Europe’s engagement with civil society: Policy inconsistencies

The European Commission recently published a new communication aiming to set out a more strategic engagement with civil society organisations (CSOs). Entitled The Roots of Democracyand Sustainable Development; Europe’s Engagement with Civil Society in External Relations, the communication draws on a “structured dialogue – for an efficient partnership in development” with CSOs as well as a public consultation undertaken earlier this year. The Communication credits civil society as being ‘an asset in itself’ and a great contributor for bringing about development outputs. However, as Frauke de Weijerin of the European Centre for Development Policy Management (ECDPM) notes, the Communication fails to explain how the new strategic engagement with CSOs will actually translate into practice.

Although it emphasises the importance of civil society at country level, the Communication is unclear as to how it plans to engage with CSOs, particularly those with who it is less familiar, such as faith-based organizations, unions or even social movements from these countries. For CSOs to be eligible for inclusion in policy dialogue the Commission wants them to be ‘accountable and transparent and share its fundamental values’. However, as Weijerin argues, the ‘full spectrum of perspectives’ must be brought on board in order for the development policy to be broadly owned by society.

A 2008 evaluation of EC aid delivery through civil societyorganizations found an inconsistency between the Commission’s policy objectives and the actual use of the civil society channel. For example, it noted an inability of the Commission to mobilise the CSO potential in governance related processes and a tendency to utilise European NGOs at the expense of local civil society organisations. Additionally, the evaluation noted the existence of an institutional culture within the Commission which is not conducive to the proper engagement of CSOs – mainly due to limited political backing from the top. While institutional changes have been made since the evaluation was undertaken and it is hoped that the new communication will provide the necessary push to remove the barriers to a proper engagement with civil society, according to the EuroStep network.

(Bio-)fueling injustice? EU driving global biofuel production

The European Union’s biofuel policy continues to threaten food security and increase land grabs in Africa, shows a new report by the EuropAfrica platform and FIAN, (Bio)fueling injustice: Europe’s responsibility to counter climate change without provoking land grabbing and compounding food insecurity in Africa. The report is released as the EU is set to review its biofuel policy in 2012 in line with environmental impacts. “Imported industrial biofuels for European renewable energy exacerbate land grabs in Africa and fuel violations of the right to food”, says Nora McKeon coordinator of EuropAfrica. “The EU has to realise that its energy and agricultural policies have global impacts, often affecting the most vulnerable in poor countries. Decision makers cannot ignore the evidence; it’s time for a total re-think of biofuel policy.”

The report shows that 66% of the land grabs in Africa are intended for biofuel production, some 18.8 million hectares. Among the biggest investors are companies from Europe, as case studies from Senegal and Mali show, with European investments likely to increase further. “We want to grow food for people in Africa, not for fuelling cars in Europe. The switch to biofuel crops in Senegal has been a failure. Productivity has fallen sharply since we started trying the Jatropha biofuel crop, and many farmers are feeling cheated. We call on the European Union to drop its renewable energy target for biofuels until measures are in place which ensure that the right to food is not violated”, says Marius Dia, of CNCR (Conseil National de Concertation et de Coopération des ruraux du Sénégal).

Despite contrary claims, the EU is highly dependent on imports. Already in 2008, the EU imported almost 40 percent of its biofuels or biofuel feedstock. The study further finds that the EU and its Member States violate their human rights obligations by not having conducted an adequate assessment of the impact of the biofuel policy on human rights and by not regulating European companies and financial actors. According to Blandine Bouniol, Policy Coordinator at CONCORD, the European NGO Confederation of Relief and Development NGOs, the EU’s good intention to fight climate change by promoting renewable energy is turning into a disaster. Europe is outsourcing its production, getting a ready supply of biofuels at the expense of the environment and people in the developing world.

The alternative view from Washington: Greece

The agreement between the European authorities and Greece won’t resolve Greece’s economic crisis and is likely to make it worse, said Mark Weisbrot (see photo), economist and Co-Director of the Centre for Economic and Policy Research (CEPR).“The European authorities seem more intent on punishing Greece than helping the economy recover,” said Weisbrot. “For two years now they have been pushing the Greek economy into recession, and there’s still no light at the end of the tunnel.” Weisbrot noted that the IMF has had to lower its projections for Greek GDP shrinkage by an enormous 7% of GDP in less than two years. Most of this downward revision has been in just the last five months.

A leaked document reported this week by Reuters and the Financial Times contains a “sustainability analysis” prepared for the European Finance Ministers. It portrays a grim scenario with explosive debt and Greece needing “about €245bn in bail-out aid, far more than the €170bn under the ‘baseline’ projections eurozone ministers were using.” “Given the underestimation of Greek losses so far, and the recessionary impact of budget tightening, mass layoffs, a 20% reduction of the minimum wage, and other austerity measures – I think the pessimistic scenario outlined in the leaked document is a very plausible scenario,” said Weisbrot.

