Mr Secretary General,
Ladies and Gentlemen,
I have the honour of speaking on behalf of the European Commission in this High Level Dialogue of the General Assembly on Financing for Development.
You have heard earlier today the statement by the Presidency of the European Union and the European Commission naturally fully aligns itself with the EU statement.
I am addressing you today to elaborate on and to underscore certain important aspects in the financing for development agenda. There are three issues I would particularly like to point out. These are:
1. the importance of scaling up of aid,
2. the need to improve the effectiveness of aid, including aid predictability and aid modalities, and
3. the impact of trade on development.
The year 2008 is a crucial year for development. It will test the credibility of the international community and our global partnership. In Accra we will further promote aid effectiveness, in Doha we will look into the implementation of the Monterrey Consensus and we expect to see further progress in the global trade negotiations in the Doha Round. These are major events and processes which should not only urge us to respect our commitments, but to lead us to do more, better and faster, at global and country level.
The eradication of poverty and the achievement of the MDGs remain at the centre of the EU’s agenda. To achieve these objectives we need more and better aid and the ability to implement it faster, as well as institutional and structural reforms in partner countries.
Europe’s drive to further increase aid stems from the European Consensus on Development, which defines – at the Union level – common values, principles, objectives and methods that facilitate poverty eradication. It has triggered change in the way we deliver our assistance and how we cooperate at the international level.
Following EU’s commitment to increase development assistance (ODA), doing more for the European Union means meeting the objective rate of 0.7% Official Development Assistance to Gross National Income by 2015. We are on track to deliver that objective. EU aid reached a record high of EUR 48 billion (67 billion USD) in 2006, against the global trends of ODA in 2006, and remains on the rise, even when excluding debt relief. We are now working towards our next EU intermediate target of 0.56% ODA/GNI by 2010. If the trends continue in a similar direction, EU aid will represent 70% of global aid in 2010. We call upon the whole donor community to live up to their commitments and to further increase aid to ultimately achieve the 0.7% ODA/GNI target by 2015.
At country level, in our partner countries, our determination to do more and better means much more than simply making the necessary increases in resources, particularly in sub-Saharan Africa.
Increasing resources will not bring the intended results, if we do not make a profound review of the way we use those resources. As an example, we should no longer accept situations, like in Africa today, where in one country twenty donors buy medicine using 13 different procurement procedures, or another country where 600 projects of less than one million dollars are running in the health sector alone. It makes no sense.
We see three ways to improve this situation:
Firstly, we must give concrete content to the concept of complementarity of aid. The European Union has adopted an EU Code of Conduct on the Division of Labour in Development Policy which aims to avoid excessive fragmentation of aid at global, country or sector levels and to improve aid effectiveness. The implementation of the Code will avoid the proliferation of donors in the same sector or in the same countries. It will also deal with the fact that a number of countries and sectors are neglected, particularly the countries in situations of fragility. We hope that bilateral donors, the World Bank and the UN will take a strong interest in the Code of Conduct. It is also important for our developing country partners to understand that the division of labour among donors will particularly serve the interests of beneficiary countries by providing better managed aid with lower administrative costs, better targeted aid in the context of scaling up and aid which is less volatile. This does not imply the lowering of aid allocations.
Secondly, we must review our aid modalities. An ever increasing number of projects would be highly detrimental to the benefits of the scaling up process. The European Commission is convinced that increased use of budget support, whenever possible, is essential. Budget support is the aid modality which is the most favourable to ownership, alignment with country procedures and reduced transaction costs. It is also the most favourable to scaling up, as it covers recurrent budgetary expenditures.
Thirdly, we need to seriously put into practice the concept of aid predictability. Our partner countries need stable aid and longer term perspectives regarding future aid flows in order to plan MDG-related public spending better. With respect to improving the predictability of our aid, the European Commission has been developing the “MDG Contract” in consultation with the EU Member States as a longer term, more predictable form of budget support. The “MDG Contract” targets well performing countries that have successfully implemented budget support and show a commitment to achieving and monitoring the MDGs. This form of budget support would cover six years and provide a minimum, guaranteed level of support within a strong framework for monitoring performance and results. We expect the MDG Contract to account for more than half of all our general budget support provided to ACP countries from the 10th EDF.
We believe this approach will provide our partner governments with a higher degree of predictability and thus help them to prepare longer term strategies and spending programmes with greater confidence, enabling them to accelerate progress towards the MDGs.
But we also recognise that the effectiveness of the MDG Contract will be enhanced if implemented in harmony with other budget support providers. We therefore remain committed to ensuring that the MDG Contract will be pursued in accordance with in-country harmonisation processes, while encouraging all budget support partners to promote and adopt the principles of longer term, more predictable budget support with a strong focus on results.
Trade is a powerful engine for economic growth and countries rely for a substantial part on trade to fight poverty. All countries engage in trade and all of them rely, for a substantial part on trade for their economy to grow and to fight poverty. While trade alone cannot solve development problems, openness to trade and support for supply side capacity are important elements in any coherent development strategy.
For trade to serve as an engine for growth, a number of conditions need to be fulfilled. Firstly, there needs to be sufficient access to export markets. Secondly trade policy needs to encourage competitiveness. The role of trade in development is thus something that concerns both developed and developing countries. Hence, we all have a shared interest in a successful Doha deal. It is a global deal on trade, one that reinforces openness on a multilateral basis, through the application of strengthened trade rules.
The good news is that the Doha negotiations have made more progress than people realize. A balanced, equitable and development-oriented outcome can improve the prospects for economic growth and development, and contribute to achieving the Millennium Development Goals. Therefore the Members should take this last chance to agree on the modalities for a Doha deal. In the light of this, it is absolutely vital for all key Members to show a spirit of compromise and constructiveness and a genuine will to reach to a balanced agreement.
A further round of discussions will be needed if we want a deal before the end of this year. Whether this will be the case depends entirely on the negotiating commitment and flexibility of members. We all bear responsibility for this.
The EU is doing all it can to keep up the momentum. For example, we have shown genuine flexibility on agricultural market access. Equally, big emerging economies should move to deliver their side of the bargain. That’s why we, in the EU, are asking them to bolster confidence in these negotiations by making clear they are ready to engage on the basis of the WTO Chairs’ negotiating texts.
Of course, we must ensure that the Round delivers on its development promise. The EU will continue to watch carefully to ensure that development issues, like Aid for Trade, duty free quota free access or measures against preference erosion are adequately taken into account. As an example, WTO Members, with the EU in the lead, are working to raise both the quantity and the quality of the Aid for Trade available to DCs. The EU stands by its promise to raise our trade related assistance level to 2bn euros a year by 2010 (USD 2.8 bn). The Commission is almost at its 1bn euros a year target, whilst our Member States are gradually getting there (600 mill Euro by 2008).
The clock is ticking. If there is no agreement on modalities this autumn, any early conclusion of the DDA will become very unlikely. The Doha Development Agenda remains the central priority of the EU’s trade policy. In this spirit, we need to look ahead towards a successful outcome of the Doha Round and we ask our partners to do so too.
The European Commission considers the Monterrey Consensus to be a key achievement of the international community. In Monterrey we subscribed to important commitments on financing for development and established the global partnership for development. The Consensus clearly spelled out that such a partnership is needed to eradicate poverty and to make real progress in the developing countries towards the internationally established development goals and targets. It is evident that without this global partnership and mutual responsibility our efforts are not likely to bear fruit.
The European Commission and the European Union are playing our parts in an active manner in the global partnership and we are looking forward to working together with our partners during this General Assembly and in the run-up to the Monterrey implementation review in Doha next year.
Thank you Mr President.