THE NEW ALA REGULATION:
THE LITMUS TEST OF THE EUROPEAN UNION’s COMMITMENT
TO POVERTY ERADICATION
Draft (24 January 2003)

The ALA regulation is the main financial instrument of European development co-operation with Asia and Latin America. The renegotiation of the regulation is an important opportunity to improve the effectiveness of this programme in eradicating poverty and contribute to the challenge of securing peace and prosperity in Europe and globally.

The renegotiation of the regulation (No. 443/92) comes at a particularly crucial time, coinciding with the European Convention on the Future of Europe and the InterGovernmental Conference, which will lead to a new European Treaty. The regulation, which arranges  development co-operation with two of the largest regions in the South, will be an opportunity to demonstrate the Union’s continued commitment to play a distinct global role in promoting sustainable and social development, human rights and democracy, which are the essence of Europe’s core values.

The Monterrey consensus on Financing for Development and The Implementation Plan and the Political Declaration that were adopted at the World Summit on Sustainable Development held in Johannesburg (2002) and reaffirmed immediately after by the EU General Affairs Council have shaped a global partnership for sustainable development. This partnership includes commitments to increase development assistance, good governance and a better protection of the environment.

The ALA regulation offers an important opportunity for the EU  to confirm its commitment to the Millennium Development Goals and the targets agreed in the Johannesburg Plan of Implementation. On 30 September 2002 the EU General Affairs and External Relations Council noted in its conclusions the Johannesburg reaffirmation of the Millennium Development Goals and that:

 “eradicating poverty is among the greatest challenges facing the world today and an indispensable requirement for sustainable development to be achieved through a multidimensional approach which mainstreams gender and environmental issues, and ensures access to water, sanitation, energy, health care, education, land and adequate shelter as well as income generating activities based on decent employment, and disaster prevention.”
The EU Council further reiterated:
 “the commitment of the EU to ensure coherence between its internal and external policies, including the development assistance programmes, in order to achieve the goal of eradicating poverty.”
The proposal for a regulation by the Commission (COM(2002)340 final) does not appear to reflect the commitments as set out by the Council Conclusions. While we welcome the reference to the respect of human rights and fundamental freedoms, democracy and the rule of law, we are concerned with the overall direction of the regulation in all other areas.

Firstly, the proposal does not firmly establish the goal of the regulation as the eradication of poverty. Furthermore we are alarmed by the notion introduced in the proposal that aid be premised on an embrace of neo-liberal policies, as promoted by the World Bank and the IMF (pre-amble (7)). Article 2 of the proposed regulation clearly mentions to foster the integration of economies of Asian and Latin American countries into the multilateral trading system through the implementation of WTO agreements (also pre-amble (6)). It strongly appears that aid and the policy framework for sustainable development for “the reduction of poverty” is to be based on unqualified principles of free market policies.  

There is growing amount of evidence that unfettered liberalisation has a tendency to exacerbate poverty rather than eliminate poverty. It is therefore of crucial importance that communities of people living in poverty are consulted in the programming of aid genuinely focusing on the eradication of poverty, and participate in the aid activities designed for them - and with them.  We firmly believe that aid should not be tied to a particular ideological or economic framework.

The diversity in cultures, levels of economic growth and political realities should be taken into account in successful efforts to combat poverty, which might require country-based solutions rather than ‘a one size fits all’ approach. The issues and concerns of poverty are specific in many ways. Social exclusion of ethnic minorities (lack of access to and control over productive resources and power), gender discrimination (women being the victims of discriminatory social practices) and caste based untouchability (Dalits who constitute a significant part of the society are at the bottom of the poverty ladder) are at the heart of the problems that need to be considered in effective strategies of poverty eradication. Participation of civil society organisations representing people living in poverty is therefore a crucial aspect for a credible strategy towards development co-operation.  

The Commission argues that only a thin regulation is required to mandate it to implement the programme towards Asia and Latin America. This touches upon some very fundamental issues underlying this proposal. Firstly, the Commission proposes that the regulation will open up for development resources to be used ‘flexibly’ and to support its other external actions, related to defence and security. This would risk that the aim to eradicate poverty would be subordinate.

Secondly the Commission has not incorporated any proposals to ensure that the enabling legislation proposed in the regulation is backed up with operational legislation, and that adequate decision-making powers, as well as powers of control, are granted to the European Parliament in the definition of concrete policies at general, regional or sub-regional level.

The ‘flexibility’ requested by the Commission - amounting to a request for a ‘blank cheque’, gives no guarantees that the regulation’s objectives, framed in the treaty development objectives (art 177) will be translated in real implementation. The emphasis given to “strengthen the political and economic presence” (pre-amble (5)) and the reference to the war on terrorism in article 2 create the impression that the regulation might be seen as an instrument for the Common Foreign and Security Policy (CFSP), rather than for development co-operation. We therefore demand a clear definition of how the regulation will be translated in implementation, both in terms of operational procedures and in terms of decisions with regards to the budget.

The regulation should respond to the EU commitment to increase ODA to 0.7% of GNI, and reach an average of 0.39% of GNI in 2006. This increase should be reflected in the regulation. Moreover, the regulation should reflect a focus on poverty and identify how more resources will be channelled to people living in poverty and low income countries, particularly - but not solely, in South Asia, accommodating the largest number of people in poverty. The regulation should set clear targets to reach people living in poverty most effectively with grant support, particularly by ensuring that at least 35% of the total appropriations will be directed to basic social services, which is essential for lifting people out of poverty. This target has been included in the ALA budget by the EU Budget Authority since 2000 and this continuity should be reflected in the regulation.

