EU ties development aid to political reform

Countries that receive development aid from the European Union will have to show that they have made progress in areas such as human rights and democracy under new proposals outlined today.

If follows the European Commission's review of its neighbourhood policy in the wake of the Arab spring, which concluded that financial support should be linked to improvements in fundamental rights.

The commission said it would focus its aid on growth in the world's poorest countries – reducing the amount it provides to middle income nations. The so-called Agenda for Change earmarks health, education, sustainable energy and agriculture, and the creation of favourable business environments as top priorities.

Funds transferred directly to governments will be linked to the terms of a "contract for good governance" which measures factors such as democracy, human rights and the rule of law. The commission also said it would improve transparency and look for innovative ways to distribute money.

Presenting the plans, which will be discussed later by EU foreign ministers, Commissioner for Development Andris Piebalgs said: "The EU is already the biggest donor in the world. I want to make sure it remains an effective one too. We must keep pace with changing realities and adapt the way we fight poverty as a result.

"That's why I'm proposing today that we refocus our aid priorities to ensure that counties are on track to achieving sustainable and achievable growth. I want to make sure that every euro reaches those that need it most." The EU gave €53.8bn in aid last year, more than 50 per cent of the global total, with the commission managing €11bn.

Elements of the proposal were broadly welcomed by Oxfam, whose head of EU office Natalia Alonso said: "We applaud the EU's decision to focus on health, education and agriculture, as these sectors have the greatest impact on improving the lives of those most in need."

But she raised concerns about tying aid to political conditions. "Providing aid directly to developing country governments offers one of the best chances to meet developing countries' needs, rather than the political and economic strategies of donors. That's why we are surprised that the commission suggests attaching more political conditions to recipient countries. Budget support must remain a poverty-reduction tool – not a political one."

Meanwhile limiting aid to only the very poorest countries was "misguided", she said, because 72 per cent of the world's poorest people live in middle income nations. "Take Angola or Peru as possible examples. It is deeply misguided to believe that this sort of countries can do without assistance as all together."

But the centre-right European People's Party in the European Parliament supported the commission's position. Filip Kaczmarek MEP said: "I presume that in the upcoming reprioritising there will be no place for countries like China to receive EU aid money." The EU gave €128bn to China in aid between 2007 and 2010.