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First KLICE Comment May 2016

The EU budget: black hole or loving our neighbour?

Julian Chapman worked for 25 years in the European Union institutions before retiring as head of unit in 2014 and returning to the UK. He was particularly involved in assessing the effectiveness of EU foreign aid. The views expressed in this article are personal.

This is one of a set of KLICE Comment pieces commissioned to reflect various political views. Others can be found on our EU Referendum page. KLICE has no official position on the Referendum.

From well before the start of the European Union (EU) referendum campaign, one of the most controversial topics has been the size of the UK’s contribution to the EU budget. The Leave campaign likes to insist on a figure of £350 million per week and to suggest that this disappears into a large black hole somewhere in Brussels never to be seen again. The Remain campaign points out that the £350m is a gross figure whereas the true – ‘net’ – amount is approximately £160m.[1]

But what about this £160m? The Remain side itself has said little if anything about this amount, risking creating the impression that as it does not flow back into the UK’s coffers, this part of the UK contribution to the EU budget really does just go down a black hole. I want to throw some light on one area of EU budget expenditure to which this £160m contributes: foreign aid. I want to argue that this is one area, although by no means the only or even the largest one, where the EU budget is used to finance policies through which we as UK and EU citizens ‘love our neighbour’. 

Foreign aid represents about 8-9% of the current EU budget.[2] This aid, like the rest of the budget, is approved and monitored by the EU Member States, including the UK. In contrast to most of the EU budget which is administered by the EU Member States themselves, the aid budget is administered by the European Commission, in conjunction with the beneficiary countries, mainly through the EU’s offices in the countries themselves. The foreign aid budget provides development and humanitarian assistance to developing countries and also assistance to European countries seeking to become members of the EU.

EU development and humanitarian assistance

Even when the EU was nothing more than a two-page declaration of intent – the so-called Schuman Declaration of 9th May 1950 – this Declaration stated that one of the essential tasks of the new Europe would be the development of Africa. The EU has stayed faithful to this original objective, the so-called ‘European Development Funds’ first being established in 1963 with mainly French-speaking African ex-colonies and then expanded significantly in 1975 to include former British colonies in Africa, the Caribbean and the Pacific.

Today the EU is the world’s second biggest donor to sub-Saharan Africa and the current European Development Fund has a budget of €30bn for the period 2014–2020. Over the last decade, funding has focused on supporting projects and sub-Saharan African governments’ reforms to achieve the Millennium Development Goals in the areas of health, education, environment and poverty alleviation. In the 1980s and 1990s development assistance was subsequently further extended to Asia and Latin America although nowadays, given the greater prosperity in these continents, funding (€19.6bn from 2014 to 2020 through the Development Cooperation Instrument) is targeted on the least developed countries in these regions. In addition to development assistance, since 1992 the EU has provided humanitarian assistance to countries around the world facing natural disasters and war, its annual budget of approximately €1bn again making it one of the largest donors in this area.

In a context where many developing countries have suffered from dictatorship and war, through its development assistance the EU also seeks to provide a framework through which it can communicate and promote European values and practises, such as democracy and human rights, good governance and the rule of law, for which Christianity has been a powerful inspiration. At the same time, the story of the EU in bringing together previously warring European countries in peaceful cooperation provides an example of what can be achieved. This promotion of European values is particularly pertinent at a time when both Islamic and Chinese influence is on the rise in many developing countries.

EU foreign aid to countries seeking to join the EU

Since 1989 an important part of the EU’s foreign aid has also been much closer to home. In a rapid response to the dramatic collapse of communism in Eastern Europe, which was widely considered to be in part due to the success of the EU and its Member States, the EU established the PHARE programme (‘Phare’ means lighthouse in French) to provide ex-communist countries with financial and technical assistance to help them navigate the choppy waters towards establishing democracy and market economies, essential requirements for EU membership. Over the period 1989–2007, the EU’s PHARE programme indeed made a significant contribution to helping these countries reform and make the difficult transition from the authoritarianism and impoverishment they experienced in the Soviet bloc to freedom and relative prosperity in the EU.[3]  

Following the end of the war in Yugoslavia in 1995, the EU provided major financial support for the huge reconstruction effort that was needed. This has subsequently developed into similar support to countries in the Western Balkans,[4] as well as Turkey, to that given under the PHARE programme. The Instrument for Pre-Accession Assistance currently provides a total of €11.7bn over the period 2014–2020 to help prepare them for possible future membership of the EU. One country from the region, Croatia, joined the EU in 2013. The hope that the prospect of the EU membership offers to these countries and the incentive it gives them to introduce reforms, with the support of EU assistance, should not be underestimated.

