Europe To Take New Development Approach To The Region

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By David Jessop

News Americas, LONDON, England, Tues. Nov. 29, 2011: Since 1964 the Caribbean has received European development assistance. This has been provided, largely unconditionally, on both a regional and national basis to every Caribbean nation, including at times, Cuba.

Despite problems of slow disbursement, complex bureaucratic procedures and changes to the manner in which funding is made available, there has always been the sense that such support would continue.

However, the way in which Europe will provide future development assistance and the countries and areas that it will be directed at, are about to change.

During the course of October, the European Commission (EC) produced two communications (policy papers). One ‘Increasing the impact of EU Development Policy: an Agenda for Change’, plus an accompanying impact study, focussed on Europe’s future priorities and approach. The other, ‘The Future Approach to EU Budget Support to Third Countries,’ suggested revisions to the EU’s existing policy on bilateral budgetary support; the mechanism that Europe introduced to try to create greater efficiency, by providing financial resources directly to governments to administer.

Though neither document addresses in any detail the EU’s future support for any particular part of the world, it is clear, from a careful reading and comments made in private by senior European officials, that Europe’s traditional approach in the Caribbean – providing support though multi-annual national and regional programmes – is going to come to an end.

In particular, the ‘Agenda for Change’ makes clear that before long Europe’s global priorities will be very different and that in its words ‘a sharpened focus, both sectoral and geographical, is the best option’ to increase ‘the impact and influence’ of Europe’s Commission-managed aid.

When the accompanying impact study and communication are read together it becomes clear that, for the most part, the Caribbean does not fit with Europe’s principal priorities and objectives. Rather the region will fall into a category of nations that are likely to see, in future, an emphasis on new development mechanisms that encourage growth and prosperity through private sector and investment related mechanisms.

The ‘Agenda for Change’ proposes that Europe’s future global emphasis will be on reducing poverty; will focus on those countries where there is a deficit of democracy, human rights, good governance and security; will take into account differentiation between developing nations; and will explore how best to co-ordinate with nations like China, Brazil and India that have become aid donors in their own right. It also makes clear that future development policy will be led by Europe’s approach to foreign policy and will adopt ‘different policy mixes adapted to each partner country’.

The communication – which like most European Commission documents is dry and full of a language that is far from user-friendly – suggests where its Agenda for Change will lead. In doing so it makes clear that the EU will place its future emphasis on countries most in need and on issues such as human rights, democracy and good governance. In other words, matters that are not seen as being of hugely problematic in relation to much of the Caribbean.

What rapidly becomes apparent is that the new European approach to development will largely only apply to the region in respect of measures to improve the business environment, regional integration and insertion into world markets through what are described as ‘innovative financing methods including blending grants and loans’, and in respect of climate change.

Space makes it is hard to do justice to the quite complex ideas these global policy documents contain. However, it is clear that if the Caribbean no longer accords with European priorities, is in effect being graduated out of traditional development assistance, and that the majority of future EU support will come in the form of the encouragement of economic growth.

In this context the document makes clear that growth requires a favourable business environment and that Europe should in future support the development of competitive business sectors through building local institutional and business capacity, promoting enterprise development and a range of other actions aimed at helping the region to harness opportunities in the regional and global market.

In two key paragraphs, that will almost certainly be applied to the Caribbean, the ‘Agenda for Change’ states:

‘The EU should develop new ways of engaging with the private sector, notably with a view to leveraging private sector activity and resources for delivering public goods. It should explore up-front grant funding and risk-sharing mechanisms to catalyse public-private partnerships and private investment. The EU should only invest in infrastructure, where the private sector cannot do so on commercial terms’.

And:

‘The EU will further develop blending mechanisms to boost financial resources for development, building on successful experiences such as the European investment facilities or the EU-Africa Trust Fund for infrastructure. In selected sectors and countries, a higher percentage of EU development resources should be deployed through existing or new financial instruments, such as blending grants and loans and other risk-sharing mechanisms, in order to leverage further resources and thus increase impact’.

What this means is that when present EU programmes are at an end, almost all assistance to the region other than for Haiti, will be through public-private programmes and that the traditional basis for bilateral support will in most Caribbean nations come to an end.

As matters now stand, neither the Caribbean public nor private sector seems ready for this. Most of the public sector seems locked into a model of continuing grants and budgetary support while much of the private sector has failed to look either at the region or beyond as a market opportunity.

While it is easy to point to the shortcomings of Europe’s new approach when it comes to the Caribbean, and in certain discrete areas there will be additional support for small island developing states and overseas territories, it is clear that before long present forms of bilateral support will end and future assistance will be very different in character.

This changed approach by Europe suggests that once again the region is being outpaced by new thinking elsewhere. Europe is now moving to create a twenty first century development policy while the Caribbean, with no new strategy of its own, seems, in comparison, mired in the development thinking of the past

David Jessop is the Director of the Caribbean Council and can be contacted at david.jessop@caribbean-council.org. Previous columns can be found at www.caribbean-council.org.

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