The effects of the global financial and economic crisis on developing countries and on development cooperation (debate) 
President
The next item is the debate on the oral question to the Commission - B7-0209/2009) by Eva Joly, on behalf of the Committee on Development, on the effects of the global financial and economic crisis on developing countries and on development cooperation.
Eva Joly
Mr President, Commissioners, ladies and gentlemen, while I have the pleasure of putting this oral question to you on behalf of the Committee on Development, sadly I do not have the pleasure of presenting you with the resolution on the same subject, adopted unanimously by this committee.
My colleagues from the Committee on Development and I worked tirelessly to ensure that the resolution was voted on and debated in plenary before the G20 Summit in Pittsburgh.
However, apart from my group, the Group of the Greens/European Free Alliance, and the Confederal Group of the European United Left - Nordic Green Left, no other political group supported our request to put this resolution on the agenda, and yet it is vital if we want the European Parliament to play more of a part in defining the European Union's external policy and to have real strength behind its proposals.
Ladies and gentlemen, of what benefit will it be to us to vote on this resolution, which was to put the European Parliament's requests and proposals to the members of the G20 and, more specifically, to those of our Member States who sit on it, as well as to the European Commission, at the October plenary session, that is, after the Pittsburgh Summit?
Besides the fact that this devalues the work accomplished, we cannot be content with this role of current affairs commentator either. That is not our job. Let us leave it to those whose job it is and who do it with professionalism: journalists.
Developing countries need us now more than ever. While our fellow citizens have not been spared, the global economic and financial crisis has had a far more lasting effect on the populations of developing countries. However, the financial institutions have not made these populations the main beneficiaries of the emergency loans, since very few of them satisfy the required conditions.
The countries of Africa have thus received only 1.6% of the loans granted by the IMF since the last G20 meeting in London and the increase in the IMF's resources. The rest has gone to developed countries, European ones in particular.
Maintaining the European economic system was imperative of course, but this must not make us forget the extreme poverty that is raging at our borders; extreme poverty made worse by a crisis for which we carry the burden of responsibility.
Public development aid must be increased as a matter of urgency. Already, most of the Member States do not meet the conditions required by the OECD since 1970, and we are facing new emergencies without having new funds. We must therefore find new sources of funding, not least by reforming the current system.
The Committee on Development is asking you to take action to eradicate tax haven abuses, tax evasion and the illegal flows of capital from developing countries.
According to a Norwegian report published in June, the figures of which have been verified, the illegal flows leaving developing countries are ten times the amount of our development aid. This shows just how much is at stake.
There is a need to implement a new binding financial agreement that will force transnational companies to declare the profits they make and the taxes they pay, on a country by country basis, in order to ensure transparency in respect of what they pay in each of the countries in which they operate.
Moreover, a radical reform of the system must take place involving, in particular, the introduction of new democratic and transparent regulations for trade and the international financial systems.
The responsibilities are huge, the challenges many, and the task arduous, but, now more than ever, the European Union must step up to the plate and lead these reforms.
Karel De Gucht
Member of the Commission. - Mr President, the Commission in its role as the EU's representative in the G20, together with the Presidency, strongly advocates increased support to low-income countries, particularly the poorest, as one of the critical priorities of the G20 commitments.
In this regard, it is important that low income countries receive appropriate funding to meet the needs emerging especially from the backlash of the financial crisis. That is why we advocate the need to enhance access by poor and fragile countries, often without institutional administrative capacities, to the facilities and credits made available by the international financial institutions and other donors.
Personally, I will defend this approach at the November Development Affairs Council, and the global financial crisis will be at the centre of my political concerns during the weeks ahead. I hope I can count on your support throughout.
In this context our 'Vulnerability FLEX' instrument is of particular relevance. The Commission has worked with the World Bank and the IMF to identify the most crisis-vulnerable countries and to complement the loan-based assistance provided by these two institutions with timely and targeted grant aid under the Vulnerability FLEX.