Weisbrot also pointed out that the European authorities’ strategy of “internal devaluation” is not working even on its own terms. The ostensible purpose of Greece’s prolonged recession is to lower labour costs in order to lower the country’s real exchange rate and increase Greece’s international competitiveness. But Weisbrot noted that “after four years of recession, with unemployment rising from 6.6% to a record 20%, Greece’s Real Effective Exchange Rate (REER), according to the IMF, is higher than it was in 2006.”
The IMF is projecting that Greece will still have 17% unemployment in 2016.

“The bottom line is that you can’t shrink your way out of a recession – you have to grow your way out. What they are doing to Greece really makes no economic sense. At this point, it looks like the economy would do better if Greece were to exit from the euro, as opposed to enduring indefinite recession and stagnation, extremely high and persistent unemployment, and increasing poverty. The European authorities are certainly pushing Greece toward the exit and default option.” – A more detailed paper on the Greek economy and crisis by CEPR is available >>> here.

Agenda for Change: In whose interest?

The European Commission is seeking to attach more conditions to development aid and restrict it to fewer recipients. This is the message that is set out in the Commission Communication entitled ‘Agenda for Change’ adopted on 13 October. The most prominent innovation is the concept of ‘differentiated partnerships’ by which different countries will be eligible for different forms of assistance mechanisms. The Agenda emphasizes good governance as a more important prerequisite for development assistance and also focuses on the concept of inclusive growth — with development effects reaching those most in need.

This however seems to be counter to the goal included in the Age for Change of reducing the recipient countries. Middle-income countries where a large segment of the population lives below the poverty line would no longer be recipients of development aid. “Unfortunately the most important change in Piebalgs’ new agenda is that aid to the world’s poorest is being cut, diverting funds towards energy and private sector investments which are in the interest of the EU only, not the developing world,” says Concord Director, Olivier Consolo. Concord also highlights that poverty has not disappeared from countries now classified as middle income and these poor should not face reductions because of these categorizations.

Head of Oxfam International’s EU Office, Natalia Alonso, similarly points towards the negative implications this will have on the poor living in middle-income countries. Moreover, she calls attention to the limits of the private sector in its role in development. “We cannot sit on our hands and assume that the benefits of the private sector will simply trickle down and reach those most in need”, says Alonso. Concord also mentions that although the private sector can be beneficial for development, Official Development Assistance (ODA) should not be used “to guarantee private sector risk or to substitute public services.”

The Agenda for Change is accompanied by a paper on budget support outlining some of the implications it has on this modality of aid delivery. Oxfam International’s EU Office welcomes the EU determination to continue to use this system for poverty reduction objectives, but also warns against a politicization of aid that can result from more requirements. “We are surprised that the Commission suggests attaching more political conditions to recipient countries. Budget support must remain a poverty-reduction tool – not a political one”, stresses Natalia Alonso.

EU FTT plan is a historic opportunity

Today, European Commission President José Manuel Barroso announced before the European Parliament that the Commission has adopted a proposal to set up a Financial Transaction Tax (FTT) in the European Union. Civil society organisation such as the international alliance of Catholic development agencies CIDSE call on the Finance Ministers of all EU member states to endorse the plan when they meet on 5 October 2011, making sure sufficient money is earmarked for the fight against poverty and climate change. Bernd Nilles, Secretary General of CIDSE, qualified the initiative as “an important victory for justice and solidarity” being in sight.

The Directive would establish an EU-wide tax applied on a broad range of financial transactions ranging from stocks and shares to futures and derivatives in organised markets and over-the-counter trading. Unfortunately, the Directive remains vague about what FTT revenues should be spent on. CIDSE reckons it is inconceivable that they would simply go to replenish the EU budget or national coffers.

A closer look to the draft version of the Directive reveals a mixed picture. Positive elements are:

* Establishment of an EU-wide tax applied on a broad range of financial transactions ranging from stocks and shares to futures and derivatives in organised markets and over-the-counter trading.
* It will be difficult to evade the tax, as the FTT will be applied on the basis of residence. This means that one of the parties to the transaction should be authorised to act, or be registered, or reside, or have a branch, in a member state for it to be taxable.
* The Directive could also contribute to fiscal transparency by taxing transfers even between daughter concerns within the same mother company. Such transactions are notorious for being non-transparent and under-valued. Taxes on such transactions will be calculated on the basis of the market price, making it more difficult for parties to ‘fix’ the value of a transaction to suit their own purpose.
* EU member states must implement an FTT by 2014, rather than the earlier mentioned implementation by 2018 at the latest.

Negative aspects include:

* There is no clear stipulation that the revenues of the FTT should be used to tackle poverty and climate change. While the Directive does acknowledge that the call for the FTT also stems from the desire to generate additional revenue among others for ‘specific policy purposes,’ it merely states that the tax would create a new revenue stream for the EU and its Member States.
* Trading in currency and commodities are exempt from the FTT which could reduce its revenue raising potential and have unforeseen implications on these markets.
* The Directive also recommends a low tax rate for derivatives to reduce the risk of tax avoidance, evasion and abuse. Yet, many other measures could be put in place to prevent tax evasion, especially with regards to the issue of where a party to the transaction is established.

