A stronger, more effective European development effort can help secure a massive advance in poverty reduction and development, and underpin a more stable and secure world in the new century.

There could hardly be a better time to debate the role of the European Union in international development. Romano Prodi has announced the names he plans to put to the European Parliament for the new Commission. He has proposed that the handling of development issues within the Commission should be substantially reorganised. The new Commission team is a strong one, and reform and increased effectiveness is part of its mission. We are in the midst of the most important renegotiation of the Lomé Convention since its inception nearly three decades ago. And the EU will need shortly to agree priorities for the external assistance budget for the 2000-2006 period.

All this means that the decisions to be taken over the next six months or so will set the tone of the European Community’s role in international development for the next decade. I am therefore pleased to have an opportunity to set out my ideas for strengthening the EC’s contribution. And I am grateful to the African, Caribbean and Pacific group of countries (ACP) and the non-governmental organisations (NGOs) for organising this occasion.

I have four main aims for my speech today. First, I want to restate Britain’s approach to international development and the role we see for Europe within this. Second, I want to look at some of the strengths and weaknesses of the EC’s contribution to international development. Third, I’m going to suggest ten specific proposals for reform, to strengthen the EC’s role in development as we enter the new millennium. And fourth, I want, on the eve of the next EU-ACP Ministerial meeting, to make some comments on the successor to the Lomé Convention.

The single greatest challenge which the world faces, as we enter the I new millennium, is the fact that one in four of our fellow human beings are living in extreme poverty. It should be a major priority for the new millennium systematically to reduce the suffering, instability and environmental degradation to which this leads. In a series of United Nations Conferences over the last decade the major governments of the world have committed themselves to a set of targets for poverty eradication. The main goal is to halve the proportion of the world’s population living in abject poverty by 2015. Associated targets include universal primary education, access to basic health care and reproductive health care for all, and sustainable development plans including commitments to reverse the loss of environmental resources in every country.

These targets are practical and achievable. They have already been reiterated by both the EU and the ACP in the negotiations on the successor to the Lomé Convention. All major international institutions have agreed that it is possible to achieve the biggest reductions in poverty the world has ever seen. But to do this we must generate the necessary political will, mobilise the resources and adopt the appropriate policies, nationally and internationally. And we must deploy the full potential of the whole international system, including the UN, the international financial institutions and, of course, the European Union.

We regard the EC as a crucial player in development for three main reasons. First, because of the scale of financial resources the EU contributes to development. The Community and member states together account for two thirds of total global official development assistance. The Commission on its own, spending €5 billion a year in official development assistance, is the second largest multilateral donor. Second, the EU, as the world’s largest trading block, provides an enormous market which could better assist developing countries, and is a major source of foreign investment. Third, the EU has instruments, like the Lomé Convention, which provide for a unique collaboration between developed and developing countries to promote the elimination of poverty.

The EC has important strengths in its work in promoting development. Major financial resources. An ability to integrate development assistance with trade opportunities. An extensive network of country delegations. Many able and committed staff.

There are some success stories and also signs of a real commitment to improve EC effectiveness. The Commission has played a significant international role in work on HIV/AIDS. Its proposals for modernising development assistance under the successor to the Lomé Convention are commendable, especially the work on simplifying the instruments of co-operation and allocating resources to where they are likely to be most effective. Senior Commission staff have taken a positive approach to untying aid within the EU. Recent work to harmonise procurement systems is also greatly to be welcomed.

But in other areas there are serious grounds for concern. We summarised these in a document my Department published last December. This text was shown in draft to many people involved in the EC’s development work, in Brussels and beyond. No one expressed disagreement with it! Let me repeat its conclusion:

The effectiveness of the EC’s programmes is below its potential. A broadly good policy framework is not consistently translated into operations. A high and increasing share of resources goes to middle income countries, at the expense of the poorest. The Commission has a complex organisational structure for managing its external assistance programmes. Its procedures and systems, notably in the areas of financial management and procurement, act as a brake on flexible and efficient implementation. At the same time, patchy implementation of project cycle management techniques impairs the quality of the Commission’s programmes. These difficulties are reinforced by inappropriate staffing, and systems which centralise most authority in Brussels. It is important to note that weaknesses in the EC’s programmes arise partly from constraints imposed by member states.

Let me give you some concrete examples that have been put to me:

  • Many Commission officials have expressed frustration at the difficulty of getting simple decisions taken and implemented. In one case reported to me, 35 different signatures were needed for a simple amendment to a contract. In one country in Asia, EU Ambassadors have jointly written to the Commission expressing concerns about long delays in projects;
  • A senior figure in a country I visited some months ago asked me whether I could possibly persuade the EC to withdraw its offer to assist in the water sector. He was exasperated by what he described as constant missions and endless delays and the fact that an EC offer meant he could not obtain support from another donor.
  • A consulting company has approached us about delays in payments for work on the EC’s external assistance programmes. They have outstanding invoices of €1 million going back over a year. Other companies and NGOs have apparently faced bankruptcy while waiting payment from the EC.

