EUROPE’S ROLE IN

MAKING POVERTY HISTORY

This year, Europe must decide whether it is committed to making poverty history. Decisions taken at European level on aid and trade reforms in the coming months could make or break efforts globally to tackle chronic poverty.

The UK takes over the Presidency of the European Union (EU) in July 2005. This represents an opportunity for the UK to drive forward the EU’s development agenda: shaping the European Commission’s future work on development cooperation and international trade, and promoting sustainable development that works for people and planet. This manifesto sets out the challenge from civil society organisations to the UK Government and the European Union to Make Poverty History.

The world is facing an acute development crisis. Some 1.2 billion people in developing countries live in absolute poverty, 1.1 billion people are without safe water, more than 800 million people go to bed hungry and one in five of those living in absolute poverty areestimated to have a disability. In September 2000, world leaders placed development at the heart of the global agenda by adopting the Millennium Development Goals, which set clear targets for halving poverty and hunger; combating HIV/AIDS and other major diseases, tackling child and maternal mortality; achieving gender equity, universal primary education and environmental sustainability; and increasing resources for development by 2015. These goals demand a holistic approach by government and non-governmental actors. Nevertheless, current predictions suggest that even if the Goals were achieved, around 1 billion people of all ages will remain in poverty in 2015.

The existence of a substantial European Community (EC) aid programme is a mark of the EU’s maturity and solidarity and its seriousness as a group of states in trying to promote respect for human rights, sustainable development and assist in the achievement of the Millennium Development Goals.

As a leading advocate of the Millennium Development Goals, the UK Government has called for the G8 Summit of July 2005 to focus on international development. We urge the UK Government to ensure that its Presidency of the EU is also a ‘Development Presidency’.

Executive Summary

2005 offers a unique opportunity for the EU to Make Poverty History.

As the world’s largest multilateral donor and largest trading bloc, the EU could help foster sustainable democracy, strengthen governance and civil society, support democratic basic service provision, support long-term environmental sustainability, promote gender equity and greater social inclusion, and prioritise accountability to Southern citizens.

Yet EU trade policy is unjust. EU aid quantity is woefully inadequate and its quality should also be improved. While the EU has a vital role to play in increasing security around the world - and indeed to do more to protect civilians - the recent preoccupation with ‘terrorism’ has overshadowed the need to eradicate global poverty. Security policies should never compromise the need to respect human rights, democracy and development.

The EU should go to the UN Millennium+5 Summit with a holistic package of commitments on the political, security, environmental and development challenges outlined in this paper. EU commitments on improving aid quantity and quality must be renewed this year, with a clear timetable towards reaching the 0.7% UN target. In preparations towards the WTO ministerial, EU trade policy must account for its impact on poor people and the environment; and stop the pressure on developing countries to open up their markets when such measures are not deemed economically, politically and socially appropriate. The EU should get its own house in order and end export dumping, as well as regulating big business to stop it profiting at the expense of poor people and the environment. We call on the UK Government to build pressure on EU Member States and encourage the EU to take action on:

MORE AID
  • The EU should reach a collective average of 0.7% of GNI allocated to ODA by 2010
BETTER AID
  • At least 70% of EC ODA should be spent on low-income countries and should be focused on poverty eradication
  • Human rights obligations and a rights-based approach should guide EC aid
  • EU policies should be coherent with, and enable the achievement of, development objectives
  • 20% of EC aid should be allocated to basic social services
  • All EC aid should be fully untied
  • Donor co-ordination, complementarity and harmonisation should be improved
  • Better use should be made of multilateral channels
  • National ownership and civil society participation in setting development priorities should be ensured
  • EU Delegations should be equipped with greater expertise and dialogue capacity
HUMAN SECURITY
  • An EU Council Common Position on fragile states should be developed
  • Regulations for European corporate investment should be strengthened
  • An International Arms Trade Treaty should be championed
  • The EU Common Position on arms brokers should be strengthened
TRADE JUSTICE
  • Developing countries should not be forced to liberalise their industrial, services or agricultural sectors through the trade negotiations at the WTO
  • The EU should withdraw ‘offensive’ market access demands from the EPA negotiations
  • The EU should urgently honour its commitment to provide ACP countries with viable non-reciprocal alternatives to EPAs, in parallel to EPA negotiations
  • All forms of economic policy conditionality, including conditions linked to trade liberalisation, should be abandoned
  • The EU should end export dumping, which currently damages livelihoods of poor communities around the world
  • Laws to stop big business profiting at the expense of poor people and the environment should be made by the EU

MORE AND BETTER AID

Our 2005 Challenge to the UK Government

Much remains to be done if the Millennium Development Goals are to be achieved by the 2015 target date. The world is not making enough progress … We cannot afford to miss this chance.
Hilary Benn, Secretary of State for International Development, UK MDG Report 2005
Globally aid spending is between US$50 and $60 billion. Globally spending on defence is $900 billion. If we spent $900 billion on aid, we would not need to spend more than $50 billion on defence.
James D. Wolfensohn, President of the World Bank, Financial Times, 26 April 2004

The Millennium Development Goals will not be met by 2015 without an immediate and major increase in international aid. Rich countries have promised to provide the extra money needed – at least $50 (USD) billion per year – to meet the goals; this must be delivered now. Rich countries promised in 1970 to provide 0.7% of their national income for aid by 1980 at the latest, but most – including most EU Member States – have still not set a binding timetable for reaching this target.

