The reform of the European development cooperation is in progress. Its success depends partially on the constructive support of all institutional actors within the EU’s complex institutional system. This note, based on consultations with officials of the European Commission¹ and the European Parliament,² analyses the potential contribution of Member States in the implementation of the reform. After a short review of the main issues of the reform, essential steps of the reform process and actors involved in the implementation, an analysis is proposed on the current forms of cooperation between Member States and the Commission, and on future challenges for an improved complementarity.

Introduction

The Prodi Commission is undertaking important institutional reforms of European external assistance. The decision to undertake these reforms was made on 16 May 2000 within the framework of the wide-ranging administrative and financial reforms of the European Commission. Under the Treaties, the Commission is responsible for the management of external assistance, and thus for the reforms it has initiated in this area.

However, European development cooperation has become a complex and evolving system, comprising numerous political and institutional actors in the European Member States and the partner countries in the South. As is the case with bilateral cooperation, European development cooperation is going through a transitional phase, characterised by the merging to foreign policy and the focus on technical aid management. No single actor in the European cooperation system can take significant action on its own to contribute effectively to the transitional phase. This note examines the Member States’ contributions to the reform of European development cooperation.

1. The reform of European Development Cooperation

1.1 Issues and Questions

The new management system should improve the relevance, quality and impact of European cooperation, as well as its efficiency. Within the European Commission, the adaptation of management procedures will entail a profound transformation in the ways of doing things, in mentalities and in the institutional culture. It is therefore necessary to identify ways of measuring this transformation, other than by quantitative indicators, focusing on the levels of disbursements.

The reforms of the European Commission’s external assistance system are coinciding with the development of the Common Foreign and Security Policy, which formalises the Union’s political ambitions. The challenge here will be to preserve the specific development perspective while strengthening the foreign policy dimension.

Finally, the reform process opens new perspectives for interaction and cooperation between the Commission and Member States, most of them facing the similar issues in their bilateral cooperation. However, the inter-institutional relations are often tense and characterised by suspicion, reflecting the current political climate, critical about European integration.

1.2 The Main Steps in Implementing the Reform

In January 2001, the EuropeAid was set up, with responsibility for managing all external assistance, from the identification of programmes/projects to their evaluation. The Office will play a pivotal role in the reforms since it is charged with introducing new, harmonised and transparent management methods, responsibility for which will be progressively devolved closer to the ‘field’ as the autonomy of European Commission delegations increases. DG Development (DG DEV) and External Relations (DG RELEX), respectively, will be responsible for development cooperation policies with all partner countries (strategic orientation) and the political dimension of cooperation policy (policy dialogue).

The devolution of responsibilities to delegations is planned to take place in three phases. The first phase of the process (beginning at the end of 2001) will involve developing the administrative, financial and technical capacities at the level of 23 delegations. Due to their proximity to the beneficiaries in the partner countries, delegations will be better able to contribute to the relevance and efficiency of Community assistance. Devolution offers new opportunities for designing cooperation based on the demands of the partner countries.

In the second phase, institutional reorganisation will involve a two-pronged movement, both towards lower levels and the centralisation of operational services. The reorganisation will come about as the result of a number other changes. The redeployment of personnel (at Headquarters and within delegations) was initiated in 1999, and the previous system of delegating tasks to private sector organisations (technical assistance offices) has been questioned, and will be dismantled and rationalised over a four-year period. Finally, in the third phase, major modifications will be made to the system of financial management (control, allocation of financial responsibilities) and to the general financial regulation system (which dates from 1977).

2. The European Cooperation System

2.1 A Reform with Multiple Actors

Box 1: Roles of Different Actors in Implementing the Reforms of the European Cooperation System The European Commission is responsible for conceiving and implementing the reforms of the administrative and financial management systems, and for reorganising the institution. The European Parliament intervenes, along with the Council of Ministers, through the budgetary process. It allocates the working budgetary resources necessary for implementing the new management system (human resources, modifying financial regulations, defining thematic orientations within certain budget lines, etc.). Member States, through the Council, are involved in the reform process via their monitoring of its implementation (requesting progress reports, etc.), as well as at the level of necessary reforms of the committee system. The national parliaments also reflect national public opinions, and are applying pressure to improve the efficiency of European cooperation, which is financed by the contributions of European taxpayers. European society (NGOs, the private sector and trades unions) positions itself and intervenes at various levels, by lobbying at the European Parliament or through consultations proposed by the Commission.

