Eurocommissaris Piebalgs (Ontwikkeling): goed dat EIB nu ook leningen verstrekt aan landen buiten de EU (en)
Commissioner for Development
EIB i Lending outside the EU - a way forward
EIB Conference, European Parliament
Brussels, 29 April 2010
Ladies and Gentlemen,
Let me first thank you for inviting me to share with you my vision on EU’s development policy, and my hope that the EIB and other financing institutions will play an increasingly important role in it.
The starting point for my remarks is that the EU remains the most significant donor in the world, providing over half of global aid while it only represents about a fifth of the world’s GNI. The EU provided nearly 50 billion of aid in 2009, which means its aid doubled in the past ten years.
The economic crisis has put both the developed and the developing world in a challenging situation. Capital flows have dropped, trade revenues have decreased, and remittances have gone down. Millions of people have been thrown back into poverty.
Even in these difficult times we have managed to make a difference. Two years ago the EU was able to respond rapidly to the food price crisis, allocating €1 billion for those that were worst hit. Last year we rolled out the Vulnerability flex mechanism to help those developing countries whose economies suffered most from the downturn.
This is what Europeans should be immensely proud of.
However, despite our efforts we need to do more and do it soon. In 2009, EU’s official development aid corresponded to 0,42 % of EU’s gross national income. This means that we are running behind our schedules. While it will be far from easy to catch up, encouraging trends may be expected in 2010 in most Member States and a number of countries are already showing an excellent performance.
The collective EU intermediate target by this year that the EU and its Member States have committed to is 0,56% of GNI. The challenge of achieving 0,7% by 2015 is achievable, but requires a lot of political will. We have to respect our promises; it is not only our obligation, it is in our interest.
To maintain our lead and credibility we rapidly need to establish realistic and verifiable national annual action plans with individual targets that will demonstrate our willingness and ability to keep our promises. We must strengthen accountability, for example through peer-review mechanisms. And we need international burden-sharing to raise the ambitions of the others; like with climate change, the EU cannot act alone here.
We are far from the goals we set ourselves for the eradication of poverty; the objective of the Millenium Development Goals. The MDGs also help us measure our success.
There is no universal picture when assessing progress on MDGs. There are many success stories and we can see, for example, that much has been achieved in Asia. The same is true in those countries of Sub-Saharan Africa where the level of governance is high. But in many regions of the world we are threading water at best.
Let us ask ourselves a fundamental question: what is needed to give people the tools to get to the first ladder of development, particularly in those countries where progress on MDGs is the slowest?
We are talking about simple things, those that we take for granted in our lives. They are: reliable access to clean water, to energy, to a working transport infrastructure, health services and to education. I also add security and rule of law as fundamentally important pre-requisites for development.
Time and again we have seen that where people have these tools, they can drag themselves to the first ladder of development and then climb up further. So how to do this?
Let's look at some hard and difficult facts. The EU gives slightly less than 50 billion € of aid per year. Global ODA is around € 80 to 90 billion. Even if this all would go to sub-Saharan Africa (which it does not), we would be talking about aid per citizen probably in the region of 50 Euros per person per year.
We should not live under any false assumption that this aid on its own will succeed in bringing clean water, energy, healthcare, transport and education for everybody.
It is only if we see our aid as a catalyst, that we can harbour such ambitions. Indeed, such a change could happen if this money can be used as a seed to boost growth through supporting the creation of new markets, generating industrial activity or building capacities such as improved tax systems.
Good governance is key to development. Without the rule of law, security or sound public finances aid will never succeed in giving people a long term future. If we ignore this we will succeed only in poverty management, not poverty alleviation. Simply keeping people alive is not my objective.
Clearly, we cannot turn our backs to the world's poorest living in the most fragile states. We must help the developing countries help themselves. This is why supporting governance is so important.
