Transcript Document

EU development cooperation in
middle-income countries?
The state of play of the negotiations
Mikaela Gavas
9 May 2013
[email protected]
Introduction
1. Differentiation and its rationale
a. Five overlapping objectives
b. Levels of differentiation
2. EU institutional approaches to differentiation in the
DCI
a. What aid allocation criteria?
b. How to apply the criteria?
c. Cutting or phasing out?
3. Differentiation and the EDF
4. Member State approaches to differentiation
5. Milestones in the negotiations
EU policy on
differentiation and its
rationale
Five overlapping objectives
1. To target
resources where
they are needed
most
5. To focus more
on certain
geographic
regions and less
on others
4. To respond
better to the
specific needs /
capacities of
each country
2. To target
resources where
they could have
the greatest
impact and value
for money
3. To shift
relations with
some emerging
countries towards
a partnership
based on mutual
interest
Levels of differentiation
1. Differentiated eligibility to
development assistance
(i.e. ‘graduation’)
2. Differentiated volumes of
development assistance
3. Differentiated mix of
policies and instruments
Eligibility and volume of development
assistance

Based on: need, performance, capacity, commitment & potential EU impact
Level 1:

Criteria for eligibility for grant-based bilateral aid:
– UMICs according to the OECD-DAC
– More than a 1% share of global GDP
– Other factors also considered (Human Development Index, Economic
Vulnerability Index, aid dependency, economic growth levels and foreign
direct investment)
Level 2:

Criteria for levels/volumes of development assistance (TBD)
Differentiated mix of policies and
instruments

Differentiated development partnerships funded through
thematic envelopes and the Partnership Instrument:
– Loans (esp. blending of loans and grants)
– Technical cooperation
– Support for trilateral cooperation
Grant and
subsidy-based
aid
Myanmar
Less
concessionary:
blended finance,
still ODA, but less
through aid
agencies
India
China
OECD-type
cooperation: peer
learning, institutional
twinning, fully cofinanced
Korea
Adapted from Altenburg and Koch, DIE, 2011
EU institutional
approaches to
differentiation in the
DCI
What aid allocation criteria?
Focus on income and size of economy. Countries should
graduate if:
• UMICs according to the OECD-DAC
• More than a 1% share of global GDP
• Other (HDI, EVI, aid dependency, economic growth levels and FDI)
Focus on income and size of economy. Countries should
graduate if:
• UMICs according to the OECD-DAC
• More than a 1% share of global GDP
• Possibility to maintain geographic programme in ‘exceptional cases’
Focus on human development, people poverty and inequality.
UMICs should be eligible if they score:
•
•
•
•
9
Below 0.75 on the Human Development Index
Above 10% of the poverty headcount ratio
Above 4% on the Poverty Gap Index
Above 45% of the Income Gini Coefficient
How should the criteria be applied?
Allow for a few named exceptions
• 19 countries to lose grant-based bilateral aid: 17 UMICs and 2 LMICs
• 2 exceptions: Cuba and South Africa
Allow for an exception clause without naming countries
• 21 countries potentially lose grant-based bilateral aid: the 19
proposed by the EC, plus Cuba and South Africa.
• No named exceptions, but a clause could allow for exceptions at a
later stage
Allow for an exception clause, and a few named exceptions
• 16 countries to lose bilateral grant-based aid: 14 UMICs and 2 LMICs
• 5 exceptions: Colombia, Cuba, Ecuador, Peru and South Africa
• A clause could allow for more exceptions at a later stage
10
Should aid be cut or phased out?
No new grant-based bilateral aid funds will be
committed or disbursed after 2014
Phase out in ‘exceptional cases’
Phase out in ‘exceptional countries’ with
vulnerable constituencies
11
Differentiation and the
EDF
A different approach for the EDF
‘…what we intend to propose is strong differentiation
according to the level of income. But for the Caribbean I have
a bit of a soft spot because the countries are vulnerable to two
major challenges: climate change and natural disasters. It is
the same with the Pacific…They are vulnerable economies that
in a way deserve some attention even if the income per capita
is there’ (Commissioner Piebalgs)
•Differentiated eligibility will not be applied (level 1)
•But, there will be increased differentiation of aid volumes and
instruments (levels 2 and 3)
•Should the same criteria be used?
13
Differentiation and the EDF:
potential implications
21 UMICs in the EDF:
• Less than 1% of the EDF’s poor live in the EDF-21 countries
• But, 17 out of the 21 score high on the Environmental
Vulnerability Index
Differentiation and the EDF:
potential implications
Transition from 9th to 10th EDF
EDF-9
Allocation
% of total
EDF-10
Allocation
% of total
Difference
% increase
EDF 9 > 10
6520.8
92%
11316.5
92%
4795.7
74%
Caribbean
353.8
5%
738.1
6%
384.3
109%
Pacific
219.6
3%
306.6
2%
87
40%
4883.7
69%
8859.1
72%
3975.4
81%
576
8%
1260
10%
684
119%
LMC
1098.9
15%
1552.5
13%
453.6
41%
UMC
508.2
7%
649.6
5%
141.4
28%
HIC
27.4
0.4%
40
0.3%
12.6
46%
Region
Africa
Category
LDC
LIC
TOTAL
7094.2
12361.162
4941
Member State
approaches to
differentiation
4 groups of Member States
Clear
criteria
with no
exceptions
17
Clear
criteria
with
flexibility
to include
or
exclude
countries
Clear
criteria
with
specified
exceptions
Sceptical
of
criteria
and
country
list
Milestones in the negotiations
MFF:
•February 2013 – European Council agreement on the figures for the MFF
(2014-2020)
•March 2013 – European Parliament rejects European Council agreement
•April 2013 – European Commission proposal for allocating funds across the
instruments for external action
•May 2013 – Council, Parliament and Commission agree to restart negotiations
on the future EU budget
DCI:
•June 2012 – Council’s Partial General Agreement on the DCI
•September 2012 - European Parliament’s negotiating position on the DCI
EDF:
•December 2011 - European Commission proposal for the 11th EDF
•March 2013 – European Parliament own initiative report on the 11th EDF