The European Community is a unique donor in that it plays a dual role in development, as a bilateral donor providing direct support to countries, and as a co-ordinating framework for European Union (EU) Member States. The European Commission is the executive body, accountable to the European Parliament and the Members States meeting in Council.
Since the last DAC Peer Review in 1998 the European Commission has been redefining its development policy and ways of working. In April 2000, the European Commission set out an ambitious agenda for its own reform to increase its efficiency, effectiveness and accountability by focusing on performance and results. This broad reform process also has a particular focus on external relations (RELEX), which includes political aspects, trade and development policy. The RELEX reform has strengthened the organisational structure of the European Commission by integrating the services dealing with political, trade and development more strongly within a "RELEX family". Furthermore, since January 2001, EuropeAid has been created to strengthen the implementation of the European Community development programmes worldwide.
The development assistance committee (DAC) notes that these reforms of external relations take account of concerns expressed in the 1998 Peer Review. The DAC also notes favourably that the European Community's development policy framework, programming, organisation and management have been strengthened in numerous ways. In particular, poverty reduction is now the principal aim of development assistance, in line with DAC guidelines and assessed against the Millennium Development Goals (MDGs).
The European Community official development assistance (ODA) increased in real terms by 13.4% to USD 4.91 billion in 2000. The preliminary figures for 2001 show a further increase to USD 5.91 billion, an increase of 21.1% in real terms. The European Commission encouraged EU Member States, in the Barcelona Council meeting of March 2002, to raise the average amount of ODA to 0.39% of gross national income (GNI) by 2006, which was confirmed at the Monterrey Conference on Financing for Development in March 2002. In addition, the European Community can play an important role in political dialogue and in facilitating access of least developed countries to the EU market. Other measures, such as aid untying, can also increase the effectiveness of ODA and contribute to collective donor efforts to reduce poverty. The DAC welcomes these efforts, but notes major challenges for the European Community to improve the development impact of its sectoral allocations taking account of cross-cutting objectives of governance, gender equality and environment within the context of the primary aim of poverty reduction. In particular, there are challenges to achieve development objectives in the EU foreign policy context and to improve the different means for tracking the impact.
The European Community's legal and policy framework sets out the requirement to seek policy coherence with development objectives. The European Commission has introduced several institutional mechanisms that will help promote coherence of external relations' policies with the poverty reduction objective. In particular, the Country Strategy Papers (CSP) have become a central mechanism for strengthening policy coherence with other Community policies and for co-ordination with Member States. The challenge is to develop analytical capacity by allocating sufficient resources to support this mechanism across the system. A major success with policy coherence has been achieved through the "Everything But Arms" initiative, opening access to the EU market to the least developed countries. In contrast, there are other coherence issues to address in the relations between development policy and the European Community's internal policies, for example the Common Agricultural Policy and the Common Fisheries Policy. These cases show how the pursuit of the legitimate interests of the European Community may have potentially adverse consequences for the legitimate development interests of partner countries, despite Treaty obligations to pursue coherence with development policy.
Despite the ambitious nature of the reform of the Commission's services and the substantial progress achieved with the Community's development programme, there remain several potential challenges for the reform process and for implementing the programme. These include: sustaining political support for completing the reform, including more strategic roles for the Council and Parliament; further refinements to the organisation to clarify responsibilities, improve speed of aid delivery, and enhance organisational and analytical capacity to make deconcentration work; and ensuring appropriate and sufficient staffing to strengthen implementation.
The DAC welcomes the joint commitments by the European Community and the EU Member States for increased ODA effort by 2006. The DAC commends the European Commission for undertaking the ambitious internal reforms that are improving its capacity to achieve the European Community's primary development aim of reducing global poverty. The DAC recommends that the European Community set a realistic time frame within which to assess the results of its reforms of development co-operation and external relations, against agreed performance standards or benchmarks. Several challenges remain, and the DAC further recommends that the European Community:
a) Strengthen the European Community's comparative advantage in promoting development
Further develop the European Community's strategic approach to development by: promoting the political and trade dimensions that can facilitate development and complement development co-operation policies; clarifying the strategic roles of the Member States and Commission regarding coherence issues; and encouraging the full implementation of the DAC Recommendation on aid untying.