Multiannual Financial Framework of the EU

On 29 June, the European Commission (EC) outlined its priorities for the next budgetary period. Overall, the communication was welcomed by development NGOs due to the EC’s plans to increase external spending by €14bn from 2014 to 2020. The extra funding allocated to achieving the Millennium Development Goals (MDGs) and the EU’s commitments to eradicate poverty. The document also outlined a potential Financial Transaction Tax (FTT) to generate EU resources and named climate action as a core priority. There is also an underlying emphasis on the role of the private sector in development.

According to the EC communication, the Commission proposes that €70bn shall be allocated to external instruments, including the Development and Cooperation instrument (DCI) and the European Neighbourhood Instrument (ENPI). In order to support the implementation of the Joint Africa-EU Strategy, the EC proposes the introduction of a pan-African instrument under the DCI, which “will focus on poverty eradication and the achievement of the Millennium Development Goals (MDGs)”. For the European Development Fund (EDF), which is expected to remain outside of the MFF, it is proposed that an allocation of €30 billion be made.

CONCORD welcomed the Communication, stating “The European Commission has shown courage in difficult times. It’s putting its money where its mouth is on giving priority to development,” said Olivier Consolo, Director of CONCORD. The Communication also argued for poverty eradication to be rooted in the promotion of democracy, human rights and equality by respecting the UN charter and international law — an approach applauded by CONCORD.

The Communication draws on the current thinking that gives an increased orientation on the role played by the private sector, not only for the implementation of activities (on the grounds that this levers more resources for development) but also in designing instruments and strategies. The Communication calls for the creation of a new Partnership instrument with industrialised and emerging economies to support EU business benefit from global economic transformation. In addition, the EU calls for greater risk sharing and guarantees so as to promote private investment in innovative business and infrastructure in developing countries. Whilst this emphasis on the private sector is not wholly unexpected in times of fragile economic recovery, there is a need to ensure that the EU’s global approaches are consistent with the EU’s international development commitments.

An orientation debate on the MFF will take place 12 September and 15 November 2011 in meetings of the General Affairs Council. Following this, the proposal for regulatory financial instruments will be agreed before the end of the year.

CONCORD welcomes EU budget increase for development

Proposals for the 2014 to 2020 EU budget released on 29 June by the European Commission, revealed a planned increase in external spending from €56 billion to €70 billion. CONCORD, the European NGO confederation for relief and development, welcomes the renewed commitment to the Millennium Development Goals. "The European Commission has shown courage in difficult times. It’s putting its money where its mouth is on giving priority to development," said Olivier Consolo, Director of CONCORD.

CONCORD welcomes in the EU budget:
* the proposal to include a clear commitment to the 0.7% GNI development aid targets along with a clear focus on poverty eradication based on democracy, human rights, equality and the respect for the UN Charter and international law.
* a Financial Transaction Tax (FTT) to generate own EU resources.
* climate action as a core priority.

CONCORD calls:
* on Member States to support the proposal on development funding levels and to take responsibility at national level to meet their MDG commitments.
* for the new budget not to be used as an opportunity to cut aid to emerging and middle income countries where three quarters of the world’s poor live. Poverty eradication and fighting inequalities must be central to development cooperation.
* funds raised with a FTT must go to tackle poverty and climate change.
* for climate financing to be additional to official development assistance (ODA) commitments already made.

Civil Society Organisations are widely recognized as having a central role in development cooperation which must be translated by including them in the EU Multiannual Financial Framework (MFF) negotiations. A CONCORD paper on the main MFF Priciples can be found >>> here.

CONCORD: EU should act against land grabbing in developing countries

EuroStep – As a reaction to the European Commission’s 2007 Communication on “Advancing African Agriculture” (AAA), the European NGO confederation for relief and development (CONCORD) submitted a monitoring report to the European Parliament’s (EP) Development Committee, addressing the impact of land grabbing. Besides analysing the implications of EU and member state policies on the issue of land grabbing, the 2009-2010 monitoring report specifically focuses on three case studies from African countries, namely Uganda, Mozambique and Ethiopia. It further assesses the role of the European private sector and its linkages with state activities and scrutinizes the impact development assistance and trade and investment policies may have on land grabbing.

In light of increasing large scale land acquisitions that threaten the subsistence of local farmers in developing countries, the report calls on the EU to “initiate as soon as possible the needed international regulation to prevent such land acquisitions, including a legally binding agreement related to the proper regulation of financial and other actors active in agricultural investment”. It moreover stresses that such measures should entail direct references to the supremacy of human rights provisions, with stipulations for punishing human rights abuses by investors and states under international law. To this end, the EU should further “strengthen the implementation of human rights based land policies in ODA, particularly when supporting the implementation of the AU Land Policy Guidelines”, the report reads.

With regards to the EU’s recently adopted renewable energy targets, CONCORD calls upon the EU to scrap these targets and to freeze all policies encouraging “the use of agrofuels for the transport sector until and unless the [aforementioned] regulations … are in place”.

