Foreign aid to be big loser from EU budget under Michel plan

EU external and development spending is in line to be the biggest loser from next week’s crunch EU budget summit in Brussels. The blueprint outlined on Friday (10 July) by European Council President Charles Michel includes a reduction of €4.7 billion for the Neighbourhood Development and International Cooperation Instrument in the EU's next seven-year budget.. EPA-EFE/KENZO TRIBOUILLARD / POOL

EU external and development spending is in line to be the biggest loser from next week’s crunch EU budget summit in Brussels. The blueprint outlined on Friday (10 July) by European Council President Charles Michel includes a reduction of €4.7 billion for the Neighbourhood Development and International Cooperation Instrument in the EU’s next seven-year budget.

The new ‘Neighbourhood and the World’ budget heading, bringing together all of the EU’s external action spending, would be allocated €98.4 billion between 2021 and 2027 and include €26 billion to be allocated to programmes in sub-Saharan Africa.

EU leaders will meet for a special European Council on 17-18 July next week but with governments focused on their own economic recovery from the coronavirus pandemic, there are unlikely to be many voices speaking up to protect the bloc’s spending outside its borders.

Next week, finance ministers in the G20 will meet to discuss whether to extend a suspension on debt repayments for the world’s poorest countries into 2021, many of whom are likely to be worst hit by the pandemic.

In April, the G20 agree to suspend debt payments for 73 of the world’s poorest countries for the remainder of 2020, at a value of around $12 billion. 41 of the 73 countries are accepting the relief.

However, development aid is likely to suffer cuts at the national level in the coming years. EU countries are facing an average GDP fall of 8% in 2020, which will, in turn, inevitably lead to lower budgets.

But civil society and development campaigners had hoped that the EU budget would be protected.

“President Michel’s proposal is incoherent with the Council’s stated priorities,” said Emily Wigens, EU Director at The ONE Campaign.

“Barely one week after adopting conclusions on Africa underlining that a prosperous, peaceful and resilient Africa is essential for Europe, he suggests cutting funds to sub-Saharan Africa where up to 50 million people risk being pushed into extreme poverty this year,” Wigens added.

The planned cuts will not, however, come as a total surprise. External and development spending by both the EU and its member states was cut in the last seven-year budget, which was negotiated in the aftermath of the 2007-8 crash and the subsequent double-dip recession.

Prior to the coronavirus pandemic, insiders had expected the external spending budget to be between €100 billion and €120 billion, representing around 6% of the total EU budget.

In April, members of the Development Assistance Committee of the Paris-based Organisation for Economic Co-operation and Development vowed that they would “strive to protect aid budgets”.

Civil society campaigners expect that since most EU countries and other DAC members are set to see their economies decline by between 5% and 10% in 2020, that will, in turn, significantly reduce aid budgets.

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