The following issues will be essential if the objective of the regulation is to set clear parameters for eradicating poverty in Asia and Latin America:

1.    The overall objective of the ALA regulation should be unequivocally stated as being the eradication of poverty.  Its definition of actions should be set within the requirements of the EC Treaty, art. 2,3,6 and 177 - 181, and derived from the EU commitment to the Millennium Development Goals, as well as the joint EU Council/Commission Development statement of November 2000. The regulation’s provisions for implementation should originate in the conclusions of the EU Council for General Affairs and External Relations from 30 September 2002 with regards to the Johannesburg Political Declaration and Plan of Implementation.

2.    The ALA regulation should directly indicate with tangible figures the strategic support to the EU contribution to the action-oriented outcome agreed in Johannesburg with clear and measurable objectives, directed to achieving the Millennium Development Goals. This should include increasing the appropriations to reflect the commitment to contribute 0.39% of GNI in 2006 to ODA made in Monterrey; greater proportional allocations to low income countries and 35% of allocation to social sectors, with 20% to basic social services, and 10% for the environment - as is already contained in the current ALA regulation.

3.    The regulation should unambiguously confirm the commitment of the EU to ensure coherence between its internal and external policies to achieve the goal of eradicating poverty. This should include the promotion of food security and rural development in the spirit of the Declaration of the Rome World Food Summit - as reiterated by the EU Council Conclusions of 30 September 2002.

4.    The need to achieve a balance between environmental protection and economic development should be clearly stated in the final text. As a follow up to resolutions of EU General Affairs Council and External relations dated 30 September 2002 reaffirming the commitment of the EU to fulfil the targets agreed in the Johannesburg Plan of Implementation, the proposed resolution should reflect in its Article 2, in term of particular attention for Community co-operation, the following sectors: water and sanitation; restoring depleted fish stocks; establish a network of marine protected areas; use and production of chemicals; reduce loss of biodiversity; reduce current trend in natural resources degradation; and promote renewable energy share.

5.    The adoption of  “Country Strategy Papers” and the “Regional Strategy Paper” planning EC intervention in the Countries and regions should be a first step towards the establishment of National Strategies for Sustainable Development, NSSDs, called for by UNGASS by the year 2002. In its report to the Development Council, the Commission has recommended that the Community support preparation and implementation of NSSDs in developing countries, which should become the main tool for integrating environmental, economic and social concerns in a coherent framework. The new ALA regulation should make reference to the establishment and implementation of NSSDs in Partner countries as part of the priority measures to be supported by the Community.

6.    The regulation should acknowledge the importance of the involvement of people’s organizations in the process of policy, strategy and action plan formulations. Binding provisions must be made for active participation of the people’s organisations in the entire decision making process. It will substantially help to understand the ground situations and formulate strategies in realistic terms tailored to the priorities of people living in poverty. The regulation should provide support for building the capacity of civil society actors and associate representatives of civil society organisations to dialogue in the context of the regulation at regional, sub-regional and country level.

7.    The regulation needs to recognise the specific problems of poverty relating to Asia, which is home to 75% of the world’s people living in poverty. A large number of Asian poor live in South Asia totalling 40% of the world’s total poor. Within South Asia, special consideration should be given to countries that fall into the category of Least Developed Countries, particularly Nepal, Bangladesh, Bhutan and Maldives. The nature and objective of the list of countries annexed to the proposed regulation should be clarified.

8.    The regulation should recognise the need to target specifically groups of people excluded from the benefits of development, particularly indigenous people and dalits. The regulation should also pay specific attention to the need to address gender equality as a precondition for sustainable development. The severe problems of children - and particularly the girl child, in bonded and forced labour, child labour need to be addressed and children’s health issues, particularly related to HIV/AIDS.  The right to education for all reaffirmed at the World Education Forum in Dakar 2000 and endorsed in a European Parliament resolution in June 2001 needs to be addressed in the regulation in line with the Development Council conclusions in May 2002 which reaffirmed Member States' commitment to ensure that no country with a viable education plan will be thwarted by a lack of resources and explicitly committed Member States to increasing the volume of aid to education.

9.    Although welcoming the fact that the proposed Regulation provides for the untying of aid in Article 9, we think it is logical to untie aid to the fullest extent possible and therefore propose that aid be untied to all developing countries.

The Regulation should also make a positive contribution towards increasing the capacity of firms in developing countries to bid successfully for contracts thus ensuring long- term sustainability and development.

We propose therefore that a specific reference (including incentives) be made to concrete measures to promote local sourcing of goods and services.

An existing model is the Cotonou agreement, which incorporates measures to promote ACP firms’ participation in European Development Fund contracts.

Untied aid would lead to greater sourcing of local supplies and expertise. This will not only produce more relevant goods and services for development projects, but also offer better value for money and enhanced effectiveness.
Fostering the participation of developing countries’ firms in aid-funded contracts will lead to increased economic growth, which is vital for poverty reduction.

10.    The regulation should incorporate the notion that a political and institutional environment that upholds human rights, democratic principles and the rule of law, good governance and the transparent and accountabler management of human, natural and economic and financial resources for the purposes of equitable and sustainable development. This entails clear decision-making procedures at the level of public authorities, transparent and accountable institutions, the primacy of the law in management and distribution of resources and capacity building for elaborating and implementing measures aiming in particular at preventing and combating corruption. These principles should underpin the EU-Asia/Latin American partnership and the parties should agree that serious cases of corruption, including acts of bribery leading to such corruption, should constitute a violation of the essential elements of the regulation.

11.    The Regulation should be in the nature of a parent statute that clearly lays down the policy content and under it, delegated legislation, if any, should be established only for the purpose of giving effect to such policy and never in the nature of a discretionary power that goes beyond the parent statute itself.


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