2.2 Danger of Renationalisation?

• Community development cooperation is recognised by the Treaties, and is becoming an instrument of European Union foreign policy in which the credibility of Member States is also at stake (as shown by the Balkans, for example).
• Member States now actively support the concept and implementation of Community cooperation (project decisions, policy orientations by Member States for projects financed by the Community budget or the European Development Fund, EDF), through partnerships carried out by organisations, the private sector or networks of European citizens (e.g. trades unions).
• The sectoral approach and the need for coordination with partner countries are increasing the interdependence of various cooperation partners, including European countries (e.g. ‘basket funding’ or poverty reduction strategies, PRSPs).

3. Cooperation between Member States and the Commission

Since the introduction of European development cooperation under the Maastricht Treaty on European Union (1992), the Commission and the Council have clarified the objective of complementarity and its links with efficiency. The European development policy cooperation (November 2000) paved the way for sectoral or strategic complementarity, thus strengthening European cooperation.

3.1 Current Forms of Cooperation

Box 2: Examples of Cooperation between Member States and the Commission Common implementation: In Somalia, for example, Italy allocates funds through Commission programmes that are partially implemented by Italian NGOs. Assignment of experts: Member States assign experts to the Commission or to their delegations. The establishment of a pool of European expertise could be considered in response to the demands for greater efficiency in European cooperation. Co-financing or parallel financing. The implementation of joint co-financing remains difficult (due to the complexity of tendering procedures and financial controls), but there are examples of European funds being made available to Member States’ programmes. In Uganda, for example, the Commission contributes to Denmark’s human rights programme, which is subject to Danish financial controls. Common participation or ‘basket funding’. Within the framework of budget support and the sectoral approach, the question of co-financing does not arise at the bilateral level, but applies to the group of funding partners who adopt common rules for monitoring and evaluating the use of funds. The partner country plays a crucial role in the coordination. Sectoral implementation. The idea that European donors should identify sectoral ‘lead agencies’ has been discussed during the debates on operational coordination. Such coordination is defined in the ‘donor matrix’ during the establishment of country strategies.

3.2 Future Roles and Challenges

Complementarity at the political level: the Council

The Council of European development ministers (the ‘Development Council’) recently decided to focus Community cooperation on priority sectors in each partner country. In other sectors, the Commission would contribute co-financing for the programmes of Member States and other donors. The implementation of such schemes will require a major harmonisation of financing procedures (see Box 3).

Box 3: Harmonisation of Financing Procedures: the Internal Agreement on the 9th EDF Against the background of the crisis in European assistance and the debates on the risks of the ‘renationalisation’ of Community aid, the internal agreement on the 9th European Development Fund (EDF) (adopted in June 2000) sets out the mechanism for co-financing. Article 11.4 of the internal agreement established the legal basis for the implementation of Community assistance by Member States: implementation must be on the basis of co-financing, requiring a financial contribution from the Member State concerned; co-financing must be in conformity with the country strategy adopted by the EDF committee; and co-financing that exceeds a threshold of EUR 8 million must be approved by the EDF committee comprising representatives of all Member States.

The internal agreement, decided at political level, therefore tries to establish a balance between the aspirations of certain Member States to renationalise cooperation, and the Development Council’s desire to retain collective control of the procedures for implementing Community assistance.

Complementarity at the level of programming and country strategies (management committees)

Since 1999, the Commission has been working to harmonise the country strategy framework. At the same time, committee work is evolving to ensure that the discussions of the management committees (EDF, ALA and MEDA)³ focus on strategic aspects, rather than the previous practice of ‘micro-managing’ individual programmes.

