people's attention to is the notion that there should be tighter scrutiny of the EU's budget as a whole, but also of aid and this budget support, and these processes should be more transparent, so that people know what their money is being spent on.
It would be interesting to know if the Commission has thought about whether every month on the Internet there should be information available to the public concerning the results achieved by the financial assistance which the EU provides. I believe that it would help people to be more vigilant and more obliging, because they would know that their money is reaching its destination. Now, unfortunately, it does not all get to where it is supposed to, by any means: it is subject to abuse and corruption, and it is used to buy arms. I would propose that each month the EU starts to post on the Internet the results of what has been achieved through development aid.
João Ferreira
(PT) Mr President, there is an essential starting point in this debate which some among us at times forget or attempt to hide. For decades, centuries, relations between the so-called industrialised countries and what are termed developing countries have been founded upon unequal trade and upon the dependency and underdevelopment of the latter, which are looked on as sources of supply for raw materials and cheap labour.
Centre-periphery relations, peculiar to the capitalist system currently in force at a global scale, are intrinsically unjust and unequal. These relations are upheld by the policies imposed by institutions such as the World Trade Organisation or the International Monetary Fund, with their programmes of structural adjustment, and by means of instruments such as the suffocating external debt and its servicing. It is all this that should be questioned and profoundly changed, and because of all this the policy of development aid should not be looked upon as an act of charity by the richest towards the poorest, but instead as a necessity dictated by the criteria of fundamental justice. The report, which contains positive aspects, but which is not free from contradiction, does not, unfortunately, address these and other essential questions.
Elena Băsescu
(RO) Mr President, I think that the budget support granted to developing countries is more effective than project-based funding. It helps reduce the costs relating to projects and their fragmented operation. Another benefit is that contributions can be adapted to each country's specific requirements based on an ongoing dialogue between donors and beneficiaries. I should stress how important the transparency of this process is. In this respect, it is vital to have the active involvement of the European Commission, local civil society and national parliaments. The principle of shared ownership of the funds' implementation is also a crucial factor contributing to their effectiveness.
I believe that the EU must retain conditionality as a basis for budget support. This will help guarantee respect for human rights in developing countries.
Franziska Keller
Mr President, I would also like to thank the rapporteur for his great report. I very much agree that budget support is a very important instrument. It does not help with everything, but it has the potential to increase country ownership and enhance parliamentary control and oversight by civil society, and it can contribute to accountability.
Of course it only works if, at the same time, you strengthen civil society organisations, parliaments and courts of auditors. In the end it does not mean that we should engage less if we just give money to a country, it actually means engaging more, in policy dialogue, etc. But we cannot expect a development which took Europe decades, if not millennia, to happen within a month. You cannot confuse defectiveness with something that you can see in a weekly update reporting that this or that has happened. Education or health sectors, for example, do not spring up within a week or two. For proper, sustainable growth and development we actually need more time; we need to take a longer view.
Jaroslav Paška
(SK) Mr President, I realise that providing budget support to developing countries is an important contribution that can help improve the financial capacity of public spending in such countries. As there is a lack of government accountability in many countries for the handling of these funds, however, it is very important for us to consider sensitively whether a particular country is truly capable of managing our budget aid effectively and responsibly. I therefore view the efforts of Mr Goerens to clarify the rules on European budget aid as a meaningful attempt towards the more efficient and more rational management of EU funds, and an attempt that is worthy, in my personal opinion, of our broad support.
Czesław Adam Siekierski
(PL) Mr President, EU budget support for developing countries is exceptionally important. We should examine the negative as well as the positive effects of such support. Without doubt, it has a direct effect on the development of economic potential. Nevertheless, we must not forget the possible risks involved with budget support. These could include difficulties in monitoring countries outside the EU and possible irregularities involved in distributing and utilising the funds.
