25/11/2005
Complete Untying of EU Aid

The European Community has adopted two regulations on the access to EC external assistance that establish an unprecedented level of untying. Giving aid on the condition that it will be tied to the purchase of goods and services from the donor country has been a major impediment to the effectiveness of aid. But this consensual decision represents a remarkable step toward the enhancing of EC aid effectiveness.

The Council and the Parliament have agreed to the Commission’s approach that goes far beyond a trade negotiation between donors. It puts the partner country at the center and advocates an intelligent use of the concept of untying that also supports regional integration, capacity building and the development of local markets. It helps concretely the partner country to become a major actor of its own development not only in political terms but also as an operational actor.

European Commissioner for Development and Humanitarian Aid, Louis Michel, presented this agreement as “a concrete delivery that proves that we have taken seriously the commitments we made on aid effectiveness in the UN Summit”.

In the new regulations, all aid to the Least Developed Countries will be unilaterally untied. All expertise will be untied and based only on its dual criteria of quality and price. Food aid will be untied. In total, this is 30% of all EC aid that will be completely untied. According to international agreed estimations this would create a better value for money up to € 500 million. This goes much further than the existing limited international consensus that covers 2% of aid.

The remaining part of EC aid will be open to other donors upon the condition that they open themselves their own aid, according to the principle of reciprocity. This represents a generous offer for those donors that do not yet untied their own aid. It could bring an additional better value for money of € 1.2 billion.

The regulations also entail several operational simplifications favouring more joint actions between donors. They constitute a further implementation of the principles and commitments agreed by the European Union in the High Level Forum on harmonization and it so-called internationally “Paris Declaration” on aid effectiveness.
The text of the Regulations can be downloaded at the following address:
http://europa.eu.int/comm/development/index_en.htm