Summary
An EC information note suggests the future multi-annual financial framework for EU external action programmes will see a 30% increase in the budget. However factoring in proposals to incorporate the EDF into the future multi-annual financial framework for EU external action programmes, suggests an almost 16% reduction in the real value of total EU external action programme expenditures in the coming period and even a small decline in planned expenditures in nominal terms. However it remains unclear where the burden of the reduced level of the EU’s planned expenditures in real terms will fall. Caribbean and Pacific ACP countries seem most likely to see a decline in grant financed development cooperation expenditures, while certain sub-Saharan African regions could see traditional development assistance activities down-sized as EU external action expenditures are more closely aligned with EU policy priorities along the West Africa-North Africa axis which plays a central role in migration flows.
According to an EC information memo the European Commission is proposing a nominal 30% increase in EU budget financing for EU external action programmes for the forthcoming 7 year financial period (from €94.5 billion for the 2014-2020 period to €123 billion for the 2021-2027 period). According to the EC, when yearly inflation is factored in this represents a 13% increase in the financial allocation to EU external action programmes (1).
The EC is also proposing a significant simplification of the structure of the financing arrangements for the EU’s external action programme, to allow the EC greater flexibility in more effectively addressing evolving global challenges. The aim is to reduce the number of specific budget lines and ensure a ‘clearer focus on political objectives and engagement with partners in line with EU values and priorities’ (1).
The EC’s proposed external action budget lines include:
- ‘a Neighbourhood, Development and International Cooperation Instrument with €89.2 billion,
- a European Instrument for Nuclear Safety with €300 million;
- an Instrument for Pre-Accession Assistance with €14.5 billion;
- a humanitarian aid instrument with €11 billion;
- a Common Foreign and Security budget with €3 billion; and
- cooperation with overseas countries and territories including Greenland, with €500 million’.
In addition outside the EU budget, the EC is proposing:
- a budget for the High Representative, with support of the Commission;
- the establishment of a European Peace Facility, worth €10.5 billion.
The proposed financial breakdown for the 2021-27 period shows sub-Saharan Africa receiving an allocation of €32 billion. According to the EC this represents an increase from the current level of €26.1 billion allocated to cooperation activities in sub-Saharan Africa. According to the EC information note ‘these increased resources will allow for supporting development, inclusive economic growth, as well as African-led initiatives in the field of peace and security’. Moreover it is held the integration of the EDF into the budget will create a single instrument which will ‘make it easier to finance policy priorities covering both North Africa and Sub-Saharan Africa’ (1).
Meanwhile Caribbean ACP countries are to be subsumed under the general heading of Americas and Caribbean to which €4 billion is allocated. With reference to this new category of countries it is highlighted how ‘some countries in the region may be graduating out of ODA eligibility in the coming years’. However it is recognised some countries are facing ‘specific economic and environmental vulnerabilities, including climate change, natural disasters and other challenges’, which will need to be addressed jointly.
Pacific ACP countries for their part are to be subsumed under the heading of Asia and Pacific to which €10 billion is allocated.
Significantly within the proposed new financial arrangements a number of elements currently funded outside of the annual budget framework are to be integrated into the annual budget framework. This includes the European Development Fund (EDF), the financing mechanism for ACP-EU cooperation activities.
The EC maintains the framework will still provide predictability of funding at the national level since ‘at least 75% of the overall financial envelope’ will be allocated geographically within the framework of a multi-annual programming process. The EC’s major focus will be on ‘least developed countries, low income countries, fragile or crisis stricken countries’. However the new framework will provide the flexibility required to ‘allow for using and re-using unutilised funds on a multi-annual basis’ (1).
| Comment and Analysis It is noteworthy the EC is proposing the European Development Fund (EDF), which is currently financed outside of the EU annual budget, is to be incorporated into the financial framework for the EU’s external actions financed from the EU budget. This is significant for over the 2014-2020 period a total financial allocation of €30.5 billion was made to the EDF (2).If this financial allocation to the EDF is factored in, then to maintain the current nominal level of financial allocation a total of €125 billion would be needed under the future financial framework. This is €2 billion above what is currently being proposed. To maintain the real value of the EU financial support to external action (talking into account inflation) an allocation of some €146.25 billion would be needed.This suggests given the inclusion of the EDF in the future annual budget financial framework the proposed financial allocation for the 2021-2027 period represents a reduction of some 15.9% in the value of the EU’s financial allocation (taking into account the effects of inflation).It is unclear where the burden of the reduced level of the EU’s planned expenditures in real terms will fall. It appears as if the EC plans to maintain the focus on sub-Saharan Africa but within the framework of a broader all Africa strategy aimed at addressing EU priorities more effectively (e.g. migration and security concerns). This could potentially see funds diverted away from traditional cooperation activities with sub-Saharan Africa towards addressing EU priority concerns along the West Africa-North Africa axis, which plays a central role in migration flows. What seems likely is that EU grant financed cooperation activities with ACP Caribbean and Pacific countries will be downgraded within any future annual budget based financial framework for EU cooperation with African, Caribbean and Pacific countries. |
Sources:
(1) EC, ‘Questions and answers: the EU budget for external action’, 14 June 2018
http://europa.eu/rapid/press-release_MEMO-18-4124_en.htm
(2) EC, European Development Fund
https://ec.europa.eu/europeaid/funding/funding-instruments-programming/funding-instruments/european-development-fund_en