Donor harmonisation and the EU

In risk of a two-speed Europe

Coordinated action depends on more than only pooling of information. A joint agenda, a division of tasks and adequate individual performance have to follow suit. In the arena of EU Development Cooperation, this sequence is not yet well applied. Ultimately, further improvement of EU aid effectiveness is not a technical matter of harmonisation procedures and systems, but a political quest to further European integration. EU coordination should not be regarded as an end in itself. It is the means to achieve more complementary and coherent EU policy.

[ By Paul Engel and Niels Keijzer ]

The Compact Oxford English Dictionary defines the process of coordination as “the ability to move different parts of the body smoothly and at the same time”. Quite obviously, that is not yet an EU forte. Deficits in its development cooperation were noted as early as 1969 by the Pearson Commission and again, in 1980, by the Brandt Commission. In the Dutch town of Maastricht in 1992, European heads of state and government (European Council) finally agreed on a legal obligation to coordinate their efforts in this field.

The Maastricht Treaty emphasises “Three Cs”: coordination, coherence and complementarity. European governments and their agencies are told not only to coordinate their activities, but also to ensure that their sum makes sense and fits in well with policymaking in other fields (such as trade or security, for example).

While several initiatives were taken in the first years after the Maastricht Treaty (see page 62), the process of coordinating EU development efforts really picked up momentum after the turn of the Millennium. To take one case, some member states and the Commission gradually took a more pro-active approach to enhance “Policy Coherence for Development” (PCD). From 2003 to 2005, six successive EU presidencies pushed the matter, culminating in 12 specific PCD commitments adopted in May 2005. By 2006, a large majority of 25 EU members had accepted PCD as a policy objective, and more than half had made practical adjustments to their institutional architecture.

Efforts towards better coordination did not slow down after expansion of the EU, to 25 members first and even 27 members today. In November 2005, the EU passed the “European Consensus on Development”, which for the first time identified a framework of common principles for the member states and the Commission in this policy field.

Code of conduct

Last May, the EU adopted “The code of conduct on division of labour” in development cooperation. It is considered one of the main achievements of the German presidency in the development field. It can also be seen as a document that exemplifies difficulties of EU decisionmaking, with different parts of the document having been adopted at different times.

On the one hand, the code emphasises a gradual approach, expressly mentioning its “voluntary, flexible and self-policing” nature. On the other hand, it states that the member states and the Commission “will start to use the code of conduct immediately and in all developing countries in a pragmatic way”.

The code lists eleven key principles to guide EU development efforts (see box 2). The best known is probably the commitment for each member state and the Commission to focus on supporting only three sectors per developing country, and the related commitment to limit the number of EU actors involved in any single sector to a maximum of five. The document has met with criticism. For instance, it was pointed out that the code lacks a precise definition of “sector”. According to some, implementation may even result in “sector orphans” as EU donors could all crowd into easy sectors.

More fundamentally, there is increasing concern about the frictions between donor harmonisation on the one hand, and alignment with target country’s development priorities on the other. Such frictions directly affect those countries’ capacity to assume responsibility and leadership (“ownership”) in policymaking, in order to reap maximum benefits from aid.

Moreover, it seems that EU members and the European Commission (EC) are not able to agree on areas of comparative advantage. The list of the EC’s areas of comparative advantage mentioned in the Consensus seems relatively all-encompassing, and member state’s aid agencies can easily face a newly “created” comparative advantage, should their parliament decide that they have one.

On the other hand, it would be cynical to deny that the EU is making progress at all. There are indications that EU coordination is indeed improving. It is promising that procedures have been changed to allow for member states and the Commission to co-finance development programmes. Moreover, member states such as Sweden, Germany and the Netherlands, have begun to reduce the number of countries they do development cooperation with. Finally, the OECD’s Paris Declaration on Aid Effectiveness of 2005 and the various EU documents on the matter are inter-related, and these agreements mutually reinforce one another.

The global policy context is changing too. In the 1990s, aid volumes were going down. That trend has been reversed, and the EU has prominently pledged to scale up aid to 0.7 % of GDP by 2015. Boosting aid to that level will certainly require more and better coordination, because staff-levels are not expected to keep pace.

At the same time, the world economy’s emerging giants are becoming more active in development matters. These “new” donors do not yet take part in the OECD’s Paris agenda, and by challenging the role of the “conventional” donors, they are providing incentives for the EU to get its act together.

In September last year, during the Portuguese presidency, the EU published its first biennial report on efforts to promote PCD. The report generated some debate, and the Commission recently launched a public consultation to keep the matter on the radar of policy debate this year.

Joint evaluations

All summed up, however, it remains very difficult to precisely assess the quality of EU coordination in development affairs. There is no clearly defined baseline. While the “Baseline Survey” undertaken in the context of the OECD’s Paris Declaration goes some way in this respect, its operational usefulness is compromised by the lack of agreement among OECD donors on the definitions of key indicators and the way they are reported.

As early as October 2000, a joint evaluation programme was launched by EUHES, the EU heads of evaluations services in the area of development. This approach involves the evaluation services of the member states and of the Commission. The initial idea was to check what progress had been made on the Three Cs since Maastricht. In 2000, the step marked a shared, multi-year commitment, and it boosted cooperation among the various evaluation bodies involved.

Joint evaluations undertaken in this context offer some interesting clues to assessing the EU’s actual coordination performance. In February 2007, the EUHES secretariat invited the European Centre for Development Policy Management (ECDPM) to draw up a synthesis paper of the evaluations, with the goal of communicating the evaluation results to European policymakers.

