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EU development aid saves lives – and strong safeguards protect against financial risk

January 20th, 2016
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Rating: 4.1/5 (16 votes cast)

Summary
EU development aid projects save lives in some of the world’s poorest and often war-torn countries. They inevitably involve some financial risk. But the vast majority of projects deliver good results. Recent press reports suggesting billions of pounds have been wasted and that “Brussels” is asking EU member states for extra cash to finance ongoing projects do not reflect the facts or the evidence.

How EU development aid works and what it does

EU development aid saves lives and makes a huge positive difference to many more. For example, it helps children get lifesaving healthcare in the poorest parts of the world. It gives tens of millions of people access to safe drinking water. Since 2004, more than 18 million children have been immunised against measles, 13.7 million new pupils joined primary education, and 7.5 million births were attended by skilled health personnel.

The coordination of aid at EU level, whether directly through the EU budget or by mechanisms for coordinating national spending, creates economies of scale, avoids duplication and ensures more support gets to people who desperately need it.

In addition, it helps reduce the incentive for economic migration.

Media claims

Yet some UK media has a tendency to dismiss this as wasted money, or money that could be better spent at home, or by member states acting alone.

Most recently, on 17 January the Sunday Times reported that “£11.5bn EU aid has been lost due to incompetence and graft”.

It went on to say that this is due to “Eurocrats’ poor management, corruption in recipient countries and the misappropriation of funds” and to claim that “half of the money the EU spends on development aid is for projects that are either significantly delayed or fail to achieve their objectives.”

On 20 January, the Times took up the baton, claiming: “Billions missing after EU embassies run up aid bills” and alleging that the EU is asking Britain for additional £1.8bn.

The facts

The EU takes any wrongdoing seriously. Auditors’ findings and recommendations to further strengthen the EU finances are addressed immediately.

On this occasion, the newspapers’ claims are based on a report compiled by an individual MEP – not an analysis representing the views of the European Parliament as a whole.

Her report is in turn based on her reading of reports by EU Delegations – EU offices in non-EU countries, which help oversee aid delivery.

Those reports are intended to identify potential problems at an early stage, so that things can be put right in time.

So what the Sunday Times is actually highlighting is not waste but stringent measures to avoid it!

There is no question of £11.5bn being lost or of every second Euro spent on development aid not achieving what it should.

The claim that the EU is asking British taxpayers for £1.8bn to pay bills for EU aid projects is also wrong.

The reports represent an accounting “snapshot” for each Delegation at the end of a given year.

Figures can differ significantly from one year to another – as a result of an emergency, for example, or a low level of payment in a specific year.

It takes time to implement development projects, four years on average. So if an EU delegation commits in 2016 to spend say €1m on a project, that commitment might show up all in one go but the relevant payments may be spread over several years – and several annual EU budgets.

Member States are not being asked to pay more than either the ceilings they set themselves in fixing the EU’s seven-year budget framework – known as the Multiannual Financial Framework (MFF) – or the amounts they have agreed for development policy in the EU’s annual budgets.

The context – EU aid spending inevitably involves some risks

It is worth pointing out that most EU development assistance goes to the very poorest countries in the world, many of which have been affected by war and natural disasters –like Mali, Somalia or Haiti, to name but a few.

The objectives set in the projects and programmes supported by the EU are always deliberately ambitious.

But as the Commission, other international organisations such as the specialised and specifically mandated UN agencies, national governments and NGOs are all aware, running projects in the poorest developing countries does bear risks. War, natural disaster, limited administrative capacity of the local partners, remoteness and/or limited infrastructure can all affect results.

That is why the Commission builds in safeguards and applies them even if delay might result, as that is better than real waste. But the unavoidable risk attached to development projects in this environment is not a reason to do nothing and to allow people to suffer – and sometimes die – unnecessarily.

More background – specific points in the articles

The reports in question by EU Delegations refer to projects in progress. They do not measure the final results of projects.

Should there be any concerns on payments, the Commission can review the books, or ask auditors to do so, and withhold payments.

This early alert system in the Delegations’ reports can also trigger additional checks by independent external consultants who monitor whether a particular project is on track.

The Sunday Times also refers to two specific projects which it calls “controversial” and “failed” – one for solar power installations in the Comoro islands and a second one to combat corruption in Nigeria. Contrary to what the newspaper claims, both projects are up and running.

The signature of a grant agreement in the Comoro Islands was withheld until the Commission was satisfied with the reliability of the local partner and until the Comoro government raised the required co-funding. Furthermore, the technical specifications for the project were reviewed to take into account the latest advances in solar power technology and the development of the Comoros national electricity grid. The project started in 2014 and tenders for equipment and works are forecast for the first half of 2016. The end result will be more reliable and generate more renewable energy.

As for the project to combat corruption in Nigeria, the money was never intended to be managed by the government, but by an international organisation – The United Nations Office on Drugs and Crime. One of its main objectives is to empower civil society organisations to better hold the government into account. The project has been up and running since 2012. It underwent a major evaluation and audit in 2015 and there are no reports of financial mismanagement.

The term “reste à liquider” (RAL) mentioned by The Times (translated as “outstanding commitments”) is a phrase used in managing the EU budget to indicate the difference at a given point of time between funds committed to projects and the actual payments made. It applies to all EU programmes, not to EU development aid projects only, and stems from the multi-annual nature of the EU budget.

For all EU programmes – but even more so for development aid – the picture from one year to another may differ significantly, due to an emergency or natural disaster for example. At the end of 2014 the average implementation period for EU development aid projects was four years – which is within the rules. The situation in the Delegations in Vanuatu, Uzbekistan and Yemen (to which the Times article specifically refers) has significantly improved in 2015.

The Commissioner responsible, Neven Mimica, has responded directly on his blog here to the MEP’s report concerned.

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This post was published on 20 Jan 2016 and updated on 22 and 25 Jan to reflect further media coverage and to clarify further some points.

EU development aid saves lives - and strong safeguards protect against financial risk, 4.1 out of 5 based on 16 ratings

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