European Parliament: Food security high on the agenda

EP press service – A new report on food security in developing countries by the European Parliament was presented in the development committee on 25 May. MEPs used the opportunity to highlight the importance for the EU to focus on combating hunger effectively. To this end, policies should support the development of local food production and infrastructure for distribution and formulate measures to address food speculation and land grabbing, Rapporteur Gabriele Zimmer stressed. The report, An EU policy framework to assist developing countries in addressing food security challenges, comes at a time when the subject of food security and the right to food are growing in importance, according to Rapporteur Gabriele Zimmer. In light of the upcoming G20 meeting that is expected to address the problem of price volatility in commodity markets, Zimmer called upon the world’s leading economies to tackle the widespread problem of poor nutrition in developing countries, nutrition defined as “high quality food supply”, with increasing food prices further aggravating the problem.

In the wider context of food security, it was also stressed that the ever popular Washington Consensus, where trade deregulation, liberalization and tariff cuts are the order of the day, should be rethought. To this end, Zimmer stressed the EU has an important role in this shift. The draft report also refers to the ever controversial concept of food sovereignty. It is defined in the report as “the capacity of a country or a region to democratically, implement its own agricultural and food policies, priorities and strategies”.

The report was welcomed by MEPs in the development committee as an important contribution to the current discussions on food security and sovereignty. Thijs Berman (S&D) pointed to the report’s call to tackle food speculation and land grabbing as a means to foster the right to food for everyone and stressed the necessity for the EU to fundamentally reform its Common Agricultural Policy (CAP) with the aim to abolish export subsidies, even though it was recognized subsidies have been reduced by the EU over time.

The same week, the Committee for Agriculture and Rural Development (AGRI), adopted a report, entitled “the Common Agricultural Policy by 2020”, calling for a reformed CAP policy that provides for food security and environmental protection, focuses on renewable energy and fosters the creation of new jobs. The report sets out the committee’s priorities for the current debate on the reform of the CAP, which is running in parallel with the discussions on the EU’s next Multiannual Financial Framework (MFF). As a major step forward, the report explicitly refers to the principle of Policy coherence for development and long term food security in developing countries, a clause that was welcomed by the NGO Confederation for Relief and Development (CONCORD). According to the report, “the EU [must] ensure consistency between the CAP and its development and trade policies” and urges the EU to “not jeopardize food production capacity and long term food security in [developing] countries and the ability of those populations to feed themselves, while respecting the principle of Policy Coherence for Development (PCD)”.

New European Social Watch Report: Time for Action

The second European Social Watch Report was launched in Brussels with a roundtable discussion at the European Parliament. The event was chaired by Irish MEP Proinsias De Rossa, who was labour minister and head of country delegation to the Social Summit in 1995, when Social Watch was created. From its mere title, “Time for Action: Responding to Poverty, Social Exclusion and Inequality in Europe and Beyond”, the European Social Watch report reflects the Egyptian political crisis as a true demonstration of its findings.

The report points out that 17% of people in the European Union live below the poverty line. Social Watch looks at Europe's approaches to addressing poverty, social exclusion and inequality both inside the EU and in the wider world. The report examines the issues from different angles, including employment, healthcare, housing and financial exclusion. Since “one child in five is born and grows up with economic and social deprivation” and “twenty per cent of young people are currently living at risk of poverty in the EU”, Mirjam van Reisen argues in the report summary that the policies in place to address poverty and social exclusion are “weak” and “have come under pressure in the aftermath of the financial crisis”.

“The fiscal constraints that developing countries have experienced in previous decades resulting from IMF policies are now confronting European countries” says the report, and as a consequence “the ability of governments to implement their national and international obligation to guarantee social security has been compromised”. Social Watch Europe analyses the reality for groups of people particularly vulnerable to poverty and social exclusion, such as migrants and the Roma. Special attention is given to gender and poverty, as well as the young and old who are more vulnerable to social exclusion. It concludes by calling for a universal standard for social protection. It also concludes that if the EU is to play the global role that it claims then the EU must also establish its own “social floor”.

The Report is available >>> here.

Civil society and trade unions on EU-India Free Trade Agreement

As the EU-India Summit meets in Brussels today, civil society organisations and trade unions have reiterated their views on a draft free trade agreement. A broad civil society alliance called on the European Commission and the Indian Government to immediately halt the ongoing free trade negotiations between India and the EU. More than 240 concerned civil society groups signed an open letter, in which they warned that the talks would damage the livelihoods of millions of people in both India and Europe, exacerbating poverty and undermining economic and social development.

The proposed agreement would undermine people’s rights to food, to health and to gender just and social development. “The EU persistently puts pressure on India to open up its market to European dairy and meat products, while the EU continues to export these products at prices far below production costs with the help of subsidies”, said Armin Paasch, trade expert of the German Catholic Bishops’ Organisation for Development Misereor. “Around 90 million people are working in the dairy sector in India, most of them being small scale farmers or herders and 70 percent being women. Their livelihoods would be severely threatened if subsidized EU exports are permitted to flood the Indian market”, said Paasch.

