Open Europe briefing: Less than half of the EU's external aid goes to the world's poorest countries

London, (PresseBox) - Open Europe has today published the first in a series of two briefings looking at the EU's external aid spending. The UK Government has recently reviewed its aid funding in light of the challenges facing the country's finances, seeking to ensure that UK taxpayers get value for money from every penny spent.

With the world facing social and political upheaval, from Bahrain to the Ivory Coast, it is essential that the spotlight is turned on the aid efforts of the international community, including the EU's €12bn annual external aid budget.

Open Europe's report looks at how much the EU spends and where, identifying five key problem areas with EU aid. These include a lack of poverty focus, with only 46% of EU aid reaching lower income countries compared with 74% of UK aid. EU aid is also subject to unnecessary administration and transaction costs, with money being recycled between national governments, the EU and other international bodies, such as the United Nations or World Bank, up to three times before it reaches those in need.

Open Europe will publish its second briefing on EU aid, specifically looking at the effectiveness of EU aid in North Africa, in the next two weeks.

Open Europe Research Director Stephen Booth said:

"While development aid can have a real impact, the EU's aid budget suffers from poor accountability, unnecessary bureaucracy and, most critically, less than half the money spent actually goes to the world's poorest people. Old colonial links and regional proximity, rather than fighting global poverty, continue to determine the destination of most EU aid."

"There's no conclusive evidence that the EU adds value to national aid programmes that are already performing relatively well, such as the UK's aid spending. National contributions to the EU aid budget should be made voluntary with the Commission primarily playing a coordinating role, encouraging best practice and coherent policies among member states."

"At a time when funds are tight it is vital that national governments get value for money from their aid spending. Unfortunately, when it comes to accountability, money spent via Brussels too often falls into a black hole between member states and the European Commission."

Please click here to read Open Europe's briefing: http://www.openeurope.org.uk/research/euaid2011.pdf

Key Points:

- The UK currently contributes £1,424m to EU external aid spending, around 18% of the UK's £7,767m total aid budget. The UK Government has said that its recent "plans to redraw the aid map will concentrate efforts on countries where UK aid will, pound for pound, achieve the best results in fighting poverty and building a safer world." This redrawing of the map must also include EU aid.

- Money spent as EU aid continues to be poorly targeted at tackling poverty. Only 46% of EU aid reached lower income countries in 2009, compared with 74% of UK aid and 58% of EU member state governments' aid.

- Geographical proximity and ties with former colonies continue to determine the destination of much of the Commission's foreign aid. From 2000-2009, developing European countries received $10.49 per capita, while Sub-Saharan Africa received only $3.94 per capita. Turkey was the top recipient of EU aid in 2009 and other European neighbours Kosovo and Serbia were also in the top ten recipients.

- EU aid, which is managed by the European Commission, currently has administration costs of 5.4%, which are higher than the UK's Department for International Development's (DFID) costs of 4%, and the UK Government's target of reducing these to 2% by 2014-15. Some EU aid streams, such as the programme for African, Caribbean and Pacific countries, have administration costs as high as 8.6% - above the ceiling the UK imposes when giving grants to NGOs.

- €1.4bn or 10% of EU aid is needlessly passed on to other multilateral donors every year, such as the UN and World Bank. This money is simply being recycled between donors - up to three times in some cases - before it reaches a recipient country and is subject to unnecessary administration and transaction costs. In 2009, the Commission also agreed to 'delegate' €242.7m worth of aid spending back to the EU's national governments, which begs the question why the money was ever given to the EU by member states in the first place.

- EU aid is too often not aligned with other EU policies. For example, in 2008, the Commission established a migration centre in Mali to provide support to migrants seeking temporary jobs in the EU. However, with only Spain having signed a migration agreement with Mali, the €10m centre has helped only six Malians find work in Europe, although the centre also served as an information and education hub.

- The EU's current drive to transfer up to 50% of its aid directly to recipient governments' treasuries, through 'budget support', rather than pre-agreed projects means that the EU risks donating money directly to discredited or illegitimate regimes.

- While budget support does offer benefits, such as better alignment of aid with recipient countries' national policies, the EU often lacks the proper controls and monitoring to ensure money is not wasted or lost to corruption. The huge focus on budget support risks an overreliance on an unproven development policy.

- Some aid funding does not even leave the EU, or even Brussels. In 2009 alone, the EU granted a Brussels-based communications agency nearly €500,000 to produce various promotional brochures and campaigns. This included €90,000 to co-ordinate an "I fight poverty" music contest amongst young people in Europe, to increase "development awareness". However, Open Europe also highlights examples of EU aid well spent, which could be built on in the future, where the link between aid and performance has been strong.

Conclusions and recommendations:

1. Despite improvements the EU's 'value added' remains unclear.

2. Contributions to the EU aid budget should be voluntary which would drive better performance and accountability.

3. The EU's role should be more geared towards facilitating the co-ordination and division of labour.

4. The EU needs to avoid overreliance on budget support for delivering its aid.

5. Aid is not the only way to foster development - the EU needs to be more open to trade and remove internal subsidies, which are particularly damaging to farmers, among others, in the developing world.

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