Andrew Sherriff co-authored this article.
As EU budget negotiations are moving to the concluding phase (Figure 1), the ultimate outcome for development and EU external action spending is still unknown. Clarity on key questions, such as an indication of the amount of development funding available, remain clouded by the impasse and posturing in the wider negotiations. The Cyprus EU Presidency, in its role as “honest broker”, is currently lowering expectations, by saying that if agreement cannot be found on the overall level of the EU budget then all elements inside and outside the budget “will have to be adjusted downwards”.
This dynamic has moved the major contest from the overall size of the budget to member-states and groups trying to protect certain components or ‘headings’ of the budget. For instance, the ‘Friends of Cohesion’ group, led by Slovakian Prime Minister Robert Fico, is trying to protect the large part of the budget that the EU spends internally for “less developed countries and regions [within the EU] to catch-up”. The financing of Heading IV “Global Europe” which covers development funding is not the focus of discussions, only because the amounts involved are not as large or central to the interests of key EU member-states Yet if the budget is to be agreed then Heading IV and the 11th European Development Fund (EDF) – another source of development funding that is outside the regular budget – are unlikely to escape unscathed. Reports confirm that some member-states already plan to cut their EDF contributions. Budget talks might be further impeded by a potential €10bn request by the Commission to make up for shortfalls in the current budget.
Possible financial scenarios
As negotiations stand now there are different scenarios that could occur in terms of the financial impact on development (Figure 2).
An optimistic scenario is either that the overall budget remains intact or that Heading IV and 11th EDF remain unaltered from the Commission proposal, even if other areas of the EU budget would be cut. Only a strong and robust defence would persuade member-states to keep development related spending at the level of the Commission’s proposal. At present it is not clear if there is a real ‘Friends of Development’ or ‘Friends of EU External Action’ group amongst the most influential member states ready to mount such a robust defence in the final negotiating process. This is amplified by the fact that those member-states with the strongest record of ODA contributions, such as the United Kingdom, Sweden and the Netherlands, are at the same time also the net contributors to the EU budget who are advocating for a cut in the level of the MFF. Any ‘Friends of Development’ group has to be convinced both of the value of development spending, and of it going through the EU institutions.
A second scenario would see very limited almost tokenistic cuts of around 3%. This approach would illustrate that areas of EU spending are not immune from cuts while protecting development from an even larger loss of resources. Though, for those working in development, cuts of around €2.1 billions in the Development Cooperation Instrument and €1.02 billion for the 11th EDF may not seem so tokenistic.
A more likely scenario is that the Member states decide to cut development or EU external action spending proportionally to the overall cuts to the budget total. Some states originally proposed a “zero growth” scenario that proposes between €25.457 billion and €29.7 billion for the EDF, as opposed to the €34.275 billion proposed by the Commission.
The worst-case scenario for development is that the EDF and development related instruments inside the budget take a disproportionate “hit”. While the “dent” in bringing down the size of the overall EU budget would be small given that development related spending is not a large ‘heading’, the consequences for the credibility of development and EU external action would be significant.
While there is still time and some scope to ‘defend’ development spending in the EU budget, behind closed doors of the EU institutions, some already discuss possible consequences of cuts. There are different levels of impact where possible cuts will affect development cooperation. Firstly, at the level of each financial instrument, which are separated into geographic and thematic instruments, and the EDF; secondly at the level of special programmes, such as the Pan African Programme and thirdly at the level of actual programming such as country allocations. In its new development policy, the ‘Agenda for Change’, the EU proposed to concentrate its spending on countries it perceives as ‘most in need’ and on areas where the EU interventions can have the highest impact. Cuts could therefore bring policy choices for differentiation into sharper contrast.
As the figure below shows, October is expected to be a decisive month: not only will the European Parliament vote on the Commission’s proposal for the EU budget (consent is needed for the final adoption), but also the Presidency affirmed to publish the all-decisive revised negotiation box at the end of the month, including concrete numbers for the first time. This negotiation box will prepare the ground for a compromise Member States need to reach at the extraordinary summit on 22-23 November, which is entirely devoted to this purpose, since it appears that only the highest political level could break the impasse on the budget.
The EU can certainly do a lot for development beyond aid. As ECDPM has articulated on numerous occasions, examples can be seen in its trade and other policies areas. Yet many contend that European aid has made a difference already and that when the general public is engaged and the real impact is demonstrated it is supportive. At the same time, with this public support would have the potential to achieve even more. Certainly there is room for both improvement in focus and results and the communication of results for EU development assistance. Generally, however recent Eurobarometer results show that Europeans would support an increase in aid for developing countries. Yet if EU development spending is to be protected in the EU budget a strong “Friends of Development” group needs to be active to influence outcomes from now to the very final moments of the negotiations.
Andrew Sherriff, who co-athored this article, is Head of Programme EU External Action.
This blog post features the authors’ personal views and does not represent the view of ECDPM.