Four main findings emerged:
– At the level of agency headquarters, coordination efforts among EU donors have increased. It must be stressed, however, that institutional coordination is not an end in itself. Rather, it is a means to improve the other two Cs (coherence and complementarity). The empirical data, nonetheless, reveal that coordination efforts often did not go beyond ex-post exchange of information and documents, often once decisions were already made. This is certainly not enough to achieve coherence and complementarity. Accordingly, the efficiency and impact of EU efforts often remain suboptimal, for instance in humanitarian aid.
– At the level of the target countries, constraints seem to outnumber incentives in the quest for more EU coordination and complementarity. Reasons include that some decisions are made not locally, but at the headquarter level in European member states or in Brussels. Mandates, moreover, tend to be unclear, and the quality and timing of information exchange are often poor. Coordination mechanisms so far do not lead to joint assessments or even joint decision-making at the local level, binding all parties involved.
– The evaluations also highlight that EU members do not agree on what complementarity means precisely, and what it requires in practice. There is an over-emphasis on exchange of information and views, and this thwarts the quest for better results, while increasing transaction costs nonetheless.
– Member states and the Commission are involved in designing and implementing more flexible and joint planning arrangements. Such schemes are likely to improve matters significantly. Some of these arrangements involve non-EU donors. Promising models should be shared widely to stimulate further development.

On the basis of these and other findings, four recommendations were made to improve EU coordination processes:
– A major harmonisation drive would help the EU and its members to rise to day-to-day coordination challenges.
– Further political and operational guidance is required in terms of managing EU coordination in practice.
– Good practices, such as those described in the evaluations, should be further shared.
– It is advisable to boost EU research and training facilities in order to support coordination efforts with knowledge and analyses.

The way forward

Last June, the synthesis paper was presented to the EU Council Working Party on Development Cooperation (CODEV), which involves representatives of the member states and the Commission. CODEV next drew conclusions, which were endorsed by the EU General Affairs and External Relations Council, the EU’s top decisionmaking body in foreign affairs, in November. In the Council Conclusions, all member states and the Commission were invited to make further proposals on how to implement Maastricht’s Three Cs.

Recent debate at the EU level, however, indicates that there are differences of opinion on how much progress the EU should make with regard to coordination and division of labour in the short and medium term, especially in view of the 3rd High Level Forum on Aid Effectiveness, which will be held in Accra in September this year. The inner-EU controversy is about more than merely technical aspects. In spite of treaty obligations to further integrate development efforts, doing so is obviously very difficult.

At the level of individual developing countries, there is an obvious tendency for EU governments to cooperate closely with like-minded member states and other donors, rather than work within an all-EU framework. This is not surprising, as such working relations with like-minded donors are well-established. However, that practice is not necessarily healthy. How many “coalitions of the willing” can we expect? The donor landscape is becoming increasingly crowded, which is problematic in its own right. The EU should aim to reduce complications in aid delivery, not to increase them.

Progress on coordination will also depend on the priorities of the next EU Presidencies. It remains to be seen whether EU members are really willing to upscale EU coordinated efforts to development, or whether the propensity to act individually or in like-minded groups will prevail – both at the headquarter level in Europe and at the field level in developing countries. A “Europe of two speeds” – or even more speeds – may yet emerge in the development arena, to the detriment of both the EU’s coherence and visibility in the developing world and the effectiveness of its efforts.

In December, the Lisbon Treaty took a step in the right direction, by stressing the explicit goal of “complementarity and efficiency of Union action” in the context of EU coordination of development cooperation. In practice, however, the EU will have to move beyond merely exchanging information for attaining this goal. It is thus obvious that the EU’s quest to ensure that its collective value in development cooperation exceeds the sum of its individual parts is essentially not a technical quest of procedures and systems, but mostly a political quest to further European integration.

A few months before the Maastricht Treaty was signed in 1992, the European Commission completed a detailed Communication to the Council and the Parliament. The title was “Development-cooperation policy in the run-up to 2000”. The document included the demand to move “away from national cooperation policies towards joint cooperation strategy”. It even called for a “common development policy”.

The Council, however, did not adopt that proposal, and the Maastricht Treaty consequently identified development cooperation as a “shared competence” of the member states and the Commission. Nonetheless, the treaty did spell out the “Three Cs” of coordination, coherence and complementarity in development affairs. The European Commission was given the right of initiative, as well as the responsibility for elaborating strategies and implementing EU policy.

Such strategies and policy decisions are adopted through resolutions (“conclusions”) of the EU General Affairs and External Relations Council (GAERC), which is composed of a minister from each member state. The GAERC takes the final decisions on all issues relating to external relations, including development co-operation.

It is noteworthy that various initiatives to improve EU coordination in the development field were undertaken in the years after Maastricht. What became apparent, however, is that most progress was made on policy principles, not in practice.

Moreover, the member states tended to leave the initiative primarily to the Commission. Only a few member governments were willing to push hard to implement the “Three Cs” of the Maastricht Treaty.
The GAERC passed several decisions on strengthening coordination in those years. The most important document was probably an EC Communication in 1999 on “Complementarity between Community and Member State Policies on Development Cooperation”, which, among other things, stressed comparative advantages of the Commission. In 2001, the
Council adopted guidelines with the purpose of “strengthening operational coordination between the Community and the Member States in the field of external aid”. In both cases, it was acknowledged that the target countries should be in the driver’s seat. (pe/nk)

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