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The Development Assistance Committee (DAC) is the principal body through which the OECD deals with co-operation with developing countries, and includes most of the world's major bilateral donors. The DAC agreement to be discussed at the meeting unties aid for the least-developed countries (LDCs), as defined by the United Nations. The catch is that the United States has succeeded in negotiating an effective opt out for itself by excluding food aid and technical assistance although the vast majority of US aid is food aid. Japan is also determined to protect the interests of its own firms in development co-operation projects.A recent expert meeting in Brussels shows that all EU Member States agree that the DAC draft Recommendation does not provide any significant added value, but that it is probably the best that can be achieved at the moment. According to the DAC own estimate, the increase in the amount of untied aid would barely reach 2% of total ODA. The EU states also agree on the notion of partnership and the need to consult developing countries. Member States are deeply divided on whether the DAC recommendation should be applied to EC aid. The UK and the Netherlands are strongly in favour, and have already taken steps to untie their own bilateral aid. They are looking to the Commission to take a strong lead, and give a clear political signal to its reluctant partners in the DAC. Germany, Sweden, Italy, Belgium, Denmark and Ireland could also be persuaded to support the full blow position. France, Portugal and Spain are the most unwilling to give up the privileges enjoyed by domestic firms in implementing bilateral aid, especially without any similar move from large non-EU donors. Finland is also reluctant, but for a different reason. It says that if the donor community is serious about untying, it should reach an agreement even without EU aid, and the inclusion of EU aid cannot be a condition.--EU aid had been partially untied for more than 25 years to all 77 ACP countries, to all Mediterranean partner countries under the MEDA programme and to the beneficiary countries in Asia and Latin America. For example, ACP countries managed to clinch 23.6% of the markets worth Euro 1.415 billion between 1985 and 2000. The scale of tied EU aid has also dwindled as it has become increasingly directed at balance of payments and budgetary support, which by definition are entirely untied.--Commission decision on NGO funding imminent.Development NGOs are hoping that the European Commission will agree to a compromise over the funding of their EU liaison network 'CLONG' next week (April 24 or 25). The Commission announced in December last year that the poor accounting found in an audit by consulting firm Ernst and Young would require it to recover Euro one million of EU funding from the Liaison Committee of Non Governmental Organisations (see European Report No 2555). The NGOs have begun legal proceedings in a Belgian court, in a bid to force the institution to pay up contracts which it has already signed. The case is due to be heard on 7 May, although the NGOs may withdraw their complaints if a satisfactory compromise can be reached next week. A Commission spokesman said on April 17 that progress towards such a compromise had been made. The NGO spokesman says that the final figure of unaccounted expenditure in the Ernst and Young report is likely to be half the original one million figure.

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Title Annotation:The Development Assistance Committee
Publication:European Report
Article Type:Brief Article
Geographic Code:1USA
Date:Apr 18, 2001
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