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European Round-Up

New EU aid fund

The European Union is creating a new trust fund to disburse European aid to Africa without depending on the World Bank. The fund could be operational before the end of June 2006. ”European aid money should be spent according to European policies,” Louis Michel, the EU Development Commissioner, said. He insisted the project was not aimed against the World Bank, but said he wanted the EU to be on ”an equal footing“. The joint plan by the European Commission and the Luxembourg-based European Investment Bank (EIB) has still to be approved by EU and African governments. According to Michel the trust fund would be administered by the EIB and finance major infrastructure projects in Africa, including roads, railways, telecommunications, and water and energy networks through subsidised low-interest loans.

Meanwhile a group of NGOs (Campagna per la riforma della Banca Mondiale, Italy, CEE Bankwatch, Netherlands, WEED, Germany, and Friends of the Earth International) has published a study of EIB’s lending policy. The study (>>> In Whose Interest? The European Investment Bank in the South) analyses the poverty alleviation impact of EIB lending operations in Africa, Latin America and Asia. It exposes how European companies are the main beneficiaries of EIB loans, points to significant social and environmental problems surrounding EIB’s projects, details serious policy incoherences and highlights the lack of transparency and development impact assessments of the lending. The authors write that “the EIB has an opportunity to avoid the mistakes made by its sister organisation, the World Bank”. As the EIB is setting out to revise its mandates outside the EU by 2007, the report recommends steps for the EIB to improve its lending policy and practice.

Hamon Report on IMF reform

The European Parliament’s Economic and Monetary Affairs Committee (ECON) has produced a new report on IMF reform. The report (>>> Report on the strategic review of the International Monetary Fund) calls for a single European seat at the IMF, reform of conditionality in low-income countries, more member state parliamentary control and a new debt sustainability framework grounded in achieving the Millennium Development Goals. In particular the report demands a revision of the voting system, highlighting the need to increase the weight of basic votes and the establishment of a mechanism to allow developing countries to increase their membership shares. The EU should be represented as a ‘single negotiating bloc’.

The report, which had some input from the European Network on Debt and Development (Eurodad), is named after the Rapporteur Benoît Hamon MEP and will be voted on during EP’s session in Strasbourg on February 13-16. Despite it has been unanimously adopted by the ECON Committee, there have been strong indications that the report would be watered down by amendments the conservative European People’s Party has asked for. There have been also reports that the IMF office in Brussels was unhappy with the overall tone of the report and, in particular, its mention that on average in low-income countries there are 114 conditions attached to loans.

Morgantini Report on EPA negotiations

A Draft Report on the development impact of Economic Partnership Agreements (EPAs) is being discussed in the European Parliament’s Committee on Development since the beginning of 2006. The report named after the Rapporteur Luisa Morgantini MEP expresses strong concerns “that the overly-rapid pursuit of reciprocity in trade relations between the EU and the ACP (Asia, Caribbean, Pacific) could have a devastating impact on vulnerable ACP economies , precisely at a time when the international community should be doing utmost to support states in their drive to meet the MDGs”. According to the report there is no reason to believe that introducing a policy that seems to improve EU market access rather than ACP market access will be a successful driver of sustainable development. The authors especially urge the European Commission to take into account the budgetary importance of tariff revenues in many ACP states and to press for a development-friendly revision of GATT article XXIV to allow non-reciprocal EPAs. The draft report recommends the European Parliament to reject any attempt by the Commission to bring investment, competition rules and government procurement (which have been rejected in the WTO) under the EPA mandate. It is now up to the Parliament to decide a motion based on the report’s recommendations.

Corporate lobbying

There are around 15,000 lobbyists based in Brussels – around one for every official in the European Commission, a new study of ActionAid International finds (>>> Under the Influence. Exposing undue corporate influence over trade policy-making at the World Trade Organisation). More than 70% of Brussels lobbyists represent business interests, while only 10% work for public interest groups. Annual corporate lobbying expenditure in Brussels is estimated at € 750 million to € 1 billion. The study with the title “Under the influence” reveals the extraordinary influence of business on trade talks. Transnational Corporations (TNCs) have privileged access to the European Commission and the WTO policymaking process.

Examples include the European Services Forum (ESF), a corporate lobby group, which counts among its members for example BT, Vodafone and Lloyds. The group confirmed it meets regularly with high-level EU trade officials to share strategies for WTO negotiations, to push for liberalisation and the opening up of services markets, including telecom, tourism and IT, in developing countries. ESF also enjoys easy access to the powerful but secretive EU trade policy setting committee – the 133 Committee – that formulates EU trade policies in WTO negotiations. – Drug companies are using their influence in the WTO to safeguard their profits and impede the fight against HIV and AIDS. Lobbying at the WTO brought about a rule change last year that ensured that countries such as Brazil, India and Thailand will find it much harder to make cheaper copies of patented medicines.

In the US the situation is even worse. Around 17,000 lobbyists work in Washington DC – outnumbering US Congress lawmakers by 30 to one. 93% of the official external advisors to the US trade department are from corporate lobby groups and companies such as Burger King, Coca-Cola, McDonalds, and Pfizer. AktionAid calls on the EU, US and WTO secretariat to curb corporate influence on the current negotiations.

EU financing instruments

Pressure is growing to split the Development Co-operation and Economic Co-operation Instrument into two separate instruments to ensure a single instrument for development (>>> article). The Austrian EU Platform of development NGOs demands a separate Development Instrument after the ‘No’ of the European Parliament to the budget deal of last December’s summit.

In late January the Mitchell Report was presented to the Development Committee of the European Parliament. The report named after Gay Mitchell MEP proposes a clear separation between the EU’s relations with developing and industrialised countries and to guarantee that development co-operation is based solely on the principles of poverty eradication. The proposed amendments still have to be adopted by the Parliament. NGOs such as EuroStep and Germany’s terre des hommes and WEED warned not to dilute the report in the process. More information on the report provides a EuroStep Briefing paper (>>> The Development Co-operation Instrument: European Parliament puts the EU back on track). While the Development Committee of the Parliament warmly welcomed the report and its recommendations, the European Commission still objects to certain proposals especially the clear separation of the instruments. The issue will be discussed by Development ministers at their next meeting in April in the Council of General Affairs and External Relations.

New online resources

* CIDSE, Study on Security and Development. A CIDSE Reflection Paper, Brussels, January 2006

Eurodad, Le "modèle tchadien": Chronique d'un désastre annoncé, Brussels, January 2006

Friedrich-Ebert-Stiftung/terre des hommes/weed: Civilian Perspective or Security Strategy? European Development Policy Confronting New Challenges in Foreign and Security Policy (documentation)

Friends of the Earth, Who Benefits from GM Crops? Monsanto and the Corporate-Driven Genetically Modified Crop Revolution, Brussels, January 2006

Florent Sebban, European Constitutional Treaty: A Step Forward Towards a Responsible Europe in the World?, Vienna 2005

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The European View: Fair Trade?


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