Tightened intellectual property rights (IPR) would limit India’s ability to provide affordable medicines for the treatment of HIV-AIDS, malaria and cancer, not only for Indian patients but worldwide. “It is outrageous for Europe to undermine the Indian drug industry’s capacity to provide affordable and safe medicine to the poor. Despite massive protests the EU continues to insist on data exclusivity and other provisions, which would hinder timely production and delivery of generics”, said Rebecca Varghese Buchholz, trade policy advisor at Traidcraft, UK. “This example illustrates the corporate capture of the negotiation agenda: public health objectives are pushed aside in the interest of pharmacy industry profits.”

Representatives from Indian and European civil society groups claim that the behind-closed-door negotiations must be made more transparent – and be accountable to wider interests in society. “The EU-India summit is another example of the lack of transparency and undemocratic nature of the negotiations. Neither civil society groups nor Members of the European Parliament are allowed to attend the annual summit of political leaders from either region. At the same time, the 11th EU-India business summit will be held bringing together the European and Indian high level business and political representatives to network and shape a joint agenda,” explained Ska Keller, Member of the European Parliament. “This is unacceptable; the broad resistance against the FTA shows that people on both sides are no longer willing to leave the decision-making on their future in the hands of the business and political elite.”

The EU-India summit coincides with the official international human rights day. As civil society, “we believe that December 10 presents a timely opportunity to halt free trade talks until coherence of all provisions with human and women rights obligations can be guaranteed”, urged Barbara Specht, advocacy officer of the gender network WIDE. “Instead of profit interests the negotiations should be guided by gender and social justice and sustainable development objectives.”

“As we have said since talks started in 2007, any agreement must contain a comprehensive and effective chapter on sustainable development entailing the commitment of both parties to the attainment of decent work, including respect for fundamental workers’ rights,” insisted ITUC General Secretary Sharan Burrow. “A social chapter is essential so that an agreement could lead to growth, development and the creation of decent and productive employment,” stated ETUC General Secretary John Monks. “And trade unions must have rights and mechanisms to be able to raise issues under the procedures of the agreement.”

“The impact on the textiles sector stands to be particularly great unless effective measures to protect workers’ rights,” said ITGLWF General Secretary Patrick Itschert. “Our Indian and European affiliates are united in insisting on a strong social chapter.” Trade unions are also concerned at proposals to include provisions on the temporary cross-border movement of workers in the agreement – unions have always stated that trade agreements should not contain provisions to regulate migration. Should any such articles nonetheless be included, these must provide for full respect for national labour law and existing collective agreements in order to ensure that migrant workers receive employment conditions no less favourable than those of nationals.

Ecofin meeting: Not the end of Robin Hood Tax debate

The recent meeting of the EU ministers for economy and finance (Ecofin) could not find an agreement on the implementation of the Financial Transaction Tax (FTT) also known as Robin Hood Tax. But according to Peter Wahl of weed Germany, “this is not yet the end of the discussion”. The official communiqué says: “Ministers will further discuss the issue at an informal meeting in Brussels on 30 September and 1 October." This is confirmed by a statement of the German finance minister Schäuble who said (according to the German edition of the Financial Times) that the implementation of the tax was not for sure but there would be a chance for which one must fight. The British finance minister Osborn said instead: "This has been discussed since decades and will continue to be discussed for decades."

Unofficial sources said that Greece would have joined the camp of the proponents which by now consists of Austria, Belgium, France, and Germany.

The president of the EU Commission (the executive of the Union) Barroso said in a speech at the European Parliament yesterday: "I am also defending taxes on financial activities and we will come with proposals this autumn." It is unclear what he means by "financial activities". It could be the "Financial Activities Tax" as proposed by the IMF, but it could also be something else. Probably the opacity is by intention in order not to occur partisan between the big shots Germany and France on the one hand and the UK at the other.

France announced to raise the issue of the FTT again in the G20, although the Toronto summit had refused the FFT.

As the Germans had announced that in case that an implementation at EU level would not be possible - and the statement of Osborn points very much in that direction - an implementation in the Euro Zone should be considered. The finance minister of Luxembourg, Luc Frieden, opposed this and said the FTT "in the Euro zone only is not acceptable."

Despite the political differences on the subject Peter Wahl still sees a window of opportunity for the FTT:

“The differences between the elites are obvious. They are not capable to come to an agreement in either direction. Pressure from civil society should therefore continue. This is also important in those countries, where the government is in favour of the FTT, in order to prevent a retreat. There are some major countries such as Italy and Spain where the government is silent. There, pressure should try to reach a positive attitude.
The option of the implementation in the Euro zone should be looked at more in detail. The Europeans should prepare for the October Ecofin and the proposal announced by the Commission. At global level, the UN conference on the MDGs and the General Assembly and the G20 summit in Seoul could be further landmarks for campaigning.”