Between 2009 and 2010, up to EUR 500 million will be spent on those ACP countries requesting assistance to ensure priority public spending, including in the social sectors. Let me reassure you that the frontloading of budget support through the Vulnerability FLEX mechanism will not lead to a funding gap insofar as the Commission is using non-earmarked reserves.
Countries not eligible under the Vulnerability FLEX will also benefit from other measures proposed by the Commission in its April communication, for example, reallocations following ad hoc country reviews and the advanced mid-term review, support under the traditional FLEX, frontloading where feasible, etc.
Concerning the targeting of the budget support, I am convinced that the flexibility inherent in this instrument already allows recipient countries to use the funds in the manner which they judge will best help them respond to economic and social problems.
In addition, the advanced mid-term review of the 10th EDF will provide a good opportunity to identify new needs and assess whether these would be better addressed through general or sectoral budget support.
The advanced medium-term review will also provide an additional opportunity to look again at budget support profiles in each ACP country and consider amendments, reallocation or additional funds from the reserve.
Concerning the reform of the Bretton Woods institutions, our role in promoting their reform is, of course, limited. The issue of voice and representation will be discussed at the IMF World Bank annual meetings in Istanbul, which Commissioner Almunia and I will attend this October. In this respect, we welcome the addition of a third seat for sub-Saharan African countries on the World Bank's Board of Governors, and are looking with interest at proposals on the table for further reforms.
Concerning illicit financial flows, I would like to reassure Mrs Joly that I have already given instructions to the Commission services to explore ways of improving fiscal and financial governance in developing countries in order to curb illicit financial flows. This crisis has also shown that we have to strengthen the mechanisms for delivering ODA.
The international aid effectiveness agenda embodied in the Paris Declaration and the Accra Agenda for Action is now more important than ever. In these difficult economic times, we have a particular responsibility towards the world's poor to make sure our development assistance is being channelled effectively.
In its 8 April communication, the Commission also underlined the useful contribution of innovative funding mechanisms as a complementary and mutually reinforcing instrument with ODA. We have urged Member States to use their full tool kit and to leverage non-ODA with ODA, for example, by building on ongoing voluntary solidarity levies such as the airline ticket taxes to finance health programmes. There will be high-level discussions on this subject, including a major conference in 2010 organised by the French, which will involve the Commission upstream.
Enrique Guerrero Salom
Mr President, Commissioner, it was exactly a year ago today that we witnessed the collapse of the financial institution Lehman Brothers. Then, according to the experts, we were on the verge of a financial collapse, and we were on the threshold of another great depression.
The financial crisis intensified and extended to the real economy, and we have lived through a period in which we have had negative economic growth and job losses.
However, developed countries are beginning to come out of the crisis. France and Germany have done so, for example, and the Commission presented its economic forecasts today, which show that in the second half of the year, the European Union will come out of the recession.
However, the less developed countries are in the midst of the crisis and will continue to be there for a long time. They did not cause the crisis, but they are suffering the consequences of it more than anyone. They are suffering the consequences with less growth, faster growing unemployment, less direct investment, less foreign credit, less money sent back by emigrants, less official development aid and, of course, more trade restrictions.
We have lived through a period during which our stability has declined and our comfortable situation has declined in a limited time, but they are in danger of losing a decade in the fight against poverty, and a decade means that an entire generation is lost.
We can do a great deal for them on many aspects, and I would like to specifically focus on confronting protectionism. Last week, the Commission presented its fourth report on trade restriction measures, which shows that many countries are adopting new restrictive measures, which is disastrous for developing countries.
Also, many developed countries will not fulfil their commitments to official development aid at the very time when we need fresh resources more than ever to confront the seriousness of the crisis.
I therefore propose that we increase the coordination of this development aid with a broader agreement between donor countries, financial institutions and partners, and manage it more efficiently and transparently so that it does not generate costs and is not a bureaucratic burden.
I urge the Commission, I urge the Commissioner, to implement the plan that it has presented to us, which I am sure Commissioner Almunia will agree with.