But I am pleased to report that the news is not all bad. I have recently returned from Sierra Leone where the Commission contribution – in very difficult circumstances – was widely praised and respected.

My central message today is a simple one. Britain, under the government elected two years ago, has a much stronger commitment to international development. We are positive about Europe. I believe strongly that the EU could play a major role in the international effort to eliminate poverty. But the EC’s programmes are too often of poor quality and ineffective. I constantly receive representations about this from developing countries, the private sector and NGOs – as well as from my colleagues in other member states, and from friends and colleagues in the Commission and European Parliament. I am not interested in pointing the finger of blame. We are all responsible for the failure. I am very conscious that member states sometimes make the Commission’s life difficult – recent discussions on the location of the new EU agency for reconstructing Kosovo are a case in point.

We need an open and honest debate on how we strengthen the EC’s contribution to international development.

The weaknesses in the EC’s development work are serious and we let down the European inspiration if we allow this to continue. The European ideal – the vision that inspired the founders of the EC, and that still inspires millions of people today – is the belief that by closer co-operation we can bring tangible benefits to people, real improvements in their quality of life. In the area of EU external policy, it is the belief that by working together Europe can be a major force for good in the wider world – that we can use our development resources and our trading influence to combat poverty and injustice, and promote development. At the moment, we are not living up to this possibility.

That’s why I say that to be pro-Europe today is to be pro-reform in Europe. Europe must get better at what it already does before it strives to do more.

So what does this mean for development? And what is the way forward? My French and German opposite numbers and I published a joint Declaration in February setting out our ideas for the future. And, under Germany’s Presidency of the Development Council in May, Ministers agreed an important set of conclusions setting out priorities for reform. There is a good deal of common ground about what needs to be done. I would like today to set out ten specific proposals on which I hope we can achieve real results over the next year.

First, we need a coherent new statement of EU development policy. EU development policy needs to focus on the elimination of poverty. We need to reiterate our commitment to sustainable development, effective governance and human rights, and integrating developing countries into the world economy. It is essential, if the new policy statement is to be effective, that the Commission accepts responsibility for delivering it and is willing to be accountable.

Second, we need a more effective poverty focus in allocating resources. The share of EC official development assistance going to the poorest countries has fallen from 75% in 1987 to 50% in 1997. This is a scandal. I find it impossible to reconcile with EU policy statements on our poverty focus. Britain, Ireland, the Netherlands and Sweden have recently approached the Commission asking it to bring forward proposals for the proportion of EC assistance going to low income countries to increase each year from 2000 to 2006, reaching 70% by 2006.

Third, we need simplified procedures and increased accountability. Romano Prodi comes in with a mandate to improve financial management and accountability, and increase the speed and flexibility of EC assistance. In order to rebuild public confidence in our work, it is essential that early and demonstrable progress is made on this.

Fourth, the Commission needs to ensure that it has, among its staff in Brussels and its offices in developing countries, the full range of skills necessary to deliver programmes effectively. I would like to see more specialist recruitment exercises, and greater use of developing country professionals. Able and committed staff need to be empowered, not drowned iii a paper chase.

My fifth proposal is that the EC should devolve more authority. Too many powers remain with Brussels that would be better devolved to the overseas delegations. I know work is being done on this, and I hope we will see specific proposals very soon.

Sixth, the evaluation of the EC’s development programmes should be strengthened, and a credible system introduced for monitoring project implementation. We need to shift the culture away from a focus on expenditure plans and spending commitments towards one which values outcomes and results in the real world.

My seventh point is that we need to improve co-ordination and complementarity between the Commission and other donors, including the member states but also the UN and the international financial institutions. The Development Council, under the Austrian and German Presidencies, has been working on this. I believe that we need now to develop a number of specific practical examples of collaboration between the Commission, member states and other donors in the field. Increasingly, we need to agree on which areas of work are best done by the Community and which by member states – so that we get a proper division of labour, that plays to donor strengths and avoids duplication.

Proposal number eight concerns debt relief. The former development Commissioners responded positively to the idea that the EC should contribute more to debt relief. I hope very much that the new Commission will make an early decision to contribute to the Heavily Indebted Poor Countries (HIPC) initiative. Important progress on debt relief was made at the G8 Summit in Cologne last month. But if we are to implement the agreement reached at Cologne, extra funding is essential. A Community contribution would help enormously to make a success of the new HIPC package, and bring faster, wider and deeper debt relief to some of the world’s poorest, most indebted countries. It would also help to make up for the lack of poverty focus in current programmes.

