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Q&A: Who Should Europe Aid, And How

Interview with Koos Richelle, managing director of EuropeAid

ATHENS, Sep 17 2007 (IPS) - The challenge of distributing and managing aid is inevitably controversial. And with the EU the largest aid donor in the world, the decisions it takes are hugely significant.

EU aid goes out through member countries, and through the European Commission, the executive arm of the EU. European Commission aid is managed by EuropeAid, which makes its managing director Koos Richelle a key figure in the aid world. IPS correspondent Apostolis Fotiadis interviews him.

IPS: What are the major challenges EuropeAid faces?

Koos Richelle: The first challenge is to live up to all the policy papers in place. It has been decided that there will be on average a few hundred million (euros) per year more to be spent for the ACP (African Caribbean Pacific) countries and the neighbourhood countries. Now we have to spend this in an efficient and effective way.

The second big challenge is to do this in a modern way. Meaning, move out of small individual projects and turn in the direction of sector support and budget support. We don’t do this by opening a window and throwing out the money to the governments. We talk to them and look to important indicators. The quality of public finance management, their policy on addressing the problems of the country, and whether they operate in a democratic way and respecting human rights. Then we move on making concrete arrangements on what they should do with the money.

The last challenge is that we can’t work any more in an isolated way. We need a change of culture, so to say. In the past every donor was proud of what he did himself but not inclined to communicate with other donors. This was making donorland disneyland, you have a kind of fantasy and then you have the money to realise this in a poor country, so you do it, without looking at what others are doing and without even in a number of cases consulting the recipient government if what you do really is their priority as well.

IPS: How necessary is the reconfiguration of institutional structures and the external cooperation policy of Europe in order to stand up to those tasks?

KR: Since 2000 we have put in place a massive form of de-concentration of our activity to delegations in our partner countries. Still there is always the question, could we de-concentrate more? Moving from projects to sector and budget support makes impossible what was done in the past, when a delegation of ten people flew to a country and stayed there for two weeks, organised everything, and flew back to headquarters; and then whether the follow-up was delivered or not they returned there a year later.

A second important point is that Europe is known as a reliable but slow donor. We do what we promise but it might take some time. We have to become quicker, and one way is by simplifying our regulations. We had already three waves of simplification making things easier to pass, and threw 115 pages of internal legislation in the dustbin. Until 2009 it will be simplification and de-concentration that will govern change.

IPS: How will competition between Europe and other global political rivals, traditional and emerging, affect its external co-operation policies?

KR: I don’t think that relations with other powers influence development co-operation. The biggest influence on development co-operation in recent years was the MDG (Millennium Development Goals) declaration. This declaration was not only about targets, it contained what I would call a code of conduct for donors and recipients. Those declarations really govern policies nowadays. The policies are perfect, you can practically not add to them any more. The whole focus should be on the implementation now.

IPS: In what way?

KR: That is, put your money were your mouth is. Our European development co-operation, and we are proud of it and we advocate it, doesn’t only consist of transferring money. It also includes the transfer of European values we want to provide alongside the money, and I think we will continue to do this and try to influence other donors. Certainly the new donors coming on the screen have to learn lessons from the past. China now has given signals that it has understood the message by appointing a special rapporteur for Darfur, which they have done under international pressure.

IPS: Many NGOs and individuals object to the commitments you express. There are many cases someone could draw examples from. A report from Co-operation for Relief and Development said that 30 percent of aid actually returns indirectly to the donor countries, and concluded that a lot of money is spent in order to strengthen European commercial interests. How would you respond to these objections?

KR: It would be besides the truth if I would say that 100 percent of what is given by European member states is purely altruistic. In development co-operation there has always been the notion of self-interest. In the old days there was an old fashion of self-interest, meaning we used the money to force them to buy products that are made in our member state countries.

IPS: Tied aid?

KR: Yes. Also, use our consultants or our firms. I think we have moved on the path of untying aid; certainly for the least developed countries all aid is untied. We are also in a transitional period. In the past lots of loans were offered to developing countries, and not always on the most preferable conditions. Poor countries are still paying back these loans. In the recent past we have seen large-scale debt forgiveness.

The good thing is that debts are gone, the bad thing is that taking away the loans from the book was done with a book-keeping trick by counting them in as fresh official development assistance. That of course has artificially blown up the figures of assistance. You see an enormous rise but for the future since there are not many debts to forgive the donors will need to put real money on the table to keep up to their promises of aid.

IPS: Does direct budget support strengthen dependency on EU money and create a master-slave relation between Europe and recipient countries?

KR: Budget support is looked on with some anxiety by some circles. NGOs don’t like it too much because they prefer individual projects, which are developed by them. That is one way of looking at things but it is a rather simple one. Others say budget support is easy to corrupt, and you throw away money. I explained already that it is not sending out a blank cheque.

IPS: What about complications that might occur? For example a recipient will be able to show a higher GDP (gross domestic product) and thus attract better funding from the IMF (International Monetary Fund). What happens if you later decide to withdraw budget support but this other money keeps pouring in the country? Are you concerned about complications you haven’t predicted?

KR: Of course we learn by applying new methodology. But we don’t want to learn only after a mistake has been made. We are in constant contact with the IMF and the World Bank to discuss macroeconomic consequences of this budget support. One of the factors that is being discussed in this respect is the phenomenon of fiscal space. How much fiscal revenues can a government really expect and how can this be distributed in a realistic way. This is the reason that the IMF insists on having multi-annual contributions from donors committed to stay for a number of years.

Still, most donors are limited to a one-year budgetary approach. Now when we have to stop support, this has tremendous impact on the day-to-day life of citizens of a poor country. We never do that overnight, we firstly send signals and try to discuss. We are very careful not to disturb macro-equilibria too much just for becoming the good guy.

IPS: There is a rather normative approach in Europe about how aid should arrive in developing countries. Do corporate and national interests, or practical difficulties in burdened areas like Africa and the Balkans, create obstacles that this approach cannot surpass?

KR: We have to work by contact with 160 countries and regions in overseas territories in the Commission. That is enormous, and every area is different. What we have developed in the international community is a logical mainframe of thinking. Putting out priorities and setting out directions.

I don’t know if there was a Greek equivalent before the Romans invented their saying – be strong in your case but be lenient in your way to reach your goals. This is what we have to apply as well. The world is not following models. In countries that were developing very well you might have a setback, and need to start all over again.

There are always people who are in favour of, and against certain policies. We don’t want to order the world around, we have a much softer approach than the U.S. has. We have more patience with our partners, we respect as far as possible their decisions on how to move forward, meaning that every day brings its own surprises, and you have to adjust. It is not a question of pushing everything through a matrix and then coming to one final solution for so many countries.

IPS: Do you think that there is a huge deficit of public interest in the member states on issues related to development aid?

KR: Don’t forget that we have been operating in development cooperation for 60 years. Dozens of billions of euros have been given in support. It is only right that taxpayers ask what exactly were they used for. That is an answer that donors never have concentrated on. It was important to give money and it was more important to give more money. What exactly was it used for was not a popular subject. The focus now is shifting to results, to impact.

The population will be generally more interested if we show results instead of showing people that have to run again from home because there is a war or crisis. One wants to see light at the end of the tunnel. This is only possible if we change our attitudes and our way of working.