Press conference by EUROPEAN UNION ON DEVELOPMENT FINANCING

 

In an “unprecedented decision”, Member States of the European Union had committed themselves to bring their levels of official development aid to 0.56 per cent of their national wealth by 2010, and to 0.7 per cent by 2015, Jean-Louis Schiltz, Minister for Development Cooperation and Humanitarian Affairs of Luxembourg told correspondents today during a press conference at Headquarters.  Louis Michel, European Commissioner for Development and Humanitarian Aid, and Peter Mandelson, European Commissioner for Trade, also participated.

Those were not promises, Mr. Schiltz, stressed, but commitments.  He said that official development assistance (ODA) was the principal source of external financing for developing countries.  As President of the European Union (EU) over the last six months, Luxembourg’s main objective had been to get new ODA commitments for EU Member States.  On 21 May, Development Ministers had made that decision to make a major contribution to the upcoming September Summit and meeting the Millennium Development Goals.

Today, the European Union’s ODA represented more than 55 per cent of the worldwide ODA, and stood at 46 billion euros a year.  In 2010, its ODA would reach 66 billion euros yearly, an increase of 20 billion euros or more a year until 2015.  Four countries were already above the 0.7 level, Luxembourg among them.  Now other countries had set, for the first time, a clear time table to reach that target.  It was simply unacceptable that in 2005 people still died of hunger, especially in Africa.  It was the EU’s objective to eradicate poverty.  The European decision might be an inspiration for other nations to devote similar shares of their national wealth to development.  The level of 0.7 was not a goal in itself, however; the challenge was to eradicate poverty worldwide.

Mr. Michel, European Commissioner for Development and Humanitarian Aid, said the international community could do more regarding financing for development.  The EU had shown the path and had, thereby, acquired a leadership role in the global development community.  Although the amount of aid was important, the quality of aid was equally important.  The EU was, therefore, also planning to undertake serious efforts in the area of coordination, consistency and harmonization of various policies. 

He stressed the importance of providing more budgetary aid than project-specific aid.  Budgetary aid allowed for supporting consistent policies and for ensuring ownership of projects by national entities, he said.  He wanted to ensure that budgetary aid was more predictable for countries that met a certain set of criteria.  Those who applied good governance deserved a better incentive.  He hoped other donors would follow the EU’s example.  There was a need to provide aid more effectively, more efficiently and more rapidly than in the past. 

“If aid is the fuel of economic growth and development, then trade is its engine”, Mr. Mandelson, European Commissioner for Trade, said.  Trade should be at the service of development.  It was the third leg in the development triad, along with development assistance and debt relief.  Today’s meeting at the United Nations was the first stop before the Gleneagles G-8 summit next week, followed by the September Summit in New York and the event [WTO Ministerial Meeting] in Hong Kong in December.  The year 2005 could, therefore, be a breakthrough year in poverty reduction. 

He said there was a need to cooperate better not only with developing countries, but also with the international financial institutions, such as the IMF and the World Bank.  Those institutions had a very important role to play in implementing the Doha Round.  Trade brought its own changes.  It was not easy to adjust to and use the opportunities offered by trade liberalization.  There was a constant need to look at how inevitable and necessary reforms impacted the economies of some very needy and vulnerable economies.  In close cooperation with the international financial institutions, it must be ensured that what was inevitable and necessary was also universally beneficial. 

Given the recent crisis in Europe, was the United Nations facing a similar division among its members at the upcoming September Summit? a correspondent asked.

Mr. Michel said that the decision to increase ODA among the Union’s 25 members was a serious commitment.  To a certain extent it was a response to the problems the Union had encountered.  It also proved that European institutions were far stronger than one might have imagined and that they were capable of absorbing the aftershock of the crisis.  It was quite natural for such crises to occur.  Europe brought together 25 Member States.  That meant reaching agreement among 25 different countries and cultures.  While Europe was an excellent multilateral machine that ran smoothly, occasionally there were some “hiccups”.  The political decision taken showed that Europe was still able to rise to the occasion.  Europe would be unanimous when it met in September in New York.  Europe had already outlined its position for 2010, stating that it would add an additional 20 billion euros per year.  That spoke for itself.  There was no multilateral organization with 25 members that could spontaneously be in a position to take decisions without there being differences or conflicts.  That was its very added value.

Mr. Mandelson noted that the strength of European institutions, as well as their growing role internationally, was demonstrated by the influential role the Union was playing in taking forward United Nations reform and in preparing for the September Summit.  The Union was also showing responsibility in other international forums and on other international issues.  He believed that the Union was perfectly capable of demonstrating at the Doha Round the same leadership it had to date, despite what was going on in its own institutional backyard.  What the Union said and did marked it out as leaders in the field of trade and development. 

He added that no developed economy or set of developed nations operated such progressive and enlightened schemes as “Everything but Arms”, which gave the least developed countries tariff and quota-free access to European markets.  The Union would continue to work hard in the Doha Round to make it a genuinely pro-poor round.  It would work to ensure not only that North-South trading opportunities were opened, but also that the scope for South-South trade was fully realized.  Trade was one thing.  Increasing the capacity of developing countries, particularly the least developed countries, in those trade opportunities was another.  That was why he believed “aid for trade” was so important.

The position of the Union for the September Summit had been decided upon, Mr. Schiltz said.  The Union provided 55 per cent of global ODA.  The decision to raise its contribution to 0.7 per cent by 2015 had already been taken.  The Union was working on other issues as well.  At its spring summit, the Union had refocused on the Lisbon policy for growth and employment.  The Union had also undergone reform in the area of financing.  He was quite confident that the results of the referendum in Luxembourg, on 10 July, would be positive, giving new impetus to Europe and marking the beginning of new positive era for the European Union.

A correspondent then asked the panel to comment on a recent statement by the Head of the United States Agency for International Development that rich donor countries were focusing too much on getting more money and not enough on the other half of the Monterrey bargain, namely, the need to promote good governance.  He had also said that looking at the figures, the United States by this year had more than doubled aid since 2000 and that if the United States were to meet 0.7 per cent -- that would amount to $91 billion -- which the aid community could not absorb.

Mr. Schiltz said he was hopeful that other wealthy nations or group of nations could draw inspiration from the Union’s decision.  More aid was a necessary condition for meeting the Millennium Development Goals in 2015, although it was not a sufficient condition.  Quality of aid was also important.  The Organisation for Economic Cooperation and Development (OECD) countries had made serious progress at the Paris high-level forum in early March.  One of the other pillars of an efficient and Millennium Goal-oriented poverty-reduction strategy was the fact that developing countries had to take development in their hands.  The Goals were about halving poverty by 2015.  Eradicating poverty, however, would require more money.

Asked to comment on the French proposal for a tax on airline tickets, Mr. Schiltz said the matter had to do with innovate mechanisms for financing, the two most promising of which were the airline levy and the International Financial Facility, which was being promoted by the United Kingdom.  On a general front, the Union was favourably looking into these innovate financing mechanisms.

What was the European Union doing to cooperate more closely with Latin American countries such as Brazil? a correspondent asked.

Mr. Mandelson said the Union was committed to President Lula’s concern with poverty and hunger.  The Union shared the values that underpinned that campaign.  The President had been effective and successful in building an international coalition of support, placing at the centre of the international community’s agenda those very challenging subjects.  The Union had worked with Brazil as a key partner in the Doha Trade Round with those objectives in mind.  He paid tribute to the way in which Brazil had worked to raise the profile of those issues and looked forward to working with them on those issues in the future.

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