Louis Michel
Mr President, Mr De Gucht, Mrs Joly, I am, of course, very aware that, in this type of debate, we will inevitably hear a series of speeches all saying the same thing. That does not bother me, however. I believe that it is important to repeat again and again this strong consensus that the European Parliament has a duty to build and, moreover, this needs to be done along with the Commission. This is because, despite having claimed that developing countries would be scarcely affected by the financial crisis, all the experts are in agreement today that, on the contrary, the effects of this crisis will be disastrous for most developing countries.
All the social sectors of poor countries are going to find themselves faced with a sharp rise in social needs, in particular, and in needs for services, and with a very significant fall in growth. Moreover, from this perspective, I very much appreciated your alluding, Commissioner, to the importance of responding to these needs in a far more flexible way, and I think that you know that, where it was possible to be so - obviously in the context of sufficient monitoring - I have always been a great supporter of State aid and direct aid, whether direct or sectoral aid, but of budgetary aid, in any case. I believe that there is an appropriation effect and another, far greater effect, to do with respect, and that gives the Member States powers.
In spite of all that, I note that the G20 has not tackled the reform of the international financial institutions - I am referring to the International Monetary Fund and the World Bank - in order to give greater weight to the interests of the poor countries of the South.
As Mrs Joly said, 80% of the recent loans from the IMF went to European countries and only 1.6% of these new loans were granted, for example, to African countries. The resources pledged to developing countries in the G20 package will not be enough - we know this too - and will not be sufficiently focused on the weakest countries. Worse still, these resources will not arrive quickly enough.
The real challenge, as you have obviously realised, Commissioner, will be to force the Member States to honour their 2005 commitments. Nothing justifies a reduction in public development aid. However, as has already been said, several European countries have announced drastic cuts. I am thinking of Ireland (-10%), Italy (-50%) and Latvia (-100%). This attitude is clearly totally unacceptable. Moreover, it is irresponsible.
I should like to hear your opinion on a whole series of points. I heard your positive reaction regarding the vulnerability fund that the World Bank is proposing to create. You also responded in favour of combating tax havens. The countries of the South lose USD 1 000 billion each year in funds transferred illegally to the North, USD 350 billion of which pass through tax havens.
The issue of international governance has already been discussed.
Another issue that I believe should be highlighted is, of course, trade-related assistance. I am an enthusiastic supporter - unlike some, I know - of economic partnership agreements, provided, of course, that the specific situation is taken into account and transitional periods are introduced and, above all, provided that the Member States honour their commitment to provide this infamous EUR 1 billion sum each year to help trade. To my mind, this is obviously important, as others have said.
What is needed today is to denounce the dual messages from certain Member States that talk in glowing terms about developing countries and make huge promises but which, at the same time, are cynically reducing their public development aid.
Gabriele Zimmer
Mr President, the question tabled by Mrs Joly on behalf of the Committee on Development brings up the issue of what we, as development policy makers, are actually trying to achieve in this debate.
The promises of the last G8 and G20 summits ultimately never made it off the page. They are amongst the promises that are trotted out again and again but that have never led to adequate, tangible assistance. In this regard, I really cannot comprehend why we are not debating Parliament's resolution before Pittsburgh in order to apply appropriate political pressure. In light of the Commissioner's accurate analyses and of Mr Michel's observations, it seems clear to me that we know what is at hand here. Yet we are not in a position to apply political pressure in order to force the Member States to finally move away from this policy of 'charity begins at home'. Looking forward to Pittsburgh, that would seem to me to be the big danger. If we do not succeed in applying pressure and making it clear that we need new institutions specifically in order to support the poorest countries in the world, then we will still be sitting here after Pittsburgh pointing out that, ultimately, nothing has changed.
That is also my request to you, Commissioner. I ask you, here in Parliament right now, to comment again specifically on the results and to tell us what can actually be demanded with the support of which Member States and to what extent we have actually made progress here.
What we need is rapid and effective action because people are dying before our very eyes and they are doing so as a result of circumstances that we have helped bring about. I call on us all to act together!