However, without far-reaching changes in how aid is delivered, it will not achieve maximum benefits. Two key areas of reform are needed.

First, aid must do more to meet the needs and rights of poor women, men and children. This means more aid being spent on areas such as basic healthcare and education, water and sanitation. More money should be spent in the poorest countries, and not tied to EU goods and services. The World Bank and the IMF must become more transparent and accountable to the poorest governments and citizens.

Second, aid should support poor countries’ and communities’ own plans and paths out of poverty. Aid should not be made conditional on recipient governments implementing economic policies, such as privatisation of essential basic services or opening up their markets. Aid needs to be made predictable, so that poor countries can plan effectively and take control of their own budgets in the fight against poverty.

During its Presidency of the EU, the UK should press for measurable progress on these key areas of reform:

MORE AID

An EU timetable for reaching the long-promised UN target of 0.7% of GNI would revitalise the global political discussions on aid. Going beyond the EU’s ‘Barcelona Commitments’ on EU aid quantity would lay down the challenge to other major donors towards the UN Millennium Summit in September and beyond.

The EU should reach a collective average target of 0.7% of GNI allocated to Official Development Assistance by 2010.

The promises of increased aid held out at the Financing for Development conference in Monterrey in 2002 have failed to materialize. Rich countries are providing half as much aid as a proportion of their national incomes as they did in the 1960s. The Millennium Development Goals will not be met by 2015 without an immediate and major increase in international aid. And so far, only four Member States (Sweden, Denmark, the Netherlands and Luxembourg) have delivered on this commitment.

AID TO THE POOREST

EU development funds must be used as effectively as possible and be focused on those in greatest need.

At least 70% of European Community Official Development Assistance should be spent in low-income countries and should be focused on poverty eradication, with aid to middle-income countries targeted at the poorest.

The poverty focus and effectiveness of EC aid is improving. Recently updated EC data shows that in 2003 the EC spent 56% of its aid in low-income countries compared to 51% in 2002. The UK is committed to spending more than 90% of its bilateral aid in ‘Low-Income Countries’ by 2005/6. The OECD donor country average is 65% and only nine EU Member States spend more than 70% of their aid budget on low-income countries. Clearly, there is still a need for progress to be made on this issue.

BETTER AID

Improving the effectiveness of European Community and MemberState aid is essential to achieving the Millennium Development Goals in sustainable and equitable ways. The challenge is to turn rhetoric and policy commitments on partnership, participation, local ownership, building developing country capacity, enhancing aid predictability and untying aid into a reality of European Community and EU Member State aid programmes. The UK Government must encourage other EU Member States and the European Commission to:

Reaffirm human rights obligations and a rights-based approach which emphasises inclusion, ownership and participation of the poor

A spirit of genuine partnership, rather than conditionality, must shape aid decisions. For aid to be effective in alleviating poverty and securing rights, development strategies must be inclusive, empowering poor women, men and children to enjoy and exercise their full human rights. Excluded groups, such as those with disabilities, must be included in the policy-making process and enabled to fulfil their potential as valuable and productive members of society.

Ensure that internal and external EU policies are coherent with, and enable the achievement of development objectives, applicable in all developing countries

EU commitments to poverty eradication, human rights and sustainable development should not be undermined by actions in other areas. Policy coherence as an EU objective should entail that other policies are scrutinised for their impact in developing countries. It should not result in the subordination of development policy to other priorities. Current pressures at EU level to incorporate donor-driven expenditure on counter-terrorism or anti-migration agendas into development aid should be resisted.

Ensure that at least 20% of aid is allocated to basic social services

Funding for basic services and social and environmental protection must be adequately resourced (specifically in relation to food security, nutrition, health, education, water and sanitation).

Fully untie all aid and ensure greater participation of suppliers in developing countries

The European Commission has proposed to fully untie aid, which is welcome. Yet the Commission’s proposal still needs to indicate what measures are envisaged to ensure greater participation of suppliers in developing countries. Specific measures must accompany any plan to untie aid to support the sourcing of goods and services from developing countries (through the availability of significant price preferences, supporting joint ventures and supporting effective and transparent public procurement regimes in developing countries).