However, I do believe that this support is very important and should be continued. This is also in the indirect interests of the European Union. It results in much more rapid economic growth in those countries we support and so contributes to improvements in their economic situation, which through trade also has a positive effect on Member States and their markets. The allocated funding facilitates the stabilisation of internal situations in trouble spots and a significant reduction in poverty indicators. This aid is important. However, we must try to introduce controls for EU funding and monitor it more efficiently so that it truly supports the building of economies, and is not earmarked for undesirable aims.
Seán Kelly
(GA) Mr President, in general, I am in favour of this budgetary support for developing countries, but to be honest I am somewhat doubtful about its effectiveness.
The idea of budgetary support for developing countries goes back to the Marshall Plan and is seen as perhaps the most effective way of implementing the Paris Declaration and the Accra Agenda. Indeed, the European Union spent EUR 13 billion on this from 2003 to 2009.
Obviously, some good has come of it. But I am just wondering how effective it really is and, particularly, how we can justify that type of expenditure, because it is difficult to assess the effect in terms of the twin objectives of poverty reduction and the strengthening of democracy in the countries that are recipients of this aid. I would like an objective view. There are different views but certainly an objective view would be welcome.
Charles Goerens
Mr President, I have asked to speak again because some speakers have said that the report is not detailed enough. I would ask them to re-read the written report, which sets out all the conditions. They are even stricter than the conditions that had been called for.
I refer in particular to paragraph 32, which mentions the fact that the Commission systematically bases its approach on results derived from performance indicators; or paragraph 33, which mentions strategic decisions, or paragraph 34, which draws attention to the fact that many countries are excluded from budget support because of certain major shortcomings and lack of capacity, and weak governance in particular.
Everyone who has criticised the report ought to bear in mind that budget support is not within every country's reach. The countries must abide by extremely strict conditions, and very few hiccups are found to occur, as the report by the European Court of Auditors confirms. I must stress the fact that the International Monetary Fund is involved in every decision, and that, moreover, the Commission seeks approval from the IMF before making any disbursements in this area.
I do not think we could be any stricter. In spite of everything that is done in this area, I should point out that the unexpected can always happen. However, Mr President, let us not be hypocritical: this happens in our own countries also, and within the European Union. Are we in a position to preach to the rest of the world? Are we in a position to say that non-compliant ...
(The President interrupted the speaker)
payments can never happen in our countries?
Mr President, I felt it was important to clarify these points.
Cecilia Malmström
Member of the Commission. - Mr President, I would like to thank Mr Goerens for this very valuable contribution to the important debate on budget support. We welcome it because it invites the Commission to continue our efforts to improve the design and the approach of budget support.
Mr Goerens, the proposals that you raise come at a time when we are busy preparing the new communication on EU budget support. It is scheduled for adoption by mid-October. In this regard it is becoming apparent that your report - Parliament's report - and the emerging ideas of the new communication are moving in similar directions.
As part of the new budget support policy, the Commission will develop a closer link between general budget support and the fundamental values of the European Union. This is particularly important when it comes to political governance. Issues like human rights, democracy, the rule of law and the eligibility criteria covering macroeconomic public financial management and the national or sector strategy in the partner country will be assessed in a much more structured and rigorous way, as you also pointed out in your speech just now and in your report.
Ms Jäätteenmäki, the Commission will strengthen accountability and transparency in order to make development processes much more inclusive. The role of parliaments, civil society organisations and audit institutions in partner countries will be further strengthened as part of a budget support operation. The external oversight of national budgets is crucial for domestic accountability and international acceptance. In addition the Commission will strengthen its risk assessment and management framework with regard to budget support in line with the recommendations of the recent Court of Auditors report.
Finally, we would also like to make a reference to the Court of Auditors report on budget support operations from 2010. The Court there acknowledged that the Commission has made considerable progress but noted that there are still weaknesses in the methodology and the management that can prevent budget support from reaching its full potential. With this statement and backed by Council conclusions, I would like to contest the statement in paragraph 1 of the report that there have been numerous types of undesirable development and wastage of money. However, it is precisely because there are still improvements to be made that the Commission will come with a communication in mid-October. Mr Goerens, your report will be very helpful in that regard.
President
The debate is closed.
The vote will take place on Tuesday, 5 July 2011.
