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EU development cooperation in middle-income countries ? The state of play of the negotiations

EU development cooperation in middle-income countries ? The state of play of the negotiations. Mikaela Gavas 9 May 2013 m.gavas@odi.org.uk. Introduction. Differentiation and its rationale Five overlapping objectives Levels of differentiation

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EU development cooperation in middle-income countries ? The state of play of the negotiations

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  1. EU development cooperation in middle-income countries?The state of play of the negotiations Mikaela Gavas 9 May 2013 m.gavas@odi.org.uk

  2. Introduction • Differentiation and its rationale • Five overlapping objectives • Levels of differentiation • EU institutional approaches to differentiation in the DCI • What aid allocation criteria? • How to apply the criteria? • Cutting or phasing out? • Differentiation and the EDF • Member State approaches to differentiation • Milestones in the negotiations

  3. EU policy on differentiation and its rationale

  4. Five overlapping objectives

  5. Levels of differentiation • Differentiated eligibility to development assistance (i.e. ‘graduation’) • Differentiated volumes of development assistance • Differentiated mix of policies and instruments

  6. Eligibility and volume of development assistance • Based on: need, performance, capacity, commitment & potential EU impact Level 1: • Criteria for eligibility for grant-based bilateral aid: • UMICs according to the OECD-DAC • More than a 1% share of global GDP • Other factors also considered (Human Development Index, Economic Vulnerability Index, aid dependency, economic growth levels and foreign direct investment) Level 2: • Criteria for levels/volumes of development assistance (TBD)

  7. Differentiated mix of policies and instruments Grant and subsidy-based aid Less concessionary: blended finance, still ODA, but less through aid agencies OECD-type cooperation: peer learning, institutional twinning, fully co-financed Myanmar India China Korea Adapted from Altenburg and Koch, DIE, 2011 • Differentiated development partnerships funded through thematic envelopes and the Partnership Instrument: • Loans (esp. blending of loans and grants) • Technical cooperation • Support for trilateral cooperation

  8. EU institutional approaches to differentiation in the DCI

  9. What aid allocation criteria?

  10. How should the criteria be applied?

  11. Should aid be cut or phased out?

  12. Differentiation and the EDF

  13. A different approach for the EDF ‘…what we intend to propose is strong differentiation according to the level of income. But for the Caribbean I have a bit of a soft spot because the countries are vulnerable to two major challenges: climate change and natural disasters. It is the same with the Pacific…They are vulnerable economies that in a way deserve some attention even if the income per capita is there’ (Commissioner Piebalgs) • Differentiated eligibility will not be applied (level 1) • But, there will be increased differentiation of aid volumes and instruments (levels 2 and 3) • Should the same criteria be used?

  14. Differentiation and the EDF: potential implications • Less than 1% of the EDF’s poor live in the EDF-21 countries • But, 17 out of the 21 score high on the Environmental Vulnerability Index 21 UMICs in the EDF:

  15. Differentiation and the EDF: potential implications • Transition from 9th to 10th EDF

  16. Member State approaches to differentiation

  17. 4 groups of Member States • Clear criteria with no exceptions • Clear criteria with flexibility to include or exclude countries • Sceptical of criteria and country list • Clear criteria with specified exceptions

  18. Milestones in the negotiations MFF: • February 2013 – European Council agreement on the figures for the MFF (2014-2020) • March 2013 – European Parliament rejects European Council agreement • April 2013 – European Commission proposal for allocating funds across the instruments for external action • May 2013 – Council, Parliament and Commission agree to restart negotiations on the future EU budget DCI: • June 2012 – Council’s Partial General Agreement on the DCI • September 2012 - European Parliament’s negotiating position on the DCI EDF: • December 2011 - European Commission proposal for the 11th EDF • March 2013 – European Parliament own initiative report on the 11th EDF

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