EU aid own goals pushing MDGs out of reach

EU Member States are missing their official development aid targets and jeopardising global efforts to reach the Millennium Development Goals, reveals a new report published today by CONCORD, the European confederation of development NGOs. The report, Penalty against Poverty: More and Better EU aid can score Millennium Development Goals, is being released as EU leaders are set to meet in Brussels next week to agree their common position for the United Nations’ MDG Summit in New York this September.

‘Penalty against Poverty’ finds that EU development aid in 2009 amounted to €49bn or 0.42% of national income – €1bn less than 2008 levels. Official estimates for 2010 put total EU aid at 0.46% of national income, far short of the 0.56% target for 2010 agreed by member states back in 2005. In real terms, this represents a shortfall of €11bn in funding with some of the EU’s biggest economies – Italy (€4.5bn), Germany (€2.6bn) and France (€800m) – amongst the worst offenders.

“EU aid efforts are being crippled by a crisis of commitment. In 2005 EU leaders committed to allocating 0.7% of their national income to fight global poverty but 5 years later they are well off-track on aid and abandoning their international commitments on aid effectiveness”, said Hussaini Abdu, Country Director of ActionAid Nigeria. “We are not asking them to get more ambitious about fighting poverty, just keep their existing promises on aid quality and quantity”, he said

The annual AidWatch report notes that although inflated aid figures continued to decline compared to 2008 levels, a staggering €3.8bn of inflated aid – or 8% of the total EU amount – was reported in 2009. This includes €1.4bn for debt cancellation, €1.5bn in student costs and €0.9bn spent on refugees in donor countries – making real EU development aid only 0.38% of European GNI.

“EU aid is €19bn short of what was promised to developing countries by 2010 to help them meet the MDGs – more than half the estimated extra €32bn required per year globally to meet the hunger goal alone”, said Justin Kilcullen, President of CONCORD. “This is very disappointing from a bloc that calls itself a leader on global development”, added Eduardo Sánchez, President of the Spanish NGO platform. “Europe’s credibility as a global leader on development is at stake. If EU leaders are serious about regaining the trust of poor countries, they must come up with an ambitious MDG action plan next week”, said Elise Ford, head of Oxfam International’s EU office.

Representing over 1,600 European NGOs, CONCORD calls on EU governments to keep their promises to deliver more and better EU development aid. EU leaders must commit to legally-binding yearly timetables stating how aid targets will be met and find new ways to raise money for development such as a financial transaction tax which would bring estimated yearly revenue of €215bn - €1tr at no extra cost to the tax payer. Europe must put an end to the inflation of aid figures and place developing countries and their citizens at the centre of efforts to meet the MDGs.

Commissioner Barnier’s bank levy proposal

The EU commissioner for Internal Market, Michel Barnier, also responsible for the EU package on financial reforms, issued an official communication last week on a European project of a bank levy with some relevance for the debate on the FTT. Peter Wahl has analyzed the proposal:

Very interesting is that Barnier makes clear, that he considers the bank levy not as a tactical manoeuvre to kick the FTT off the agenda. Speaking of "levies or taxes whose purpose is to recoup the public funds committed during the current crisis to stabilise the banking system or to tackle excessive risk- taking or speculation," he declares: "The examination of such measures should continue in parallel as a useful complement to the preventive funds that are considered in this Communication."

This corresponds to the position of France (Barnier is French) to consider both a bank levy and the FTT. Barnier had spoken out before a commission of the European Parliament in favour of the FTT.

There is some more quite progressive language in the Communication. For instance: "Political support is growing for applying the so-called "polluter pays" principle, known from environmental policy, also in the financial sector so that those responsible for causing it will pay for the costs of any possible future financial crisis."

The communication also takes on board the critique, that the bank levy would increase moral hazard: "The Commission recognises that this is a major concern which needs to be addressed by making it clear and unambiguous that shareholders (up to the value of their investment) and creditors (excluding depositors which are guaranteed by deposit guarantee schemes) must be the first to face the consequences of a bank failure and that resolution funds must not be used as an insurance against failure or to bail out failing banks, but rather to facilitate an orderly failure."

Barnier also is aware of the risk that a bank levy would be passed on to the clients: "It should also be avoided that increased costs are passed on to bank customers in the form of higher charges." Furthermore, the bank levy should be part of a broader framework of regulation which is able to "mitigate the implicit guarantees associated with institutions deemed ‘too big to fail’.

The communication makes already some proposals on the size of the revenues (2%-4% of GDP) and other details.

A detailed draft will be presented in October and the legislation process should start in 2011. The communication is also meant as an input to the G20 finance ministers meeting in Seoul in June.

Of course, it is by now only an official declaration of political will, and during the further process attempts will come up to water it down. Nevertheless, its general tone reflects the deep shock of the Euro crisis and an increasing awareness of European political elites, that they have to do more than they did by now.

EU report on climate change fast-track financing

The European Union is failing to give full details about its €7.2bn pledge for immediate climate finance needs in developing countries. This is the EU’s contribution to the $30bn committed by rich countries in Copenhagen to help poor countries curb their emissions and adapt to a changing climate over the next three years. EU finance ministers meeting on 18 May in Brussels were expected to endorse a progress report on whether and how this money is being delivered.