Corina Creţu
Mr President, emergency fund contributions, as you know, recorded a decrease of EUR 4.8 billion in the amount intended for the regulation of humanitarian crises in the poorest countries. This is the highest recorded historical gap between the funds needed and the funds collected from donor governments and, seeing these figures, we cannot help but think about the huge amount of money spent on bank bailouts.
Each government is responsible for solving its own country's problems but, at the same time, it is unfair and indecent to overlook the fact that the developing countries are hardest hit by the economic crisis, even though these countries are less responsible for that crisis.
The world around us teaches us not to expect too much from humanitarian appeals, especially during periods of recession. I would therefore like to draw your attention to the risk of neglecting the developing countries and of accelerating the growth in poverty and obtaining a boomerang effect in the shape of increased internal tension, bloody conflicts, humanitarian tragedies and massive migration, yet again debated by developed countries. Considering these circumstances, I believe that efforts are required in one direction to assume our responsibilities. This requires boosting international aid and the need for more efficient development aid.
I also believe we should focus on decreasing dependence on humanitarian aid for some of the beneficiaries. I would also like to ask the Commissioner - taking into account what former Commissioner Michel previously said about the need to step up the involvement of the World Bank and the IMF - whether he intends to come up with a proposal for this Istanbul Summit.
I do not want to close this speech without stating my appreciation for the start of your Commission mandate. I have in mind the US-South Africa Summit, your visit to Zimbabwe at the end of this week, and the emergency assistance provided in recent days for the 100 000 victims of the floods in West Africa. At the same time, I wish to point out that not only Burkina Faso faces natural disasters, but Niger also needs international support. Human lives are not just threatened by floods, but also by the insidious and permanent threat of drought. I also appreciate that you allocated EUR 53 million last week to respond to the drought in sub-Saharan countries. These are encouraging indicators which I hope will influence the talks at the G20 Summit in Pittsburgh and the Copenhagen conference, as these meetings are critical nowadays with the millennium development goals facing a major risk of failure.
Zuzana Roithová
(CS) Commissioner, I too would like to say how disappointed I am that the promises of the G20 concerning assistance for the poorest countries during the economic crisis were clearly not meant seriously. The reality is that IMF assistance has so far been negligible. I would also like to call for a reform of the decision-making process so that the poorest countries can have a greater say in decision making, particularly within the Bretton Woods system. At the same time, I would like to ask you, Commissioner, whether it has been possible to maintain, in particular, health assistance and education in ACP countries at least at pre-crisis levels? I am asking mainly because there has been a drastic reduction in financial aid from many countries, including European ones. That said, Commissioner, I wish you success in your new role.
Anna Záborská
(SK) Commissioner, the issue we are discussing is highly important and topical, not only because the EU needs to have a clear idea about development policy at the moment but also because we need to explain it clearly and intelligibly to our fellow citizens. More than ever before, the level of development aid can now influence illegal immigration, public order, epidemics and also - as the IMF has pointed out - the increase in private sector debt in developing countries.
I would like to emphasise the regular control of finances both by donors and recipients of funding. We live in our various countries and we hear criticisms of the EU's development policy. The consensus in the European Parliament which Mr Michel spoke of is not always so evident in the countries of the EU. It is only through the effectiveness and transparency of development aid that we can convince people that it is justified and limit any cut-backs.
Sari Essayah
(FI) Mr President, it is extremely important that, at this stage, Europe shows moral leadership, and Member States must honour all their commitments as well as the Millennium Development Goals. Of course, we are suffering from relative poverty during this present economic downturn, but we need to remember that in the developing countries, they are suffering from absolute poverty, and people are dying of hunger and disease. More than 10 Member States in the Union, however, have said they will cut their development cooperation contributions or slow down the rate at which they are set to increase. Obviously, we should remember that, important as it is to increase payments, it is equally important to ensure that they are used more effectively. There are various tools in place for this coordination of aid. One is the Official Development Assistance computer program, which has been trialled very successfully in Mozambique, and I hope that there will be investment in time and effort in this type of coordination in particular. That way, it will be very easy for us to improve our success in such a situation as this, where the amount of aid available is falling.