Improve donor co-ordination and complementarity, harmonisation and alignment of government procedures and predictability of aid flows

Incoherent donor action seriously undermines the effectiveness of development aid programmes. Efforts to tackle the burden of proliferating donor conditions, reporting requirements and aid assessment missions are welcome. But harmonisation must not result in increased conditionality relating to economic policy reforms. The EU needs to work toward ensuring greater stability and predictability of aid flows. Appropriate safeguards must be put in place to tackle the problem of aid volatility, especially with respect to humanitarian relief allocations. The EU should appoint a lead donor for different sectors in each country where the EU is working as a specific way of improving harmonisation.

The European Union committed to the following at the OECD PARIS High Level Forum on Aid Effectiveness (28 February – 2 March 2005)

  • Providing all capacity building through coordinated programmes, with increasing use of multi-donor arrangements;
  • Channeling 50% of government assistance through country assistance, including increasing the percentage through budget support;
  • Avoiding the establishment of any new project implementation units;
  • And reducing the number of uncoordinated missions by 50%.

Make better use of multilateral channels

The European Community aid programme is well-placed to handle sensitive political issues (governance, democratisation and human rights) as it is seen as more neutral than bilateral donors. The trend towards direct budget support is an opportunity to increase multilateral co-operation. Multilateral co-operation could also facilitate strengthened and more coherent civil society dialogue within the Country Strategy Papers process.

Strengthen national ownership over development policies and procedures and ensure civil society participation in setting development priorities.

Developing country ownership of aid strategy, based on strong civil society participation, should be a guiding principle for donor harmonisation and alignment. A process of harmonisation and alignment without real ownership would further encroach on the national democratic process in recipient countries. Furthermore, if governments and people of poor countries are to have control over their future, and if aid is to be an effective tool for poverty eradication, imposed economic conditionalities, such as trade liberalisation, deregulation, fiscal austerity and privatisation must be abandoned.

Build greater expertise and dialogue capacity of EU Delegations

EU Delegations should ensure that information on Country Strategy Papers and National Indicative Programmes is shared to facilitate consultation and participation of non-state actors, including civil society. EU delegations need to give greater priority in staff time, training and resource allocation to identify key partners in civil society and set up formal and informal dialogue opportunities.

HUMAN SECURITY

Our 2005 Challenge to the UK Government

Many of the poorest people in the world live in fragile states, where ethnic or geopolitical tensions and vulnerability to conflict or natural disasters undermine efforts to achieve the Millennium Development Goals….any international or national strategy to achieve the Goals must include a focus on conflict and conflict prevention.
Jeffery Sachs UN Millennium Project Report, January 2005

Conflict, disasters, insecurity and weak governance remain significant obstacles to development. At present, of the 34 poor countries farthest from reaching the Millennium Development Goals, 22 are in or emerging from conflict. Yet, short-term military responses to insecurity are not enough. A longer-term approach is needed that joins preventive measures seeking to build capable states and tackles the risks of conflict and insecurity with more effective EU action to protect civilians in cases where conflict does break out.

A preventative approach requires joined-up policies that address the social, economic, security and governance needs of populations living in fragile or conflict-affected regions. At present, misplaced development assistance, inequitable trade and foreign investment, irresponsible arms sales and disenfranchisement are feeding conflict and instability.

The EU has potential for addressing conflict through its wide range of aid, trade, security, defence and diplomatic policies. However it is essential that these policies share the aims of conflict prevention and poverty eradication rather than undermine them.

The UK Government must use its Presidency to:

Develop an EU Council Common Position on fragile states

The European Security Strategy highlights ‘state failure’ as one of the five key threats facing Europe and the world. The EU needs to develop a common position, which addresses the causes as well as the symptoms of fragile states. This requires a long term, joined-up policy approach and should include commitments to:

  • More and better targeted aid that is conflict sensitive;
  • More equitable trade policies and investment;
  • Better linking of crisis management and conflict prevention;
  • Investing in appropriate governance and security reform programmes including disarmament and policing;
  • Engaging with a broad range of civil society actors to identify reformers in fragile states.

Strengthen regulations for European corporate investment

There have been numerous recent examples of European companies helping to sustain or exacerbate conflicts though corruption or support to alleged war criminals. These include European oil companies in Gabon, the Niger Delta and Angola, European extractive industries in the DR Congo, and a European energy company in the Balkans. Despite advances by Member States, the EU regulatory framework on corporate corruption with regard to violent conflict remains weak.

To ensure that future European investment in fragile states is in line with international humanitarian law and avoids further militarisation or conflict, and to promote more equitable distribution of extractive industry-related revenues, it is critical that the Voluntary Principles on Security and Human Rights and the Extractive Industries Transparency Initiative (EITI) – both UK-led initiatives - are adopted at the EU level with a view to securing mandatory principles in the future.

Champion an International Arms Trade Treaty

Irresponsible arms exports by developed countries can exacerbate conflict and undermine development. The EU has developed a range of measures to try to control arms exports, for example the EU Code of Conduct and a number of arms embargoes. An international Arms Trade Treaty would help ensure that the same standards are applied to control arms transfers, not just in EU Member States but also across the world.