Promote further partnerships for poverty reduction in the European Community's regional programmes along the lines set out in the Cotonou Agreement, and following a similar participatory process.
b) Promote the sustainability of poverty reduction
Bring ODA allocations into better alignment with the principal aim of poverty reduction. Review the balance between pursuing long-term development objectives and the flexibility needed for external relations policies. There are discussions within the EU to improve sustainability and poverty reduction including: budgetisation of the European Development Fund; increased allocation of ODA to social sectors; and the classification of allocations along DAC lines. The DAC believes these suggestions, while potentially useful, are insufficient to address the fundamental requirements. In order to translate the primary aim of poverty reduction into more effective ODA allocations, there is a need to work towards resource allocation criteria and to reform the budgetary process in a way that meets several different strategic requirements--to reduce the number of budget lines, to promote flexibility, and to enhance accountability further to the European Parliament and the Council of Ministers.
Deepen the dialogue with partner countries, and encourage broad participation in the Country Strategy process, in order to enhance local ownership of the development process. In the context of budget support and sector wide approaches, share with other donors the European Community's innovative experience and lessons, especially within the framework of Poverty Reduction Strategy Papers (PRSPs). In particular, work with other donors to improve financial management and institutional capacity in the PRSP countries.
Enhance the European Community's multifaceted approach to poverty reduction by elaborating implementation strategies. Clarify and build on the thematic policy approaches for supporting good governance, trade capacity building, and regional development, and increase efforts to mainstream cross-cutting issues (human rights, gender equality and environmental sustainability) in the European Community's priority areas.
Pursue the promising start in post-conflict situations by creating response mechanisms and supporting the transition from humanitarian assistance to reconstruction and rehabilitation.
c) Improve policy coherence and develop the institutional framework for coherence
Review the coherence of internal Community policies with development objectives. The Country Strategy Paper (CSP) offers a context in which to do this, but the analytical capacity and resources for such work are lacking both in the field and in Brussels.
Propose initiatives for approval by EU Member States for strengthening the positive impact of internal Community policies on development policy.
Make full use of the policy coherence mechanisms by providing stronger linkages and feedback between the CSP process, Interservice Quality Support Group, Evaluation unit, and Court of Auditors.
d) Strengthen the focus on results and aid effectiveness
Clarify the structural responsibilities within the "RELEX family" for the allocation of resources to all developing countries and consider whether one entity should be responsible for managing all aid programmes (from policy formulation to implementation).
Simplify procedures further. Process requirements have been reduced but still remain complex for many partners. There is a need to look at the system as a whole and to benchmark European Community performance against other donors in the context of the DAC Task Force on Donor Practices.
Strengthen capacity for impact assessment, by developing a results orientation, undertaking programme evaluations, and promoting feedback from evaluation and monitoring systems to the quality support arrangements.
Develop a strategic role in evaluation by encouraging the Board of EuropeAid to focus on the achievement of results, and review the ways in which Parliament and the Council of the EU might support this strategic role.
Undertake specific evaluation studies of particular areas where the European Community may learn important policy and management lessons. These areas include: innovative approaches to conflict prevention and resolution; the promotion of good governance and democratisation; the development of the CSP process; ECHO's monitoring of non-governmental organisations (NGOs); the effectiveness of the European Commission's deconcentration process; and the tools and facilities devoted to the promotion of the private sector.
Improve the European Community's contribution to DAC discussions on aid effectiveness.
e) Improve the implementation of the aid programme with a view to enhancing country ownership
Enhance country ownership to improve programme quality, by building on the relationships developed while formulating the CSP. The European Community should also seek opportunities to support the partner government's leadership of sector discussions with donors in areas of the European Community's comparative advantage. To achieve this, the European Commission will need to develop and enhance its capacity for analysis and its collaboration with EU Member States and other donors in the field.
Delegate further authority to the field under clear guidance. While partners welcome the process of deconcentration, which will bring procurement and financial control closer to the field where implementation takes place, there are some risks. For the reform to be more efficient, the deconcentrated staff should be given delegated authority. For deconcentration to be more effective there should be a second stage which involves increasing analytical capacity and providing negotiating authorities, in order to deepen discussion with partners in the field.
Provide more development personnel to the country offices. More staff and other resources are needed to ensure the effectiveness of deconcentration. Regarding skills, the European Commission should review how to strengthen the mainstreaming of gender equality and environmental considerations in field operations. It might seek more complementarity among and with Member States in the deployment of human resources.
Improve personnel management for development staff. The European Commission needs to assemble a personnel management team for development co-operation staff, and review personnel policies with a view to providing a common vision on development co-operation and training. In the light of deconcentration, promote a career environment that rewards those who take on the challenges of underdevelopment, ensure adequate gender balance in the field and an effective means to re-integrate staff into Brussels after a country assignment.