Oxfam warned the EU is not being transparent enough. The report does not provide clarity on how much each EU member state will pay, on how much it will cover mitigation or adaptation projects, and critically, if this money will come on top of existing commitments to provide 0.7% of national income for overseas aid. Neither is the EU revealing the degree to which funds will be disbursed bilaterally instead of through multilateral channels such as the United Nations, nor how the world’s poorest and most vulnerable people will benefit.

Leaders in Copenhagen agreed ‘fast-start’ finance would be “new and additional”. Oxfam says this means money for climate action in poor countries must come on top of rich countries’ commitment to provide 0.7% of their national income as overseas aid. However, the EU is still divided on how to interpret “additionality”, and it is not alone. The US claims that President Obama’s budget request for climate change finance in 2011 is $1.9bn, but from all appearances that includes double-counting of cash from commitments on food security made at last year's G8 summit in L'Aquila, Italy.

Tim Gore, Oxfam International’s EU Climate Change Policy Advisor, said: “By not being fully transparent about its financing pledges, the EU is undermining trust with developing countries at a very delicate stage of the game. We need an open dialogue about how to guarantee that climate cash comes on top of money already committed for schools and hospitals. There’s no point trying to cover that up. The most important thing is to be honest about the challenges. If there are difficulties, it is better to be open. We expect the EU to address the current shortcomings in a full report later this year, which details how the money will be spent. In a global climate deal, annual reporting is a must”.

EU Council : Lack of agreement on a Financial Transaction Tax

Brussels-based NGOs are deeply disappointed that European leaders have failed to agree on the introduction of an EU wide Financial Transaction Tax (FTT) at the EU Spring council on 25-26 March. The international alliance of Catholic development agencies CIDSE says a mini tax on short-term and high-risk transactions would stabilise the current financial system and generate millions of Euros badly needed to alleviate poverty and combat climate change. CIDSE campaigned for the inclusion of an EU wide adoption of a Financial Transaction Tax (FTT) on socially unproductive and speculative trading on financial markets in the run up to the Council.


Yesterday, while European leaders were arriving in Brussels to attend the Council, CIDSE, along with a coalition of development, environmental and health organizations, staged a ‘tug of war’. It saw bankers on the one side and Robin Hood, the symbol of a massive ongoing popular campaign demanding the adoption of a FTT, on the other, with EU leaders in the middle to decide if money should go to speculators or to people and the planet (see photo).

The European Parliament has asserted unequivocal support for robust and properly resourced EU action to tackle poverty and climate change and asked EU member states to agree on a financial transactions tax to help developing countries cope with the effects of the global financial and economic crisis. Despite broad public support and the backing of the European Parliament EU leaders have failed to come to terms on the FTT.

Barroso II should put development at the heart of its agenda, CIDSE says

Following last year’s approval of the Lisbon Treaty and the election of a new European Parliament, 2010 has begun with the appointment of President Barroso’s newly selected European Commission (EC) line-up. CIDSE, an international alliance of Catholic development agencies, while wishing the new Commission success, points to the need for ambitious and fair policies. In the next five years leading up to the 2015 deadline for the Millennium Development Goals (MDGs) these should benefit both citizens at home and people living in poverty in developing countries to ensure our common future.

“In light of the recent food, economic and climate crises, which have left poor countries struggling with dire consequences, which will be felt for many years to come, it is imperative that the new Commission reaffirms the EU’s leadership in development cooperation by placing poverty eradication at the heart of its agenda and, crucially, ensures the coherence of all EU policies with this goal,”. Recent studies show that the EC is not meeting this goal with only 44% of its aid money going to poor countries in comparison to the average 65% rate of EU member states.

One of the main priorities of the Commission, and Development Commissioner Piebalgs in particular, should be to not only push EU member states to stick to their aid commitments but also to promote innovative and predictable sources of development and climate finance. “After having firmly declared his support for financial transaction taxes during his EP hearing, we expect Commissioner Piebalgs to match words with deeds. The Commission should urge EU member states to promptly implement these taxes,” said Bernd Nilles, CIDSE Secretary General.

Furthermore, the EU must adopt a policy framework for food security that focuses on the potential of small scale farming for development, a framework which is supported rather than undermined by the EU's own trade and agricultural policies. According to Nilles “the appointment of a climate commissioner presents an important opportunity for the EU to rethink and reinvigorate its engagement in international climate negotiations. The Commission must work with its member states to reach out to its negotiating partners and ensure that 2010 secures the fair, effective and binding climate agreement that both science and justice demand.” Credible and coherent policies on domestic climate mitigation efforts and support to developing countries are crucial to protect the world’s most vulnerable people from the impacts of the climate crisis.