Ninth, the EU should offer more generous trading arrangements for developing countries. We should work to make the next WTO round a ‘Development Round’. A generous approach to trade issues should be reflected in the EU’s co-operation agreements with developing countries. In particular, the EU should deliver on its commitments on market access for products from least developed countries. I will say more about the particular case of Lomé later.

Finally, we need a formal published Annual Report. The Commission should prepare a detailed, comprehensive report each year providing analysis and information on the EC’s role in international development, and detailing progress against agreed targets. Virtually all development agencies, from the World Bank to bilaterals and NGOs already do this. The report should cover all the external assistance programmes, and how our trade, investment and wider policies are contributing to our development goals. I would like the new Commission to agree to publish the first such report next year.

Finally, I would like to make a few points about the negotiations we are I all involved in on the new Convention between the EU and the ACP. I am encouraged by the progress that has been made so far. We will have before us, at the Ministerial meeting tomorrow, a text representing the bulk of the new Convention. Much of this is already agreed. And the agreements we have already reached cover some very important ground, above all that the focus of the new Convention should be on the eradication of poverty.

The number of issues still to be resolved is not itself daunting. They are, nevertheless, complex and difficult. We clearly have much work to do in order to achieve the objective, which I strongly endorse, of completing the new Convention before the end of the year. I would like to comment on four particular issues.

First, the most difficult and complex of all, trade. I was closely involved in the discussions on this at the last Ministerial meeting in Dakar in February. I look forward to resuming the talks tomorrow. The bottom line for me is that there can be no question of ACP countries suffering a reduction in their access to the EU market after nearly 30 years of Lomé preferences. The new Convention needs to give a binding commitment on this. This objective can be met by the proposal for regional economic partnership agreements included in the EU’s mandate. Where countries and regions feel it is in their best interests to negotiate such an agreement with the EU, all well and good. But there can be no question of forcing them to do so and it is clear this is not a practical option for all. So there will have to be alternatives, which also maintain market access in a way compatible with the obligations we all have under the World Trade Organisation.

Second, rationalising the instruments of development co-operation under the new Convention is very important for all of us in the EU. We have listened carefully to the points the ACP have made about Stabex and Sysmin. We entirely agree – and our mandate says so – that the new Convention should provide for additional support to countries facing exceptional fluctuations in export earnings from basic products. But the idea that maintaining Stabex and Sysmin as separate instruments, with a separate pot of money, increases the total resources available to the ACP under the Convention is misconceived. If anything, the opposite is true: lots of different instruments, of varying effectiveness, makes it harder rather than easier to justify new contributions to the European Development Fund. The question is always, will the money be better spent directly by member states or through the EDF. The EDF money is not additional. If the instruments of the EDF are ineffective it is obviously better spent directly by member states

Third, I attach great importance to the proposals the Commission has brought forward on rolling programming and introducing a performance element into resource allocation. There is overwhelming evidence that aid can only be effective in reducing poverty when the benefiting country is pursuing economic and social policies that prioritise poverty reduction. In other circumstances, aid is simply wasted. Donors committed to poverty reduction are ensuring that reforming countries that prioritise poverty reduction receive a greater share of aid resources. Clearly, the Community should follow the same approach.

Fourth, I have been following carefully the debate on whether good government should become an essential element in the new Convention. We all agree that democratic principles, the rule of law and human rights should be essential elements, the breaching of which should leave a country liable to a loss of benefits under the Convention. We all agree too that promoting effective government should be enshrined as a principle and objective of the new Convention. The ACP argue that most elements of good government are already captured in the existing essential elements. This includes corruption, since corruption is of course contrary to the rule of law in all our countries. Perhaps it is the case that other elements of effective government – for example those relating to efficient and well organised systems of public administration – are best addressed through capacity building rather than sanctions. We need to listen carefully to all the arguments before reaching final decisions on this.

In conclusion, we in Europe have a unique opportunity over the next six to twelve months radically to improve the contribution the EU makes to international development, especially in meeting the international development targets we have all signed up to.

The formation of the new Commission is an opportunity that we must not let slip. The arrival of two Commissioners who have been development Ministers, responsible for external relations and for development, brings the real prospect of a renewed determination to harness the European Union to the cause of eliminating world poverty.

That requires a step change to a new level of effectiveness. I want to see the EC at the heart of a collective effort in developing countries, not adding to the plethora of different agencies pursuing different objectives. I want to live in a Europe where member states are pleased that the EC is using their resources for development, because it adds to our national effort rather than duplicating less effectively. I want to hear the EC praised for its speed and efficiency, not criticised for delay and bureaucracy. I want to be confident that the quality of all the EC’s programmes will be lifted up to the standards of its best ones.

The task for the new Commission, for EU governments, for the European Parliament, for all of us, is to make this happen.

The task is a big one. But the prize is very great.

A stronger, more effective European development effort can help secure a massive advance in poverty reduction and development, and underpin a more stable and secure world in the new century.

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