Bill & Melinda Gates Foundation

What Does the Future Hold for EU Aid?

February 13, 2013

Last week, European Union leaders came together for a decisive summit to discuss how much they think the EU should spend from 2014-2020, and what they should spend the budget on. On Friday, it was announced that EU leaders had rejected the European Commission’s proposal to increase funding for development. 

Development aid has been chronically underfunded in previous years, and the European Commission’s initial proposal to increase it to €70 billion in its next seven year budget (known as the Multi-annual Financial Framework) is considered by the European Parliament to be the ‘bare minimum’ if the EU wants to retain its leading role in the fight against global poverty.

As a result of last week's summit, Heading 4 (Global Europe) and the European Development Fund (EDF) have been cut by 16 per cent and 11 per cent respectively, compared with the European Commission’s original proposal. What that means in real terms – that is, compared with the current situation for 2007-2013 – is that the level of development aid has been frozen.

It could have been worse. For the first time the whole European budget was cut in real terms, while development aid was ‘just’ frozen. However, the budget that comes out from last week meeting does not take into account the new post-Lisbon Treaty context and its financial consequences. The EU has missed an opportunity both to be an important global player and make a difference to the lives of more than three billion people - almost half the world’s population – who currently live on less than $2.50 a day. In addition, more than 100 million people are pushed into poverty as a result of catastrophic health costs every year. Increasing EU development aid would have allowed the EU to take a big step forward towards ensuring Universal Health Coverage which does not adversely affect the most vulnerable.

The European Commission’s proposal was ambitious and would have put the EU back on track towards meeting the promise of spending 0.7 per cent of GNI on development aid, and towards the recommendation to spend 0.1 per cent of GNI on reaching global health targets.  The European Parliament now has to give its approval to the Council proposal and has stated on several occasions that it is not prepared to support a budget that fails to take into account their demands. We will continue to work with the European Parliament to ensure the strongest possible EU aid budget, with at least 20 per cent of the Development Cooperation Instrument (DCI) and of the European Development Fund (EDF) allocated to health and basic education.

Health and basic education have a strong impact on economic growth and are essential drivers for economic recovery and poverty reduction. EU leaders must continue to invest in development, in particular health and basic education, through the European Commission which has been proven to be one of the most efficient impactful and transparent donors, as recognized by the OECD, the European Court of Auditors and independent organisations like Publish What You Fund.

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