The Commission has just adopted a Communication on Tax and Development, concentrating on promoting good governance in Tax matters. The message is that we must work jointly to support effective, efficient, fair and sustainable tax systems in developing countries. This is crucial for growth, poverty reduction and state-building. I intend to look into other mechanisms that promote good governance, including budget support, and come up with further initiatives.
The Lisbon Treaty, the new External Action Service and the real partnership between development policy and foreign policy provide excellent opportunities to advance this agenda. Vice President/High Representative Ashton and I are committed to work together on this.
The fact that our development aid should be seen as a catalyst brings me to the role of the International Financial Institutions, such as the EIB.
I am fully committed to see more use being made of mechanisms that improve the leverage effect of our aid. How could the EIB play a key role?
First, we must ensure that our objectives and actions are coherent, consistent and complementary.
Cooperation between the Commission and the EIB in supporting EU external policy objectives has a long history and has intensified over recent years. The EIB's operations in many countries have made financial conditions more attractive to borrowers. The Community guarantee for EIB external lending has been a key instrument.
Indeed, our cooperation has significantly increased the added value of EU's development policy. It has enhanced effectiveness and efficiency of aid delivery, promoted EU visibility and impacted positively on beneficiaries. I am very pleased about these successes.
I believe that, in order to respond to the growing needs to achieve more leverage in our financing, last week's proposal of the Commission on the external mandate of the EIB is a major step forward. The EU guarantee for the EIB' external operations is an effective means to combine EU budgetary funds with EIB own resources.
On the one hand, the proposal ensures continuation of the EU guarantee until the remainder of the current financial perspectives. And on the other hand the proposal brings new elements that open enormous future opportunities.
These include activation of the € 2 billion "optional mandate", dedicated to climate change projects. Another is replacing regional objectives by horizontal ones covering all regions, such as climate change or social and economic infrastructure.
The proposed initiatives have the real potential to strengthen the EIB's capacity to support EU development objectives. Enhancing the EIB's appraisal and monitoring of social and development aspects of projects is a good example.
Increasing the focus of EIB intervention in sectors that further development in third countries is a second case in point. Such sectors include water and sanitation, sustainable transportation and climate change mitigation and adaptation. Progressively we would like to see the EIB increase its activity in health and education as well.
We also will have new coverage with Cambodia, Libya, Iraq and Belarus and Iceland becoming eligible under the revised mandate.
In short, the revised mandate will enhance EIB's development role and better integrate it in the EU development architecture.
In preparing the proposal the Commission was able to draw upon the short-term recommendations of the Committee of Wise Persons, chaired by Mr. Camdessus, [who is with us here today.] It is my great pleasure to thank Mr Camdessus and his committee for this extremely important work and for the high quality of the outcome. The Commission agreed to include many of the short-term recommendations in its legislative proposal.
Going further, I thank Mr Camdessus and his group for providing their reflections on possible long-term alternatives and views concerning the European Financial architecture. The Commission will certainly be interested in pursuing further these reflections.
The area where we find huge potential to leverage financing for development is loan-grant blending mechanisms.
Here we already have excellent experience of cooperation with the EIB and other multilateral and bilateral financial institutions such as KfW and AfD. We must now ensure that blending becomes one of the answers for the future in meeting global development challenges.
We have a number of existing grant-loan blending mechanisms on which we can build in cooperation with the EIB and with other actors. They show great promise, as tools to increase the leverage and visibility of EU external assistance and promote cooperation among bilateral and multilateral finance institutions.
Each of these facilities has its own specific features, in view of the diversity of development needs in the different regions.
They include, among others, the Neighbourhood Investment Facility, the Investment Facility in the framework of the Cotonou Agreement, the EU-Africa Infrastructure Trust Fund and the recently established facilities for Central Asia and Latin America.
The Neighbourhood Investment Facility is an impressive example of increasing the leverage of EU external assistance and promoting joint European operations. Since May 2008, its Board has approved a total grant contribution of approximately €170 million. The total capital mobilised stands at €7.3 billion with the associated leverage of 43 to 1.
