Interview – PHILIP LOWE

Many European NGOs have criticized the European Union for the lack of a poverty focus in EU aid programmes, despite EU espousal of UN international development targets (see p4). It seems that conflicting strategic and foreign policy objectives may be involved here. Caroline Hartnell talked to Philip Lowe, Director-General of DGVIII, which is responsible for aid to the Lomé countries.
The amount of EU aid going to Central and Eastern Europe and the Mediterranean is far greater than goes to low-income countries. Isn’t this inconsistent with the EU’s commitment to poverty eradication?

I don’t think there is an inconsistency, but there isn’t enough frank discussion about what the policy priorities are.

The first thing to say is that the amount of funding going to the poorest countries has not diminished, it has in fact increased. Obviously what has happened is that the EU has added on assistance to other countries for reasons certainly linked to development but not to the poverty eradication objective. There are one or two of them that it would be very difficult to eliminate from the political agenda.

One area is help to regional conflict situations: in Palestine and the Middle East, the EU is the biggest donor – the US has contributed a very small fraction of what the European Community has given. Take Bosnia, and now Kosovo – we are likely to see a massive increase in the amount going to that area. The amount going to the whole ex-Yugoslavia region, as well as to Yugoslavia, is already very very large.

Then we have the more contentious question: what about this amount of assistance which is being given to Central and Eastern Europe and the Mediterranean? That is more a strategic and foreign policy type of question, it is beyond a simple question of development policy.

What has really been concerning Ministers is that the progress of development among neighbouring countries of the European Union should not destabilize what’s happening within the European Union — relatively solid growth, and despite world trends there is increasing sustainability in all areas of policy, even environmental. At the same time we have the Mediterranean region, and Central and Eastern Europe, either knocking at the European door or creating phenomena such as illegal immigration which cause widespread concern.

For the last ten years a large number of the European States have been saying that it is better to help countries who are neighbours to promote development in their own countries than to have them export their social problems into the European Community.

Now it is a good debate, which we have to have at a broad level, as to how you balance those different priorities. There is no doubt that what has gone on involves shifting priorities, leading not to a reduction in aid but simply a reduction in the growth of what might have been a greater concentration in the poorest countries.

A second issue, which the World Bank has rightly raised, is ‘Spending money in poor countries is fine, but make sure you are spending it in a good policy environment otherwise you’ll waste it’. When we discuss poverty we are not talking just about lack of access to income, food, services, basic education, we are actually talking about weak capacities, weak administrations. In that situation, often what is required is not a large volume of funds but sufficient funds and assistance to put the environment right. This is the whole debate which the World Bank thinks we should be having about whether we should be giving incentives to those countries which have a good policy environment by giving them even more money. Of course, if we do that we go against the direction of concentrating money on the poorest countries.

I think that the NGOs have to recognize that there are other factors which need to be balanced, and that’s a political question.

There’s one thing they are right about: it’s not simply enough for people to sign up in rhetorical terms to the objective of poverty eradication without saying exactly what they mean.

Another set of critics would say, why have an EU aid budget at all? We’ve got 15 bilateral aid budgets, what does an EU aid budget add? Is it just like a sixteenth country, or something else?

That’s a very legitimate question, because everything that is done at a national or multilateral level has to answer the question, what is the value added in the policy? I think there are a number of areas where you can say it makes absolute sense that the Member States should do things together. We’re only here representing say 20 per cent of the total volume of European aid. There are five areas in which there is significant value added.

The first relates to the simple fact that the European Union is a neutral element, with offices and delegations in practically all the relevant countries — because of the historical relationships with the Member States, they have insisted that we have them. This gives us a very strong role to play in the political dialogue with individual countries, over human rights, democracy, the rule of law, good government, using the European Union as a tool, an instrument for backing policy and programmes in those areas.

The second area is one where the European Union has not developed its comparative advantage yet, but it is a fact that the European Union is the major trade negotiator, or the exclusive negotiator, for the Member States. So improving the enabling environment for private investment and trade is something which the European Union is well placed to do. We have done it with the South Africans recently, we are doing it with the Lomé countries. We have to do that through regional agreements, but we should do more working together with the WTO and in other fora to achieve the best results. We have all the regulatory experience here to know what to do with trade to make sure that private investment has a good framework to do it in.

The third area is regional integration. One essential stepping stone for small countries is being able to get together, widen their boundaries. Only 6 per cent of trade in Africa is between African countries. They need to widen their markets, reduce trade barriers, get things going — that can only be done through regional organizations. The European Union institutions are uniquely placed to help.

The fourth area I’ll mention is structural adjustment programmes. The World Bank has tended to act on its own in negotiating targets: it hasn’t actually got down to working out what needs to be done structurally, economically and socially to make things work. Most of our programmes do that, they are about structural reform. It makes sense for that kind of negotiation with the government to be done by one organization rather than by 15. Most, in fact all, Member States accept that that is something which we should concentrate on.

The last area is that we are the biggest co-funder of NGOs. Not many people know this. They account for something like 15 per cent of all development aid, either directly through their initiatives or through other initiatives of which they’re a part. They give the opportunity to bring Europe as a whole closer to what’s going on on the ground, and also to express through NGOs the concerns of people throughout Europe as to what ought to be done.

The rest of development policy is vast – water schemes, energy, transport infrastructure. Germany, France, the United Kingdom have a whole corporate lobby behind their development who know how communications networks should be established. There are plenty of areas where the national governments could go in – and it doesn’t really make much sense for the European Community to be a major contributor, for example to road transport programmes, as it is at the moment by the way.

As it is in Ireland? I’ve seen all the EU-funded roads when I’ve been there.

But that’s regional development – I’ve got strong views about that. Of course, when you talk about partnerships in our regional development funding – which is outside the overseas aid area – this relies very much more on empowering, or at least giving responsibility to, national governments and regional authorities.

We should not be treating the governments of Ireland or France any differently from the governments of Zambia or South Africa. On the other hand, the degree of confidence in the administrative capacity of Ireland to actually pursue its programmes is qualitatively different. Secondly, the democratic system in Ireland establishes priorities at national level, for us to contribute to what they want to do. And what they were saying was that nothing would get going in terms of investment and jobs until the road system in the country was improved. We had massive discussions with the environmental lobby about the impact, but there is one thing that everyone agrees, we did something for Ireland there, we really did.

EU aid: some facts and figures
Almost 20 per cent of EU member states’ development aid is channelled through the European Commission. This is divided between four regions:

  • ALA – Asia and Latin America.
  • MED – Mediterranean countries.
  • CEEC/NIS – Central and Eastern European countries and the former Soviet Union.
  • ACP – African, Caribbean and Pacific states, the Lomé Convention countries, many of which are former colonies and dependencies.

Despite the fact that ALA and ACP account for almost all the world’s poorest people – with Asia alone accounting for over 70 per cent – the largest slice of the EU aid budget goes to CEEC/NIS, with MED taking the second largest slice, as shown in the three charts showing commitments for 1992, 1996 and 1997.

For the first three groups commitments means the amount allocated in the main EU budget, determined annually by a Summit meeting involving European heads of state and their foreign ministers.

Aid to ACP countries comes from the European Development Fund, a special financial ‘envelope’ allocated to a five-year programme. ACP ‘commitments’ represent amounts drawn down for a particular year. In theory an annual average of around 2 billion euros is available, but underspending is common. This is largely a result of a lack of EC capacity, and an apparent lack of political will to address this. Another factor is the political situation in some ACP countries, which may mean that funds intended for the country are frozen.

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