chapter  2
30 Pages

The politics of foreign aid in the European Union: The EC, the Member States and the end of aid fragmentation

It is often said that the European Union is the largest provider of foreign aid in the world – for instance, in 2006 it allocated US$ 58.9 billion (56.7 per cent of the DAC aid), whereas the US allocated US$ 22.7 billion and Japan US$ 11.6 billion (21.9 and 11.1 per cent of the DAC aid respectively). The figure for the EU, however, includes resources managed by the European Commission (about US$ 10.2 billion, or 17.3 per cent of the total EU aid) and by the Member States (about US$ 48.7 billion, or 82.7 per cent of the total). To these figures, we should also add the contributions of the EU-12 Member States (about €592 million), which are not members of the DAC (European Commission, 2007d). Despite this impressive performance, the high degree of fragmentation has undermined the effectiveness of EU aid and prevented it from influencing the course of international development. The adoption of the European Consensus on Development and the Code of Conduct on Complementarity and Division of Labour, following the collective commitment to boost the quality and enhance the quantity of aid in the context of the Monterrey and Paris processes, indicate a change of direction. This chapter cannot and does not seek to provide a thorough analysis of the development policies of the European Community and the twenty-seven Member States. Its aim is to offer some useful background to better understand the decision-making process in EU development policy and appreciate the challenges that the EU faces when it tries to act as a unitary donor. In the first section, I concentrate on EC development policy and pay particular attention to the relationship with the ACP group, not only because it is the most developmental of the various co-operation agreements but also because it offers a good example of the interaction between the European Commission and the Member States over the years. In the second section, I discuss the evolution of development policy in the Member States, which I divide into various groups: the big three, the northern Member States, the southern Member States, and the eastern Member States, depending on their performance in quantity and quality of aid. In the third section, I analyse the various attempts, generally by the European Commission, to advance aid co-ordination between the EC and the Member States, from the Treaty of Rome to the adoption of the European Consensus and the Code of Conduct.