Europe’s climate offer would rob tomorrow's hospitals and schools in poor countries

This week the European Commission published its paper on climate financing ahead of the Copenhagen summit in December. Even if Europe’s climate offer could divert money already promised for education and health in poor countries, Oxfam International welcomed the European Commission’s intentions to break the deadlock in global climate talks by moving first. Putting climate financing figures on the table was a necessary first step to open up meaningful negotiations.

"However, the European Commission proposes that rich countries should take money from existing promises to increase overseas aid spending to 0.7% of national incomes. This would rob tomorrow's hospitals and schools in developing countries to pay for them to tackle climate change today. This will undermine progress towards meeting the Millennium Development Goals”, Elise Ford, head of Oxfam International’s EU office, said. “This is scandalous, especially given Europe's responsibility as one of the world's biggest polluters who has caused the problem, and the onus on them to clean up.”

It’s now up to EU Member States to come up with a stronger proposal at the European Summit on 17 September, to get a good climate deal that does not come at the price of the future development of poorer countries, who are already being hurt by global warming. Funds to help developing countries to tackle climate change must be additional to aid – not instead of it. William Chadza, Executive Director for the Malawian Center for Environmental Policy and Advocacy (CEPA), said: “We must consider Europe's top-end offer of €50 billion to be an opening negotiation tactic, which might be a good start to kick-off the talks. However, the real need of developing countries to cope with the impacts of global warming and develop their own low carbon futures will go far higher than this. The rich world will need to do much more to make a real difference to poor people suffering climate change.”

* Read the media briefing >>> Paying the Climate Bill.

European U-turn on the poor as economic crisis grips

As poor countries face the full impact of the economic crisis, European governments are falling short by nearly €40bn on their aid promises, a new report from CONCORD, the European confederation of development NGOs reveals. As Development Ministers prepare to meet in Brussels next week, the 2009 Aidwatch report, Lighten the load: in a time of crisis, European aid has never been more important, shows that European governments will not meet their 2010 aid target until 2012 unless serious action is taken now. Many governments are still inflating their aid levels by counting money that does not reach poor people.

Official figures show that in 2008, Europe allocated 0.40% of its gross national income (GNI) to aid. However, the report shows that most European donors have provided misleading aid figures. Out of almost €50bn provided as aid in 2008, close to €5bn went to debt cancellation, €2bn to hosting foreign students and close to €1bn to hosting and repatriating refugees. Real European aid amounted to only 0.34% of collective GNI. Missed targets and non-genuine aid will mean poor countries will have missed out on nearly €40bn by 2010 – enough to increase the income of 380 million Africans living in absolute poverty by one quarter.

CIDSE, the international alliance of Catholic development agencies, member of CONCORD and contributor to the report, urges the European Commission to set the example stepping up efforts in EU development aid. CIDSE observes a consistent gap between the Commission’s stated objectives and policies, on the one hand and the reality of the implementation and resources actually devoted on the other. It also reckons the Commission needs to step up efforts on equality commitments, poverty focus of EC aid and aid effectiveness. “Europe can and must get aid right, it is a matter of justice,” Bernd Nilles, Secretary General of CIDSE, said. “Making aid work means hope, while failing to do so implies privation and grim perspectives for our future.”

EU climate approach puts world’s poorest people at peril

EU Environment Ministers have failed to live up to repeated promises to fight climate change. They have called on poor countries to curb their emissions, but have not put cash on the table to help them deal with the effects of the crisis or develop in a low carbon way. Following a proposal from the European Commission in January, the EU will agree the key elements of its position for a global climate deal in Copenhagen at a Heads of State summit on 19-20 March in Brussels. Climate finance for developing countries, which is a make-or-break part of the deal, is supposed to be the main focus. But Member States have used the economic crisis as an excuse to further water down the Commission’s already weak plans on finance. Environment Ministers have admitted on 2 March the huge costs involved, but not agreed how the money will be raised globally, or what the EU will commit.

The lives and livelihoods of millions of poor people are at stake from worsening climate change, created by rich countries. Oxfam International estimates that at least €40bn a year is needed to help poor countries adapt to the impact of global warming – with the EU owing at least €12bn. This is a fraction of the $3.3trn committed by the EU and the US to rescue financial institutions in 2008. Katia Maia, head of Oxfam International’s Campaign and Advocacy Office in Brazil, said: “The latest science shows the climate crisis is more urgent than ever but the EU is putting the brakes on efforts to address it. Europe is one of the world’s biggest polluters but it is doing as little as possible to help poor countries deal with the impacts of a crisis it helped create. The EU needs to put money on the table now. Treating poor people's lives as a bargaining tool in climate negotiations is both immoral and misguided as a negotiating strategy.”

Elise Ford, head of Oxfam International’s EU office, said: “It is now up to EU Finance Ministers and Heads of State to right these wrongs later this month. They must give strong backing for innovative finance mechanisms, so these are at the heart of Europe’s negotiating position for Copenhagen. The excuse of waiting for the US to move first on climate finance is wrong-headed. As EU Commissioner Dimas pointed out, if the EU does not offer real cash, there may be no global deal. And, unless there is a clear EU commitment, there will be little external pressure for the US also to come forward - as it must."