Policy Coherence for Development and the “Whole of the Union” Smokescreen

Today, development policymakers need more than ever to work with colleagues to prevent and remediate negative impacts of finance, trade and other policies on developing countries.  At the same time, the European Commission is proposing to change directions on policy coherence for development (PCD), undermining its power as an EU Treaty obligation.

Since 1992, the Treaty states clearly that the EU shall take into account its development cooperation objectives, namely sustainable development and poverty eradication, in its other policies which have an impact on developing countries.  This obligation is the envy of other EU policy areas, much stronger for example than the “integration” obligation for taking account of the environment in other EU policies.

While the obligation is not new, in 2005 it received an important boost when brought forward as playing a central role in the EU’s actions to help reach the 8 Millennium Development Goals and halve poverty by 2015.  Muscle was put behind it in the form of a work programme and a biannual report.  However, the Commission’s 17 September communication based on its second report essentially claims that fulfilling the obligation is “too hard,” and proposes a watered-down definition under the heading of a “whole of the Union” approach.

This marks the coming together of two separate dynamics.  On the one hand, the communication acknowledges frankly that achieving policy coherence for development is dependent upon political will to surmount real conflicts between domestic and developing country interests.  In the face of this challenge, the Commission proposes an adjustment, narrowing down the number of policy areas and issues to tackle from twelve to five. 

On the other hand, in the context of the financial crisis, many Member States are finding it increasingly difficult to meet their 2005 commitments to increase public development aid to an EU collective 0,56% of gross national product by 2010, and 0,7% by 2015.  To cover this shameful state of affairs, Italy proposed a public relations move to a “whole of country” approach that would add to Official Development Assistance (ODA) figures other types of financial flows from Europe to developing countries, so as to present a more “accurate” picture of the good actions of European countries for development.  Appealing to other poor aid performers, the concept was mentioned in the May 2009 Development Ministers’ conclusions, cited in the July L’Aquila G8 conclusions, then further taken up at EU level.

It requires quite an intellectual leap of faith to believe in the mixing of these two dynamics. The main justification given is that in the context of impacts from the global financial and economic crisis, “aid alone is not sufficient” for reaching development objectives.  Therefore, “the EU should work on PCD as part of the ‘whole of the Union’ approach by establishing a policy framework to better harness other policies and non-ODA financial flows to development objectives.” 

The Communication recognizes that “PCD is about minimizing the negative impact of EU policy decisions and legislative initiatives on developing countries and about enhancing their tie-ins with development objectives.”  Yet this strong stated objective related to policy impacts is undermined by shifting the focus to trafficking in accounting to try to claim non-aid financial flows as contributing to development in the same way as public aid.

The essential question is about the definition given to policy coherence, and the political priority given to its different aspects.  The tension between focusing on negative impacts of other EU policies on development, or on enhancing positive synergies, has been present since 2005.  However, in light of the confluent global financial and economic, climate, and food security crises since 2008, there is clearly greater urgency in addressing negative impacts.  

The short-sightedness of the latter approach is illustrated in the communication by the claim that the EU’s 2008 climate and energy package “offers tremendous opportunities for the production and use of sustainable biofuels in developing countries” – while making no mention of the impacts of EU biofuel policies on land use (including risks of monoculture and reduced soil quality, deforestation, and competition with food production) or of the greater problems of insufficient EU commitments on reduction of carbon emissions, and on finance for adaptation in developing countries.

While the Commission does retain climate and food security as two of its top five priorities, it shamefully fails to include EU finance policies in its remit, despite its statement that the financial crisis demonstrates how financial policies impact on others and on developing countries.  Trade policy is included only in its relation to food security, though some of the most flagrant negative impacts on developing countries come from the whole range of EU trade policies, including recent policy on access to raw materials.

More problematic is the shift in priority from policy impacts to financial flows.  The so-called "ODA plus concept" is troubling for several reasons.  The communication cites foreign direct investment, remittances, and technology transfers as the types of financial flows that would be considered.  Yet it acknowledges that these flows depend primarily on private individuals and economic actors.  While it is indeed laudable for governments to try to encourage these flows, they cannot claim responsibility for their impacts, nor can they demonstrate that the flows have development as their primary purpose, or primary effect (one illustration is the high volatility of private investment, which has dropped dramatically during the financial crisis).

Furthermore, the ODA plus concept looks at only one side of the picture, namely flows from European to developing countries.  It does not consider a full “balance sheet,” which would also include illicit outflows from developing to European countries, for example in the form of tax evasion by individuals or multinational companies, or repayments of debts contracted with irresponsible leaders – encouraged by European financial policies and tax havens.

The ODA plus concept could eventually serve to undermine the definition of ODA and its focus on poverty eradication and the right to development.  In promoting it, the Commission also undermines what has traditionally been one of its strengths, namely as watchdog for the integrity of ODA (such as its opposition to including debt cancellation in aid figures) and monitoring and pressuring Member States to live up to their promises to increase much-needed funding for development.

The communication is now under discussion in the Council, in view of conclusions for the 16-17 November meeting of Development Ministers.  However, it has encountered resistance from a number of Member States.  Some are opposed to the principles of the ODA plus concept, or believe that this debate should take place within the OECD Development Assistance Committee, where it originated.  Others feel strongly that this is the wrong debate at the wrong time, when the focus should be on Member States fulfilling their aid commitments.  As a result, it is unclear what form the Council conclusions might take. 
    
Hot debates will continue over the next weeks.  On 14 October, the European development NGO confederation CONCORD releases its “Spotlight Report” on policy coherence for development, highlighting cases of incoherence in the areas of EU agriculture and trade, climate change, finance, and migration policies.  The report argues that priority must be given to ensuring that the external impacts of EU policies do not undermine the aims and objectives of EU development policy.  On 22 October, these opposing definitions of policy coherence for development will go head to head during the European Development Days in Stockholm.

More information

• European are harming developing countries, a CONCORD press release. The European Confederation of development NGOs, of which CIDSE is a member, presented its Spotlight on Policy Coherence Report 2009 with a media briefing and a roundtable discussion in Brussels, on 14 October 2009.