Aid advocate: EU leaders took short-term approach to budget

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EU leaders applied a short-term approach to a long-term budget. But it is never too late for them to get back on the right track, Oxfam's Nicolas Mombrial told EURACTIV Germany. 

Nicolas Mombrial is an EU policy advisor for Oxfam. He spoke to EURACTIV Germany’s Othmara Glas.

The amount reserved for overseas aid in the EU budget for 2014-2020 is almost the same as in the previous period 2007-2014, and is much smaller than the Commission proposal. What consequences will the freeze of the EU's budget have for development policy?

The freeze of EU development and humanitarian aid in the next long-term budget of the EU is a breach of faith because it actually means that the promise made by EU leaders to give 0.7% of national income to the poorest by 2015 is off track [see European Council Conclusions from June 2005, paragraph 27]. EU leaders have sent a negative signal at a time when a renewed political and financial engagement is needed to achieve the MDGs, [the Millennium Development Goals established by the UN’s Millennium Summit in 2000] especially in Africa, and to tackle pressing global issues, from sustainable development and increasing disasters, to food security and social justice.

The initial budget proposal tabled by the European Commission was tailored to give Europe the means of its global ambitions, especially in terms of poverty eradication and emergency response. According to our estimates, the budget agreed upon by EU leaders last week – which represents a 14% reduction to EU aid compared to the proposition of the European Commission – constitutes a funding shortfall that would have permitted large scale investments in agriculture that could have lifted more than 4.6 million people out of poverty in Africa. Similarly, the funding shortfall in humanitarian aid is the equivalent of the EU turning a blind eye on the plight of 150 million people affected by conflicts or disasters.

Could the decision of the EU leaders be ‘excused’ by the fact that national budgets are also subject to austerity cuts?

EU leaders applied a short-term approach to a long-term budget and in doing so they came short of the ambition and vision needed to address the global challenges we all face.

Even in a context of austerity and unprecedented cuts to the EU budget as a whole, cutting aid to save money is like cutting your hair to lose weight. Aid represents only 6% of the EU budget but more than 21% of EU member states’ overseas development aid (ODA). It’s a tiny yet smart investment in our common future that goes way beyond a mere act of solidarity. The UK has shown that even in cash-strapped times, it’s possible to champion aid and respect the 0.7% aid target.

What is your assessment of the EU's development policy during the last years?

Despite an aid budget frozen at its current level, Europe will remain the world’s biggest donor.  For millions of people in the world, EU aid is difference between life and death. With an investment worth less than a cup of coffee per citizen per month, EU aid has made it possible to stop 59 million people in over 50 countries from being hungry in just three years. In less than six years it has also helped to enrol more than 9 million pupils in primary education and connect over 31 million people to drinking water.

EU aid is also deemed to be one of the most efficient, impactful and transparent in the world.  This has been reiterated by the OECD, the European Court of Auditors, DFID and independent organisations like Publish What You Fund. It is also geared to affect sustainable change in recipient countries through direct budget support that improves public services like health and education.

Will the European countries achieve the 0.7% cent target in 2015?

According to the latest available data, the EU (including its member states) allocated only 0.42% of GNI to aid in 2011 – the first year in a decade that saw a decrease in ODA. And given the drastic reduction of national overseas aid budgets in some EU countries last year – with aid budgets slashed for example by about 70% in Spain , this trend has yet to be reversed. So it seems very unlikely that European countries will achieve the 0.7% target in the coming years. Hence our disappointment at the outcome of the negotiations on the EU budget since an increase in the EU development budget could have significantly contributed to this objective.

It is, however, never too late for EU member states to get back on the right track. Countries like the UK, Sweden, Denmark and Luxembourg are showing that it is possible to respect the 0.7% even in a context of economic turmoil. It is only a matter of political will.

While we appreciate the fiscal challenges that some European countries are facing, solutions exist to raise additional finance for development. We have been campaigning for years for a Robin Hood Tax, a tax on financial transactions, part of the revenues of which would be used for development and the fight against climate change. While it is far from enough, France has already committed to allocating 10% of its own FTT to development and the fight against climate change, showing that even in a context of economic crisis it is possible for European governments to support international aid.

The 11 European countries that are going to implement an FTT must commit to allocating a significant part of the estimated €31 billion revenue the tax will yield annually to the fight against poverty and climate change.

In times of tight budgets, what are the most important issues for development policy?

In a context of squeezed budgets and increased needs, the EU should make every effort to focus its aid on poverty reduction, especially towards the realisation of the Millennium Development Goals in the poorest countries, resisting any attempt to focus aid more on the EU commercial interests. A good way for the EU to do so would be to maintain its leadership on budget support since it has proved efficient in reducing poverty and to focus on sectors that have the greatest impact on lifting out of poverty such as health, education and agriculture.

A key issue is also to steer a meaningful EU contribution to the post-2015 development framework to build a sustainable and equitable future for all. In terms of financing, this means looking beyond traditional aid.  For instance, it implies the mobilisation of innovative sources of development finance such as the Financial Transactions Tax as well as the mobilisation of the hidden billions lost each year to tax dodging. The EU needs for example to require its own companies to be more transparent and publish whether they pay their fair share of taxes in developing countries (such legislation is currently being negotiated in the EU but might not be ambitious enough). It could also help developing countries to develop progressive and redistributive tax systems as means to fight poverty and inequality.

According to Oxfam's research conducted in 52 developing countries, strengthening tax systems, thanks partly to external aid, could potentially raise an additional $269 billion [€201 billion], which is more than double the total global aid figure for 2010 [$128.7 billion, €93.6 billion].

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