Insight
Is development aid a victim of the EU budget deal? by Khrystyna Parandii 15 September 2020
The COVID-19 pandemic has hindered the Commission’s plans to reform its development policy. But though the EU will provide less external assistance than planned, its administration can be improved. The financial impact of the COVID-19 pandemic on member-states severely affected the Commission’s ambitious proposals to increase the EU’s external action budget. But the proposed reform of EU aid is not only about the numbers. If the EU is to be a more efficient and coherent international actor, it needs to improve the management of its external expenditure. This insight looks at what the reform of the EU’s development policy means for its global ambitions, and how to make the most of it. As the coronavirus pandemic spread across the world, the EU soon realised that unless it offered prompt support to poorer countries beyond Europe, the economic, security and humanitarian price of the crisis would be much higher for the Union. Since April 2020, the European Commission has managed to raise almost €36 billion from the EU, its member-states and its financial institutions (particularly the European Investment Bank and the European Bank for Reconstruction and Development) for an external support package. As most of these funds were taken from existing programmes, the Commission vowed to boost development aid in the EU’s next long-term budget, the Multiannual Financial Framework (MFF) for 2021-27, as well as making sure that the newly created recovery fund devoted some money to external action. Although the July 17th-21st European Council meeting ended with an agreement on the overall budget, there were massive cuts to foreign aid under Heading 6 (‘Neighbourhood and the World’). Only €98.4 billion (or 9.2 per cent) of the €1.074 trillion budget for 2021-27 is allocated for external spending. Despite the Commission’s initial pitch to increase that budget substantially, this is little more than the estimated €96.9 billion in the 2014-20 period. The EU’s new main aid tool – the Neighbourhood, Development and International Co-operation Instrument (NDICI) – received a meagre €70.8 billion. This is far from what the Commission envisaged
CER INSIGHT: Is development aid a victim of the EU budget deal? 15 SEPTEMBER 2020
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