MONTERREY PRESS CONFERENCE BY EUROPEAN UNION

Poul Nielson, European Commissioner for Development and Humanitarian Aid, European Union (EU), announced an increase in EU official development assistance (ODA) to 0.39 per cent of gross national product (GNP) -- from the current

0.33 level -- which would translate into an extra $7 billion in aid per year from EU member States by 2006.  

The new EU level of 0.39 per was not the end of the story, he stressed, as the 0.7 per cent target was still the goal to which the Union was committed.  The recent decision meant that those Union members that were presently below the average level of 0.33 per cent of GNP would reach that level by 2006, at the latest.

On the most modest assumption, that new figure would mean that aid from EU member States would increase by an extra $7 billion per year by 2006.  When that amount was accumulated for the period between now and 2006, some extra $20 billion would be made available from the Union.

He welcomed the Monterrey consensus, which he felt was a balanced platform from which new ideas could be launched.  It was necessary to have real and tangible results in Monterrey, which would lead the way to Johannesburg.  A progressive outcome in Monterrey confirming global cooperation was the best way to create a basis for success in Johannesburg.  “If we don’t deliver now this week, we risk an unproductive and unclear focus in Johannesburg.”

He hoped the current week would be a turning point in the effort to fight poverty.  Never before had there been such a broadly agreed consensus on what constituted good development policy. 

As it was felt that there was more to be gained from an in-depth analysis of global public goods, Commissioner Nielson also proposed, from the European side, the establishment of a task force to study its implications for financing for development.

Responding to a question, he noted that the total level of aid from the

15 member States of the European Union amounted to around $25 billion compared to $9.6 billion from the United States.  There was room for contributions from everyone and there was no need for comparisons, he said.  Every country could improve in the area of development assistance.  “That is why we are here this week.”

Asked if giving grants versus loans would “break the World Bank”, he replied that it depended on the shareholders of the Bank.  It was clear that the limiting factor at any replenishment negotiations had been the level of contribution available from the United States.  The shareholders of the Bank would have to discuss that issue.  It was evident that, without additional funding, a change in the direction of grants would lead to dire consequences for the Bank.

On whether the European Union was planning to increase its foreign direct investment in Latin America, he said that the issue was one to be decided on by businesses and not governments.  In 1998, the EU share of all private flows to developing countries was 56 per cent.  In 2000, that figure was 69 per cent.  The problem was that only a very small share of global foreign direct investment went to the poorest countries.  Something had to be done about that, he stressed.