This success, it seems to me, points to the future of EU Development policy. It highlights the potential for blending grants with loans and for unblocking other public or private investment that we badly need.
I look very much forward to improving this exciting cooperation. As suggested by the Wise Persons' Group, we should for example consider the development of an EU Platform for cooperation and development.
As a first step I have agreed with my colleagues Olli Rehn i and Stepfan Fühle to immediately initiate an internal reflection on blending mechanisms with a view to optimising the functioning of these mechanisms. I will very much value the input of the EIB and other institutions in this. And I am looking for innovative suggestions.
In my opinion the EIB can and should play a greater role in pursuing EU development objectives. To do this:
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-firstly, the consistency of EIB actions with the external EU policies should be further strengthened;
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-secondly, the EIB's interventions should increasingly focus on areas directly contributing to meeting the development challenges;
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-thirdly, the Bank's governing bodies should reflect on how to increase access to concessional funding, beyond the access to EU budgetary resources, and increase the EIB's own-risk lending, and finally,
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-the EIB should have adequate human and financial resources to implement its mandate.
Let me stress again that development aid alone will not be sufficient to achieve our goals.
It is also essential to mobilise additional resources in our partner countries and above all to focus aid on projects that will catalyse growth and jobs in the developing world: a 1% increase in GDP in a developing country will be far more effective than an increase in ODA. In addition, we need to look at innovative resources of financing and make optimal use of them in addressing today’s global challenges.
Supporting developing countries in mobilising domestic revenues is key for their growth. Help in reforms to achieve sound tax systems and smart regulatory environment make it easier for businesses to invest, to trade and to create jobs, without necessarily increasing average tax rates. They enable mobilising higher revenues through higher economic growth and broader tax bases. They help to bring in the informal economy and reducing corruption, waste and tax evasion.
Sustainable tax systems provide a stable financing source for the provision of the public services needed to achieve the Millenium Development Goals. And in addition to help raising domestic revenue, the Commission will help fighting tax evasion and putting a stop to the significant illicit outflows from the developing countries.
This requires international tax cooperation, and making developing countries benefit from international initiatives in the tax area.
Indeed, the need to fight tax evasion and avoidance has been enhanced by the on-going financial crisis. Significant progress has been made following the international pressure, notably by G-20. And the OECD standard on exchange of information has been widely endorsed and is increasingly shared by both developed and developing countries.
The position of the Commission on this issue is very clear. We ask our partners to carry out a broad-based due diligence to avoid that EU funds are used in Offshore Financial Centres or tax havens for the purpose of evading tax payment to beneficiary countries.
In this regard, we welcome the EIB interim revised policy towards Offshore Financial Centres and we encourage the EIB to continue its efforts in this domain.
Ladies and Gentlemen,
We have already achieved a lot in the recent years in improving our joint European cooperation. But we have even bigger challenges ahead of us.
If we want to make substantial progress toward achieving the Millenium Development Goals and successfully mitigate the effects of climate change, we must focus on improving the efficiency, effectiveness and coherence of our actions.
My conclusion is that we need a New European Consensus on Development with a focus on growth. Again let's ask ourselves some profoundly challenging questions:
In the EU the right to water and electricity is a fundamental right. I see no reason why we cannot start, with our partners in the developing world, working on an infrastructure programme, based on leveraging aid and national funds and increasing the use of blending instruments, aimed at ensuring these rights to every citizen of the world in 20 years time.
The same applies to effective transport infrastructure to enable regional markets, notably in Africa, to thrive and become an engine for economic growth. The EU has some expertise in this area.
And I see no reason why every citizen of the world should not have a right to education and health-care in a shorter period than this.
But without a real push from governments, both donors and partners, and the change in the way we use official development assistance to focus on using it as a catalyst rather than a panacea, this will not happen.
None of us here can allow that.
Thank you for your attention.