A final area of EU financial aid to mention is its European Neighbourhood Instrument whose origins are comparatively recent.[5] This provides €15.4bn (2014–2020) in assistance to countries which are close neighbours of the EU to the east but which have been ruled out of future membership of the EU,[6] as well as to a number of North African and Middle East countries bordering on the Mediterranean.[7] The aid is intended to support the objective of bringing much needed stability to the region and nurturing good neighbourly relations between them and the EU.  

Criticisms of EU foreign aid 

Of course, it would be wrong to pretend that all EU foreign aid interventions have been fully successful. The effectiveness of all foreign aid, regardless of the donor, is a widely discussed subject. Nevertheless, EU assistance has contributed to developing countries moving towards reducing poverty and improving governance. Assistance to countries preparing for membership of the EU has been particularly effective, precisely because it is linked to the goal of EU membership. The most difficult challenges concern how to support the ‘Neighbourhood’ countries given the enormous challenges faced by these countries in terms of the fragility of their own governments, and the threats they face from Islamic extremism and Russian expansionism. However, the size of these challenges is a reason to engage rather than disengage.

The accusation is sometimes levelled at EU foreign aid that it takes an unduly long time to implement it. However, this is at least in part due to the involvement of Member States governments (including, of course, the UK) and the European Parliament in the detailed approval of EU aid before it is implemented by the European Commission, as well as the tight controls exercised by the Commission over expenditure to combat fraud and waste in what are often considered high risk countries.

The question of subsidiarity can also be raised given that most EU Member States, and not least the UK, have their own foreign aid programmes. However, it is increasingly recognised that channelling aid through the EU rather than a plethora of Member States, each with their own implementation procedures, can greatly reduce the administrative burden on the governments of beneficiary countries. The EU plays a valuable role in helping co-ordinate the aid programmes of the Member States while the global presence of the EU’s offices also allows Member States to concentrate their own foreign aid on a smaller number of priority countries.

Conclusion

The EU budget is perhaps one of the most important manifestations of the solidarity between nations which the founding fathers of the EU, many of whom were professing Christians, envisaged. It is normal for any budget to have a redistributive objective, taking a relatively higher proportion of the income of richer contributors and transferring it for the benefit of poorer contributors. In the context of the EU budget, this principle entails the UK, as one of the richer countries in the EU, making a net contribution to the EU budget. This enables assistance to be given to poorer countries and regions within the EU to help their development and, as described above, to contribute to the EU’s very important foreign aid programmes. From a Christian perspective, this is surely not pouring money down a black hole but using the blessings of our relative wealth to love our neighbours.


[1] This is because the UK receives an automatic budget rebate which reduces the contribution to £276m and a further approximately £116m in payments to public and private organisations and individuals in the UK, such as payments to UK farmers and research and development grants to UK universities.
[2] This includes the European Development Funds which technically speaking lie outside the EU Budget but to which all Member States nevertheless contribute. The main two areas of EU expenditure, each representing approximately 40-45% of the Budget, are, on the one hand, creating growth and jobs and reducing regional disparities across the EU and, on the other, funding for agriculture, rural development, fisheries and the environment.
[3] Eight former communist countries joined the EU in 2004 (Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia) together with Cyprus and Malta, while a further two former communist countries (Bulgaria and Romania) joined in 2007.
[4] Albania, Bosnia-Herzogovina, Former Yugoslav Republic of Macedonia (FYROM), Kosovo, Montenegro and Serbia.
[5] The European Neighbourhood Policy was launched in 2003.
[6] Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine.
[7] Algeria, Egypt, Israel, Jordan, Lebanon, Libya, Morocco, Palestine, Syria and Tunisia.

1. KLICE Comment April 2017 - Brexit after Article 50

2. Ethics in Brief March 2017 - Ancient Laws for New Challenges: The Ten Commandments as a Critique of Inequality Mark Glanville

3Director Position open.

4. KLICE News April 2017.

5. KLICE award-holder and Research Associate organising conference at Aberdeen University on 'Joy and Prosperity'

6. Report of CORAB symposium available.