The country strategy documents, which are the basis for programming, are first discussed with the government⁴ of the partner country concerned and with local representatives of Member States. In Brussels, these documents are first checked by the Commission (the Quality Support Group) and are then discussed by committees comprising representatives of the Member States and the Commission. The management committees are thus evolving to adopt a more strategic function.

Complementarity at the level of implementation of European cooperation

Promoting complementarity in implementation is particularly complex because there are different levels of implementation. Member States intervene at two levels:

• as donors: most Member States have their own bilateral development policy, which they finance directly. Co-financing arrangements are discussed at this level. Many Member States have their own funding agencies or development banks.
• as implementing agencies: most Member States have established their own more or less autonomous implementing agencies, and increasingly are requesting them to compete in the provision of services.

Several European platforms have been established for the defence of common interests or to carry out joint activities (e.g. CLONG-EU⁵, EDFi and more recently EUNIDA). They do not form a homogeneous group; their members face different constraints and their motivations may even conflict. Overall, however, the creation of these European networks could contribute to the dynamism of European development cooperation.

Box 4: The Grouping of Technical Cooperation at the European Level The Member States’ implementing agencies are more or less autonomous, but they are all in a comparable situation with regard to the reforms of bilateral cooperation, i.e. most of them face reductions in their overseas development assistance budgets, the reorganisation of cooperation ministries, competition and partial privatisation. Most of these agencies have technical and financial organisational capabilities (e.g. field offices) linked to their experience, and public or semi-public management systems. Their existing administrative, technical, and methodological expertise could contribute to the efficiency and quality of European cooperation. In 2001 five of these agencies came together to form an informal network, the European Network of Implementing Development Agencies (EUNIDA), with the aim of implementing joint activities. However, many questions still remain about common management modalities, the level of EUNIDA’s intervention, and the degree of involvement in the reform of the European cooperation system. Solutions to these questions will need to take into account the impacts of the reforms on partner countries in the South, in order to contribute to the relevance of the European cooperation system.

Conclusions

These recent experiences illustrate the dynamic interactions between European actors at the level of implementation. It is important to continue the constructive debate on the modalities of this cooperation and to establish more transparent ‘rules of the game’ since, ultimately, the future of European cooperation, its efficiency and credibility, are at stake. Member States have the choice between contributing to the success of European cooperation, or to its eventual dismantling in favour of uncoordinated renationalisation. Member State agencies have a role to play in providing complementary expertise⁶ to the Commission, and in facilitating the efficient implementation of European programmes.

Finally, this intra-European debate on the implementation of European cooperation should not conceal the central question of cooperation: how will the partner countries in the South benefit from the restructuring of the European cooperation system? After all, European assistance must respond in terms of coherence and impact to the legitimate expectations of societies in the South. Serious reflection on issues such as proximity to the beneficiaries in the south and the legitimacy of Member States in implementing European development cooperation is essential, over and above the debate about the efficiency of European assistance.

The European Centre for Development Policy Management (ECDPM) is an independent foundation that aims to improve international cooperation between Europe and countries in Africa, the Caribbean, and the Pacific. This note is prepared in the context of the study commissioned by the European Network of Development Implementing Agencies (EUNIDA). ECDPM would also like to thank EUNIDA for its support and all interviewed officials for their constructive contribution. More information about EUNIDA: c/o BTC/CTB, rue Haute, 147 1000 Brussels (B). Please address any comments about this note to Anne Simon or Terhi Lehtinen. European Centre for Development Policy Management (ECDPM) Onze Lieve Vrouweplein 21, 6211 HE Maastricht, The Netherlands, Fax: (31)-43.3502902, E-mail: info@ecdpm.org

¹ DG RELEX, DG DEV, DG Budget and DG Admin.
² The Parliamentarians and the secretariat of COBU, COCOBU and COMDEV.
³ The ALA Committee is in charge of cooperation with Latin American and Asian Countries, and the MEDA Committeee in charge of cooperation with Mediterranean countries.
⁴ Together with various non-state actors, as stipulated in the Cotonou Agreement.
⁵ The European NGO Liaison Committee.
⁶ In terms of evaluation methods, strategic policies and sectoral expertise.