Karel De Gucht
Member of the Commission. - Mr President, yes, a crisis has hit the poorest countries the hardest and there is in fact not much that we can do about it. We can only talk about the remedies to get them back on track, and obviously this will take more time than it will take in the developed world because the mechanisms to produce new economic growth are much less developed in those countries.
One of the remarks that have been made by several members is about the fact that a lot of Member States are in fact backtracking on their Official Development Assistance (ODA) engagements. The EU Member States agreed in 2005 individual minimum aid targets of 0.51% for EU-15 and 0.17% for EU-12, for the new Member States to be reached by 2010 and respectively 0.7% and 0.33% by 2015.
The countries that had already achieved aid levels higher than these targets promised to maintain. Based on these confirmations and higher national pledges of some Member States, the EU should collectively reach 0.56% of ODA by 2010.
I believe that the crisis should not be an excuse to water down donors' aid promises, and I will insist on remaining committed to delivering the promised aid levels, both for EU Member States as well as other donors.
In 2008, the EU ODA has increased by around EUR 4 billion to a level of 0.40% of ODA and the collective EU ODA is forecast to continue increasing.
On the basis of the information gathered from Member States, we foresee the EU collective ODA increasing to EUR 53.4 billion in 2009, which represents 0.44%, and EUR 58.7 billion, representing 0.48%, in 2010.
This also means that, without additional steps by Member States to fulfil their individual targets, the collective targets for 2010 will not be achieved. The forecasted trend of a continuing increase in EU ODA relies on those Member States that are trying to respect their commitments, but efforts are required by all Member States, and I will continue to insist on that with the respective Member Sates. It is their responsibility. This is an engagement that they have taken up, and the crisis should not be an excuse to water down their engagements. I would even say, to the contrary.
Several Members have also insisted on the reform of the international financial institutions. This is a target that I can fully subscribe to. The G20 has set out a precise timetable for governance reforms of the Bretton Woods institutions urging them to accelerate the implementation of their own plans for reform which predate the London Summit. Some deliverables are expected as early as April next year and I am confident that solutions can be found on outstanding issues.
Given the current momentum in IMF reform created by the G20, the Commission underlines the importance of advancing the second phase of reform at the World Bank with a view to concluding it by spring 2010.
The London Summit of 2 April 2009 will go down in the history of the G20 as one where development issues were handled in their own right and in the presence of developing countries' representatives. In preparation for the next G20, these last months have seen intense activity by the institution tasked with following up.
In August, the IMF Board of Governors approved a USD 250 billion general allocation of IMF special drawing rights, of which USD 18 billion will go to low income countries, and the IMF will be called to account in Pittsburgh on other measures for low income countries. So this is, I think, a positive evolution.
Louis Michel, my predecessor, has also insisted on the flexibility, claiming that the budgetary support mechanism is the most flexible we have, and this is obviously true but, of course, this also means that we need a counterpart with the developing countries and we need to be in a position to have political dialogue with them and also monitoring mechanisms, so it presupposes a minimum cooperation on their behalf, but, once that is in place, I also believe that, especially, sectoral budgetary support is a very adequate procedure.
I do not quite understand why this resolution that has been introduced by the Committee on Development and refers to the G20 meeting of Pittsburgh is not being voted on before the G20 meeting. I do not grasp that. There will probably be one or another technical explanation for that but I think it gives the wrong signal from this newly elected Parliament that we are going to debate such a resolution after the G20 meeting in Pittsburgh, which is due to happen, if I remember correctly, from 22 to 24 September, before our next meeting in Strasbourg in October.
This is not within my discretion but I must say that, together with Members who have advocated this, I very much deplore that we have not been able to vote upon this resolution during this part-session.
President
Let me just mention that the decision to vote during the first October part-session was taken by the Conference of Presidents because, during that part-session, there will also be a debate on the G20 meeting. That is my explanation to your question.
The debate is closed. The vote will take place during the first October part-session.
